of the week!!
When over 200 people asked in unison – How to get funded?
It was a hectic evening at my Online-furniture-rental-startup Rentomojo.com when this trhs FB post popped up on my screen asking if someone wanted to attend & live-tweet the proceedings from @TiEmumbai workshop on #fundraising scheduled at One Indiabulls Center, Mumbai.
Perfect! With that kind of a panel boasting of India’s top VCs and investment Cos sharing their #fundingGyan on fund-raising; there was just one option – I quickly responded and upon confirmation, re-scheduled all my next-day engagements & next morning I found myself report-tending the event!!
For the uninitiated, this was one of @TiEMumbai‘s many events where they bring the founders & funders under one roof. So, without further ado, here’s is a quick digest of what transpired (laced with lots of funding gyan).
The first over: Welcome Pitches!
It all began with @TiEMumbai president @djhaveri addressing the crowd with his take on Indian #startup ecoysystem. This was followed by some interesting startup pitches from @Imagimake showcasing their toys, and the dudes from the world of payment – @GoSimpel that helps you manage all your hyper local vendor payments manage online.
1. The power play: Keynotes from the panel discussion on what-when-how of Early Stage Funding
1-hour long panel discussion on what-when-how of Early Stage Funding with Karthik Reddy (@BKartRed) of Blume Ventures, Maneesh Bhandari (@ManeeshBhandari) from IAN, Nandini Mansighka (@nmansinghka) of Idya Booster and Sasha Mirchandani (@SashaMirchi) of Kae Capital; moderated by Anand Lunia (@anandlunia) of India Quotient.
(L:R – Sasha, Karthik, Maneesh, Nandini, Anand Lunia)
They primarily talked on Funding in new models, Importance of business plan, Teams and Investing in sexy businesses compared to niche ones.
VCs usually love e-com these days, how can other domains not favorited by VCs get funded by them?
Conventional VCs may not have the guts to fund a non-eCom business, say a saree mfr or a toy maker
You don’t always need a VC if you’re in some non-VC favorite domain.
If you look at top 500 companies worldwide, they are NOT venture financed!
What do VCs look for and in what order?
- Team is the MOST critical aspect almost all VCs look for in the 1st place. Take it as a law.
- VCs don’t usually prefer single-founder start-ups.
- Single-founder maybe a rock star but time is the key.
- He may end up taking 3 yrs in delivering what a good team can do in 1.
- Early stage funding is all about team composition and a bit about the idea.
- Start-ups usually always pivot away from their original idea in 6 months.
- Pivots also happen with the way entrepreneurs think about their business.
- They’ll be working on something totally different so it’s the team that investors confide in.
- Pivots are part and parcel of the game, so better to have a rockstar team.
- Always good to have a clear leader. We look at how well a team gels together.
- Snapdeal changed their working model almost every year (yet investors love the team)
- Team should have the gut and determination to go longer than go big.
- If you’re looking to hire / outsource your tech / marketing, we’ll avoid funding you.
- You must have one of the founders in the team who sells (in-house marketing)
- Founders operating from multiple locations is a put off for a VC.
- Not IITians, Not intelligence, we only look for your determination.
- Make sure to have a clear role & task allocation among founders from the word go.
How should the deck/pitch be & is having a perfectly drafted B-plan a must?
- Not really. Focus on execution & a good product.
- If there is a good product-market fit, the product will find a revenue model for you.
- Simple 10-pager deck in most VCs, they will mostly never care to ask you for a full B-plan.
- Avoid silly typos, immature addressing, these put off an investor outright.
- Stop showing business plans and projections and numbers, focus on the business.
- Keep the deck short; we can talk about the numbers later.
- 10 slides, 20 minutes skinny deck is all you need.
- If an entrepreneur can’t summarize in 10 slides, it puts an investor off – @BKartRed
- Entrepreneurs these days are jumping on to quicker series A
- VCs and investors these days are going aggressively for early stage funding.
- Multiples on SaaS businesses have dropped in the US, B2B is not a sexy business – @bkartred
How to approach VCs?
- Always keep a 10-pager ready with you before approaching anyone.
- Always try to have someone introduce you to investors.
- A reference point boosts credibility & trust.
2. The Slog & Gyaan: Lizzie Chapman of Chapman Foundation next spoke on getting a pitch perfect:
- If your mother doesn’t get what you do, we have a problem.
- Fundraising is like dating, you have to kiss a lot of frogs.
- Investors can be herd-like, not always right, not always wrong.
- Great Investors invest in people, not in b-plans.
- Always clearly mention – we are X for Y. Always helps convey a better perspective.
- 6 slides in your deck is the best help you can do to an investor.
