B-plan and Pitch

1Private & Confidential

Business Plan &Pitching to investors

For ISB Class of 2016

Sep 9, 2015Jagannath, Ashish


About Ventureast


Ventureast Family of Funds

• One of the earliest VC Funds in India (1995)• 3 generations of successful early stage funds• Currently two active funds with $200M AUM – fully invested• Proactive Fund (Chennai): Technology• Life Fund (Hyderabad): Life Sciences, CleanTech, Agri• 11 member investment team• Symbiotic relationship with ISB

– Several alumni as team members– Invested in start-ups by ISB alumni

Look forward to strengthening this association further!!

Private & Confidential 4

Some of our investee companies . . .


Ventureast Plaza

A Scaffolding for the Innovative Enterprise


Vision

To be the coveted micro-ecosystem where futuristic Indian Corporations

take their first steps


Phase – I plan

• Co-working Space

We invite you to start-up with us!!!


Why Business Plan?


Investors invest in businesses

NOT in products / ideas / platforms / concepts


Investors judge a business based on how the entrepreneur presents it

They don’t know your businessYou have to tell them


So what do you need to be prepared with?

Business Plan Pitch Deck

Elevator Pitch


Some definitions


Business Plan

A detailed document – ppreferably typewritten, 30-40 page long covering all aspects of the business • Foundational document like a project report• Write this in your own words• Forces you to think through every aspect of your

business (the risks, the issues . . . )• Don’t send this to investors at this stage!!!


Pitch Deck

Provides a visual representation of your business –10-15 ppt slides• Summary from the business plan that you can “talk

through”• Usually the first source of info for an investor –

should excite him sufficiently to get you a hearing• Keep it simple, clutter-free & effective


Elevator Pitch

Elevator Pitch is a succinct overview of the business –what you want to do and how• You should be able to make a favourable first

impression in ONE minute• You should be able to summarise your business in 3

sentences!!!


So why is your pitch so important?


During last 2 years Ventureast received ~350 business proposals

We reviewed ~50 of them in detail

We invested in 4 of them


The big question


Does your business have the potential to provide 10x ROI to the investor?

In what timeframe?What are the risks?


Pitch Deck – key ingredients

(and typical questions you will face)


Before you approach . . . Find out what the investor wants

The Fund’s focus areasInvestment sweet spots

Current list of investmentsThe team’s credentials

. . . . .


Investment Hypothesis (one slide)

• A one line statement of your business• This should highlight your big vision & how you

propose to achieve it• Is this exciting enough?


Executive Summary (one slide)

• One slide summary of the proposal• Many investors “make their call” based on this slide• This determines if they are at the “edge of their seat”

or “doze off” for the rest of the presentation


Market opportunity (max 2 slides)

• What is the customer’s pain point (unmet need) that you are addressing?

• How is it being addressed now? Why is it sub-optimal as per you?

• How big is this opportunity? Some numbers /charts giving the Total Addressable Market (TAM)

• Who are the target customers and how do you reach them?

• Top-down & bottom-up analysis• What are your key assumptions?


Your solution (max 2 slides)

• How do you propose to address the customer’s problem?

• Details of your solution – the product, technology (IP), uniqueness, differentiation

• Is your product/solution simple, easy-to-use, fool-proof . .?

• Is it economical, faster, better? By how much?• Do you have a prototype? Has the solution been used

in a real life setting?


Your business model (max 2 slides)

• How do you make money?• Your sourcing, manufacturing, distribution channels?• Do you already have sales/commercial traction? (That

makes a big difference) • Do you have a simple, sticky revenue model?• Does your model create entry barriers for potential

competitors?• What are the risks? What can go wrong in this

model?


Your competitors (one slide)

• Who are your competitors?• Why is your solution/business model better?• How are you unique? Differentiated?• Would customers pay you a “premium” over your

competitors?• You can use a simple 2x2 matrix to visually show your

competitive positioning


Your team (one slide)The second most important aspect of your proposal• Who are core team members? How did they come

together? Who is the Leader?• What are their skills/experiences? Execution

capability?• Any previous entrepreneurial stints? Success/failure?• Investors are judging

• passion of the team• cohesion among team members• complementary skill sets

Does this team have IT to scale the business up to exit?


Financials (max 2 slides)

• Revenue & profit projections• Are they scaling fast enough? How big can it grow in

5 years? Revenue/EBIDTA . . .• What are the assumptions? • Can you achieve them? What is the low-case

scenario?• How does LTV compare with CAC?• What is the unit-level profitability?• How much money do you need to raise to reach the

projected position?


Funding requirement (one slide)

• How much do you need? HAVE YOU INVESTED YOUR OWN MONEY?

