Innovation, Startups, Life

Amit Shah

What is Venture Funding?

• Riskiest money: Equity without security– Money that your relatives will not lend you– A bank lends when you don’t need it

• Types of Venture fund– Seed

• Like the individual / team– Early

• When it is a concept: Mid• Product ready; some customers interested

– Late stage funds• In revenue; need money for expansion

Artiman: Investors & Entrepreneurs

U.S. Investment Team

Amit ShahYatin MundkurTom DennedyAkhil SaklechaAjit SinghTim Wilson

India Team

M. J. AravindRamesh Radhakrishnan

US Operations Team

Ida Ng

EIR

Frank ThibodeauAdam De La ZerdaMahmood PanjwaniAtul Sharan

Venture Investing Experience– Collectively managing $900+M invested in 140+ seed/early–stage

companies – 88 exits with aggregate realized return of 3.3x– 11 IPO’s and 32 acquisitions

Entrepreneurial Experience– Co-founded 10 startups in the U.S. and India– 6 successful exits with aggregate value of > $1 Billion

• ZeitNet, PipeLinks, Equator, Daksh, Ross, Kaleida, Clarity, Airgo, BioImagene

Operating Experience - public and private – Cisco, Rockwell, Siemens, AMD, AT&T, Lucent, Cabletron, Digital

Island, FireEye, Airgo, Clarity Wireless, Adaptive, Compaq, Qualcomm, HP

Technology Background– Played pioneering roles in seminal industries: Server Computing,

Networking, Voice over IP, IPTV, Digital Consumer Electronics– 26 US patents

4

Investment Strategy“Concept” and Early Stage

– World class “entrepreneurs with ideas”– Lower cost basis, providing significant ownership– Ability to impact company strategy

“White Spaces”– Potential to dominate markets– No identifiable competition, with at least a 12-month lead on technology or market– Lower execution risk and outsized returns

Scalable Business Models– Develop technologies cost effectively– Scale the business efficiently– Fundamentally change economics of target sectors

Leverage India– Long-standing network and deep deal flow– Same disciplined screen as in Silicon Valley– To build companies that cannot be built in the US – BioImagene, Guavus, Cellworks

Innovation

“Best ideas have come from outside industry”

Intersect expertise in one market with another– Think out of the box– Do NOT be a hammer in search of a nail- Intersection of experience, market understanding, ability to

Execute

Is it a business?– Feature, Product or Company?

Artiman: Focus on Disruption• BioImagene (Acquired by Roche)

• Changing Standard of Care in Pathology

• Cellworks (www.cellworksgroup.com)• Designing drugs the way computer chips are designed

• Aditazz (www.aditazz.com)• Designing & building Facilities the way computer chips

are designed and fabricated

• Zspace (www.zspace.com)• Non-invasive testing for Cardio-vascular diseases

• Invensense (www.invensense.com)• Motion Processing for consumer devices

• Prysm (www.prysm.com)• First American TV company in 30 years

Why? O Why a startup?

The trigger for doing a startup– My boss sucks; I don’t like my job;– He/she made it; why can’t I?– Always wanted to do a startup

Caution:– Not sexy; most likely foolhardy– Very, very hard work with incredible ups/downs– Enjoyment is in hindsight

Still want to do a startup?

– Create a Business Plan– Not an excel spreadsheet or a word document or a

powerpoint presentation

– An innate and clear understanding of what you are going after

– Remember: if it is in the press it is too late

– Truly understand the market dynamics

The Money

• Most businesses should not raise venture money

• Do you really know why and how much money you need?

• Who do you raise it from?- Customers, partners, friends and family,

angels, VCs- Government (Darpa, SBIC,…)

The VCs

• “They are evil; dumb; do not understand my business; trying to screw me; …”- All true- No different than a marriage

How well do you know the person?

- Look beyond the sexy early days and to the fat middle age and can you live with it?