- Always clearly talk about the solution and a clear proof (of concept).
- Always emphatically yell – we can do it! Sell yourself, perception is reality. Make your pitch more interesting. Don’t lie.
- Convey a clear go-to-market strategy.
- But it’s okay to lie to explain how your venture solves a problem.
- Understand costs you’ll incur, accordingly understand how much do you ACTUALLY need and for how long.
- Thinking too small is as risky as thinking too big and bullish.
- Don’t show them your future calculations; show them how to measure your progress.
- Believe in your dream, have long-term vision.
- It’s really really hard to acquire digital customers in India.
- Trying to please everyone is a very common mistake most entrepreneurs make.
Here is the ppt.
3. The 2nd Innings: Keynotes from the panel discussion on How do I get $Billion valuation
The panel was moderated by Anand Lunia (@anandlunia) from India Quotient and included Avnish Bajaj (@avnish) from Matrix Partners, Nitin Sharma (@NitinSharma1) from Light Box Ventures and Sandeep Singhal (@aaasandeep) from Nexus.
They basically talked on how investors value startups, the valuation math and the different exit strategies. Some notes:
- Nobody starts a venture to exit. VCs look for entrepreneurs who want to build a business not exit.
- Take money from a believer – @avnish
- Valuation formula: get ready to dilute 20-30%, get 3-4M based on how much a VC likes you – @avnish
- Seed round: team + concept, series A: product, series B: customers & traction, series C: scale, series D+: profitability – @avnish
- Bhavesh (Ola Cabs): “Avnish, jo bhi ho, main Kar lega” – Avnish shared Bhavesh’s determination to perform despite all regulatory odds and his bad-days when he even had to hide-n-run from Mumbai to avoid arrest.
- It’s more important to show a scalable model than growth, with a unit model that works.
- Managed marketplace w/ a focus on building buyer experience + understanding of capital efficiency works wonders – @aaasandeep
(L:R – Sandeep, Nitin, Avnish, Anand)
This was perhaps one of the most engaging parts of the day, so I got lost myself and forgot to take more notes L For word-by-word account, Check out the videos (should be with us and uploaded below within 7-10 days) to hear it all from the men themselves and mind you these are words coming straight from the people who matter the most at that top.
4. The Man of the Match: Next in was Viral Rathod from Everstone dissecting a typical term-sheet.
- Exit rights is what an #entrepreneur should focus on the most in a #termheet while raising #funds.
- Most #investors are non-intrusive; they invest coz they know you can run the company well.
Viral shared some wonderful cocktail of knowledge and wisdom on everything term-sheet. Viral promised to share his ppt with the attendees, once we have it, I will update this post with the same. I bet you’ll never want to miss that out.
He discussed in depths about investor rights, exclusivity clause, non-compete clauses, transfer restrictions, pre-emptive rights, anti-dilution rights, exit rights, liquidation preferences, board representation, information rights, reps and warranties / indemnities, investor affirmation rights / reserved matters, material adverse changes and a lot more.
He topped it all up with a very neat example. Just when it was all getting way more awesome, Mansi the mod hit her buzzer, so bad of you Mansi, been so strict on the speakers throughout the day 😛
Here is the entire ppt Viral thankfully shared with us.
5. The Presentation Ceremony: And then came the final session of the day: Good, bad & ugly of getting funded w/ Mohit Dubey (@mohitdubey) of CarWale, Rohan Mirchandani (@HoPo_In) of HokeyPokey and Saurabh Saxena (@Saursax) of HolaChef.
It was a fun interactive hour where all the participants spoke about their early days, their struggles and hassles they went through while raising funds and shared lot of light fun moments. Some keynotes:
- Dhandha hona chahiye – Rohan
- You don’t have to have the domain knowledge really BUT you need to have the will to learn it – Rohan
- I started off badly by listening to every new person throwing newer advice, I found myself trying to please everyone – Rohan
- When I realized it, I decided to simply focus on what I do the best, make more ice-creams and sell more ice-creams – Rohan
- I had to keep pestering my co-founders for 6 months to convince them to join me – Mohit
- For about 5 years, none of my co-founders ever cared to ask me for their share certificate, that’s the kind of trust level we shared – Mohit
Networking-wise, it was a great event, however I could feel the hall was mostly full of foodpreneurs since most of the questions that came up were something food and hospitality sect. I was getting hungry myself and with all that food-for-thought I packed my bags for my dinner. It was a day awesomely spent. If you’re attending one such event in future, make sure you come hungry, you’ll sure be treated! 😛
I’ll upload complete full-length videos of all sessions in a few days.
About me: I run Rentomojo – an online marketplace for furniture & appliances rentals.
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