• How long will that sustain you? (What is the burn?)• Are there previous investors? Are they investing?• Key terms of investment – valuation, instrument,

tranching . . . • What is the fund utilisation plan? What are the key

milestones you can achieve with this funding?• When do you need to raise funds again?


Exit strategy (one slide)The most important slide for investors!!!

• What kinds of exit are possible? Over what timelines?• Strategic acquisition? Financial investor? IPO?• Why will anyone acquire your business? What is the

strategic fit?• Are there comparable market transactions?


Concluding Summary (one slide)

• Give a summary of the proposal – you may repeat the Executive Summary points

• Tell why this is a “great” investment opportunity for the investors

• Agree on next steps!!!


Summary of the 15 slide Pitch Deck

• Investment Hypothesis (1)• Executive Summary (1)• Market Opportunity (2)• The solution (2)• Business model (2)• Competition (1)• Team (1)• Financials (2)• Funding requirement (1)• Exit strategy (1)• Executive Summary (1)


Some soft aspectsTraits investors are looking for!!!

• Passion & Commitment• A flexible & realistic business plan & ability to make

the business plan work• Willingness to adapt to changing market conditions• Ability to swim against the tide• Willingness to listen & learn• Be honest – investors usually figure out the truth

anyway


“Investors are not solely evaluating your company’s story.They are also evaluating

your ability to convey that story”

- Bill Gurley, Benchmark Capital


• Who?

• How?

• How much?

• What for?

• Where?

• With whom?

ACT-II


Whom to approach

What Stage are you at?

Indian Venture Capital and Private Equity Report – 2014, IVCA


Whom to approach

Indian Venture Capital and Private Equity Report – 2014, IVCA


Whom to approach


• A tad more than enough!

• Enough to do what?• Set milestones that means something to your future investor• Milestones should prove something important

• Optimize between dilution risk and underfunding

How much money to raise

Proof of market- Certain number of unique customers/ repeat customers

Proof of Product- Completion of Beta testing- Completion of Animal testing

Proof of Business model- Generation of bench mark revenue- Achieving EBTIDA margin benchmarks- Operating Cash break even

PROOF OF PUDDING

Filing of Patent

In-licensing of Technology

Expansion of Team

Geographic Expansion

Inorganic Growth

YAAY

!!UM

M.. N

AY…


Have enough runway….• Its not called VALLEY of DEATH for Nothing!!!

Tomgunguz.com/seed/follow-on-rates


Where are you located?

• Entrepreneurial ecosystems also have

HOTSPOTS

• Classic example – Silicon Valley

• Who’s the chicken , who the egg…?

• Its gravitation….

• Mass on one side attracts mass from

the other side

• Pays to be in the zone of such

gravitational pull

2009 – US Data on % VC funded deals by Geography

Venture Capital and Private Equity, 2nd Ed., Metrcik, Yasuda


• India Data – 2012 to 2015

No. of Deals % VCs located %East 2% 1%North 24% 18%South 40% 26%West* 34% 56%

Where are you located?

*Bombay is HQ to large financial institution who in effect have pan- India reach, perhaps leading to a confounding effect in West Zone

Ventureast Portfolio – Geographic Spread

Hyderabad – 30%!

South India – 50%!!

Ventureintellignce.com – Deal Dashborad


Sector focus matters!• VCs add more than just Capital• Better probability of success• Better probability of failing fast…


How to Approach

• Professional Network• Alumni Network• Business Network• Institute Entrepreneurship cells

• Intermediary Æ Investment Banker• Personal Contact

• Family• Friend’s Friend

• Industry Events• Cold Call/Walk in• Email on <<[email protected]>>


How to Approach


Wary of Type-II Error


Team Pedigree

• VCs are not seers (we’d love to be though -)

• There is limited proof of excellence at the time of investment

• We look for proxies that indicate probability of future success

• Like it or not – tags act as such proxies

• Academic affiliations (Good News ? - )

• Professional affiliations

• Previous startups

• MOST SOUGHT AFTER PEDIGREE EVER?

• Successfully exited previous start up

• Natural gravitation towards probability of higher success


Some wisdom . . .Statements by entrepreneurs after a failure!!!

Business, much like life, is not a movie and not everyone gets to have a story book ending (GigaOm)



What I didn’t understand was, you charge not for how much work it is for you. You charge how much the service is worth (Bitshuva)



This turns out to be the original sin of Dinnr — there never was an opportunity. And whatever we did later to try to breathe life into it (iterating on the website, different marketing tactics) was akin to giving aspirin to a deathbed patient (Dinnr)


Thank You

Happy to hear from you,

Happy to help

Write to Ashish:

[email protected]

mailto:[email protected]

B-plan and Pitch

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