do's & dont's of funding - kiran bettadapur kiran bettadapur - entrepreneur, engineer,...
DESCRIPTION
“Do's & Dont's of Funding” was last Saturday's session. It was a run-down of case study briefs to demonstrate the realities of funding. Here is the Lounge47 Summary: 1) Do not be in a hurry to get funded. Bootstrap as much as you can 2) Understand the “funding” paradigm. VC initial agreement to fund (term sheet) do not automatically translate into success; it just signifies the beginning of even harder work. 3) Research, seek professional advice, pick a VC carefully, and keep your pitch understandable and credible. 4) Your VC pitch is about selling you, your company and your product. Let passion tell your story 5) Prepare for your ask. And, be able to communicate a detailed plan of your spend 6) Think through profit, scalability, predictability, sustainability and de-risking your Startup upfront 7) Consider other funding sources like ex-entrepreneurs or executives 8) Getting the attention of the funding community is difficult; get resilient 9) If your Startup is generating receipts, you will gain leverage on funding, and in some cases, it may lead to self-sustenance without funding. 10) Do's: Focus on the business model, have self-belief, be detailed and thorough, drill down on use cases, be disruptive, focus on cash flows, be realistic. Dont's: don't rush things, don’t screw up after funding.TRANSCRIPT
11/23/2014 1
DoDo’’s + Donts + Dont’’s of Fundings of Funding
| Kiran Bettadapur || Kiran Bettadapur |
Part Part -- 11
11/23/2014 2
GambleGamble
�� OverOver--Rated:Rated:
�� Not ClairvoyantNot Clairvoyant
�� Not TechNot Tech--
Savvy...OftenSavvy...Often
�� Picks = GuessworkPicks = Guesswork
�� 1:100 1:100
�� Ideas : Execution : Ideas : Execution :
SerendipitySerendipity
MODELMODEL
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PerseverancePerseverance
�� 20 Attempts 20 Attempts
�� DFJDFJ�� US$ 300KUS$ 300K
�� Exit: US$ 400 Mil.Exit: US$ 400 Mil.
�� 00--12 Mil. in 1.5 yrs.12 Mil. in 1.5 yrs.
�� 70 Mil. Internet 70 Mil. Internet
UsersUsers
�� Rejection= Rejection=
ConvictionConviction
SELFSELF--BELIEFBELIEF
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AstrologyAstrology
�� No Method 2 MadnessNo Method 2 Madness
�� Divine Help OKDivine Help OK
�� AllAll--iziz--FairFair
�� Do What Do What You ThinkYou Think It It
TakesTakes
THOROUGHTHOROUGH
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UtilityUtility
�� Pain PointsPain Points
�� Use Case ScenariosUse Case Scenarios
�� 3WH: Who? When? 3WH: Who? When?
Why? How?Why? How?
�� Market... Not Market... Not
TechnologyTechnology
�� 3030--sec. Elevator Pitchsec. Elevator Pitch
DETAILEDDETAILED
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TimingTiming
�� Never Too LateNever Too Late
�� Mover v. ShakerMover v. Shaker
�� Seduction... SlowSeduction... Slow
�� Innovation: Innovation: TrojanTrojan
....Better Execution!....Better Execution!
HURRYHURRY
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SuperioritySuperiority
�� DisruptionDisruption
�� Compelling Compelling
...Value Proposition...Value Proposition
�� IPR...IPR...Fence/FortressFence/Fortress
�� EvergreeningEvergreening
IMPACTIMPACT
11/23/2014 8
RevenueRevenue
�� Broken Laser PointerBroken Laser Pointer
...Pez Candy Dispensers...Pez Candy Dispensers
�� Revenue Model?Revenue Model?
�� Easily Understood?Easily Understood?
�� Planning FailsPlanning Fails
�� Newsworthy Story...Newsworthy Story...
MONETISEMONETISE
11/23/2014 9
TechnologyTechnology
�� Murphy: Murphy:
Things Happen...Things Happen...
World Changes...World Changes...
�� Risks... Bets go wrong!Risks... Bets go wrong!
�� WhatWhat--IfIf
�� Course CorrectionCourse Correction
�� Contingency PlanContingency Plan AA--BB--CC
AGILEAGILE
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ProjectionsProjections
�� Simple, Logical MathSimple, Logical Math
�� Use ThumbUse Thumb--rulesrules
�� $1 L = $8 C$1 L = $8 C
�� Formula 100Formula 100--100100
�� Believable, yet... Believable, yet...
Aggressive, AchievableAggressive, Achievable
�� Not ConservativeNot Conservative
REALISTICREALISTIC
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ManagementManagement
�� Whose Money?Whose Money?
�� Rev = $0.6 mil.Rev = $0.6 mil.
�� Ad Spend = $12 mil.Ad Spend = $12 mil.
�� IPOIPO--Ch. XI = 250 Ch. XI = 250
days days
�� Blown: $300 Mil.Blown: $300 Mil.
�� Biz Fundamentals?Biz Fundamentals?