- Ecosystem

Finally…

• Actually doing a startup• Phases

– Primordial– Middle Ages– Industrial Revolution– Deliverance

Primordial

• Concept• Early fools• Extreme Energy• Some lucidity

Middle Ages

• Newer Skeptics & converts• Energy / focus correlation• Outside thoughts• Confusion

Industrial Revolution

• Scale• Technology ready for customers• Sales and Marketing starts ramping• Internal Challenges

– Job function confusion (mix of newer v/s older employees)

– Communications• Hallway conversations don’t work• Processes (unfortunately) needed

– Fallout• People dissatisfaction• Inability to scale• Some don’t make it thru transition

Deliverance

• Customer interaction starts– Initially Skepticism– Goes to “piddly stuff”– Some more selling and it becomes “maybe”– If persistence, the customer “converts”

Start-Up Check List

• Establish business entity– Engage a lawyer/be cautious going solo with

online resources – Corporation is the entity of choice if you plan to

raise money for the business– Establish initial ownership of company with co-

founders– Fed/State registration, business license and

permits• Secure Key Personnel

– As shareholders, consultants or employees

Start-Up Check List (cont.)

• Secure work space– Clean up the garage, lease an office, come to

Artiman• Open bank account • Obtain necessary insurance– Workmen’s comp– Medical– Liability

• Implement Accounting System– Popular Quickbooks is adequate – Select payroll vendor (Paychex, ADP)

Business is Never as Planned

• You will have to Refine your Business Plan

– Annual Strategy Plan

– Annual Operating Plan

– Annual Financial Budgets

Artiman Tool Kit

• www.artiman.com/startup-toolkit

• Templates and sample documents covering:– Annual Operating Plans– Board Meetings– Financial – Human Resource– Legal

Artiman Tool Kit Index

Artiman Tool Kit Index Artiman Tool Kit IndexDescription Format Description Format

1 AOP1 AOP Time Line Graphic Illustration PPT 21 HR2 Form of Offer Letter Word

2 AOP2 Sample AOP Time Line Excel 22 HR2.1 Form of Empl, Conf. Inf. and Inv. Assign. Agt Word

3 AOP3 Sample AOP PPT 23 HR3 New Hire Check List Excel

4 AOP4 Product Planning Template Word 24 HR4 Separation Release Letter Word

5 AOP5 Sample Project Responsibility Owners Word 25 HR5 EE Termination Check List PDF

6 Board1 Key Examples of Information for Board Meeting Excel 26 HR6 90 Day New Hire Review Form Word

7 Board2 Sample Board Package PPT 27 HR7 Employee Self-Evaluation Form Word

8 Board3 Action Item Template Excel 28 HR8 Performance Eval and Career Dev Form Word

9 Board4 Sample Board Consent by Email Word 29 HR9 Staff Empowerment Article Word

10 Board5 Sample Board Indemnification Agreement Word 30 HR10 Consultant Agreement Word

11 Board6 10 Immutable Rules for Exec Presentation PDF 31 Legal1 Sample VC Term Sheet Word

12 Fin1 Financial Package Excel 32 Legal2 Sample Non-Disclosure Agreement Word

13 Fin2 Company Cap Table Excel 33 Legal3 Sample Note & Warrant Purchase Agrmt Word

14 Fin3 Expense Report Template Excel 34 Legal4 Sample Note Word

15 Fin4 Insurance & Benefits Cost Schedule Excel 35 Legal5 Sample Warrant Agreement Word

16 Fin5 Sample Cash Investment Policy Word 36 Legal6 Sample Mgt Rights Agreement Word

17 Fin6 Sample Fixed Asset Capitalization Policy Word 37 Legal7 Form University License Term Sheet Word

18 Fin7 Sample Travel & Expense Reimbursement Policy Word 38 Legal8 Document Creation/Retention Review PPT

19 HR1 Sample Employee Handbook & Policies Word 39 Legal9 Fenwick Start-up Legal Resource Presto PDF

20 HR1.1 Sample Company Handbook Word