�� PP--SS--PP--S & DS & D
FUMBLEFUMBLE
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ValuationValuation
FINEPRINTFINEPRINT�� Vulture... Funding TrapVulture... Funding Trap
�� Cash + Sweat + Assets Cash + Sweat + Assets
+ Relationships+ Relationships
�� Tangible & IntangibleTangible & Intangible
�� Client, Supplier & Client, Supplier &
ChannelsChannels
�� Multiple (Rev. or Profit)Multiple (Rev. or Profit)
�� Good LawyerGood Lawyer
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CommandmentsCommandments
�� Focus on Business ModelFocus on Business Model
�� Have SelfHave Self--BeliefBelief
�� Be ThoroughBe Thorough
�� Drill Down on Use CasesDrill Down on Use Cases
�� Be DisruptiveBe Disruptive
�� Focus on CashflowsFocus on Cashflows
�� Change, if Needed, with Change, if Needed, with
AgilityAgility
�� Be RealisticBe Realistic
�� Tread CarefullyTread Carefully
DO’sDO’s
�� Don’t Rush ThingsDon’t Rush Things
�� Don’t ScrewDon’t Screw--up After up After
FundingFunding
DONT’sDONT’s
11/23/2014 14
Thank You!Thank You!
11/23/2014 15
| Kiran Bettadapur || Kiran Bettadapur |
DoDo’’s + Donts + Dont’’s of Fundings of Funding
Part Part -- 22
11/23/2014 16
InvestorInvestor
�� 33--FF
�� FamilyFamily
�� FriendsFriends
�� F_ _ L _F_ _ L _
�� 33--EE
�� ExEx--trepreneur... trepreneur... Walked the TalkWalked the Talk
�� ExEx--Executive... Executive... Talked the WalkTalked the Walk
�� Excelutive... Excelutive... No Walk or TalkNo Walk or Talk
�� A.D.D.SA.D.D.S
11/23/2014 17
Shun the Shun the ‘‘--Shuns'Shuns'
DifferentiationDifferentiation
CompetitionCompetition
ValidationValidation
ConvictionConviction
MissionMission
TractionTraction
AttractionAttraction
ExecutionExecution
DevotionDevotion
VisionVision CohesionCohesion
AmbitionAmbition
INTUITIONINTUITION
COGNITIONCOGNITION
PASSIONPASSION
AGGRESSIONAGGRESSION
11/23/2014 18
MarketMarket--CentricCentric
�� Understand:Understand:
�� UserUser
�� Use CasesUse Cases
�� CustomerCustomer
�� MarketMarket
�� CompetitionCompetition
�� PositioningPositioning
�� DifferentiationDifferentiation
�� SegmentationSegmentation
�� Avoid:Avoid:
�� Functionality Functionality
TrapTrap
�� TriageTriage--like like
PrioritisationPrioritisation
�� Product Product
ManagementManagement
11/23/2014 19
Getting VC AttentionGetting VC Attention
�� PostPost--HOMAXHOMAX
�� Make them Make them
RedundantRedundant
�� Cheap Money = Cheap Money =
Available Fast Available Fast
�� Reality Shock:Reality Shock:
�� 95% Funding... 95% Funding...
Thro’Thro’ OSB or EC OSB or EC
NetworksNetworks
�� No ColdNo Cold--CallingCalling
�� Cherry Pick VCCherry Pick VC
�� Intro... Intro...
�� LinkedInLinkedIn
�� DO HOMEWORKDO HOMEWORK
�� PortfolioPortfolio
�� InterestsInterests
�� AmountAmount
11/23/2014 20
Most ImportantMost Important
�� YOU...YOU...
�� Tangibles:Tangibles:
�� ExperienceExperience
�� KnowledgeKnowledge
�� SkillsSkills
�� EducationEducation
�� Leadership RolesLeadership Roles
�� IntangiblesIntangibles
�� PassionPassion
�� IntegrityIntegrity
�� VisionVision
�� RealisticRealistic
�� Team PlayerTeam Player
�� RESILIENTRESILIENT
�� COMMITTEDCOMMITTED
11/23/2014 21
The PitchThe Pitch
�� IntroIntro
�� TeamTeam
�� Short Biz OverviewShort Biz Overview
�� MarketMarket
�� OpportunityOpportunity
�� CompetitionCompetition
�� Product (HighProduct (High--
level)level)
�� Business ModelBusiness Model
�� Biz RelationshipsBiz Relationships
�� ValidationValidation: :
�� Beta? Clients? Beta? Clients?
Paying? Press?Paying? Press?
�� Cashflows & Cashflows &
ProjectionsProjections
�� Entry BarriersEntry Barriers
�� How Much? Why?How Much? Why?
11/23/2014 22
RememberRemember
You Are Not Working, IfYou Are Not Working, If
...You Are NOT Networking!...You Are NOT Networking!
Network Is Network Is
Your Your
True NetTrue Net--Worth!Worth!
Journey Matters... Journey Matters...
Destination Just Happens!!Destination Just Happens!!
11/23/2014 23
Thank You!Thank You!