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IN
VENTURE CAPITAL
AND
ANGEL INVESTING FUNCTION
Prepared By:
Anuj Shah
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Mr Farhad
(Electronic and Communication Engineer)
Has went to remote Place for his Project Work
Could not able to get regular frequancy of mobile network
Thus facing problem catering the clients
Thus started thinking to solve the problem on his own
So he approached Banker
Bankers has asked for
past trend, credit record, collateral security, and Explanation
w.r.t. Repayment of funds
Mr Farhad Could not justify thus banker rejected the proposal
Then he approch Mr Jain local Chartered Accountant
Mr Jain Guided him to prepare business plan and project report
IDEA
PEOPLE
MONEY
STRARAGIC
INVESTMEN
T
Purchase equity/securities
Benefits of VC to
Entrepreneur
Benefits of VC to
Entrepreneur
Investment Stages
Investment stages
1. Seed Money:
Low level financing needed to prove a new idea.
2. Early stage investment/start up investment/Angel
Investment:
Idea needs to be developed into product and needs to
be marketed to get commercial orders.
3. First-Round:
Product and Marketing chain has establish but funds
required for manufacturing of first commercial deal
4. Second-Round:
Working capital for early stage companies that are
selling product, but not yet turning a profit .
Investment stages
1. . Third-Round:
Also called Mezzanine financing, this is
expansion money for a newly profitable
company
6. Fourth-Round/mazzanine:
Also called bridge financing, it is intended to
finance the "going public" process
Investment stages
Financial
Stage
Seed Money
Start Up
First Stage
Period (Funds
locked in
years)
7-10
5-9
3-7
Risk
Perception
Extreme
Very High
High
Activity to be
financed
For supporting
a concept or
idea or R&D for
product
development
Initializing
operations or
developing
prototypes
Start
commercials
production and
marketing
Investment stages
Financial
Stage
Second Stage
Period (Funds
locked in
years)
3-5
Risk
Perception
Sufficiently high
Third Stage
1-3
Medium
Fourth
Stage/mazanine
1-3
Low
Activity to be
financed
Expand market
and growing
working capital
need
Market
expansion,
acquisition &
product
development
for profit
making
company
Facilitating
public issue
Investment stages
Roll out
Growth
Expansion
Maturity
Product Stage
Idea
Concept
Prototype
Launch
Scaling up
Diversification
Continuous
innovation
Funding Stage
Pre-seed
Seed
Seed
First stage
Second stage
Third stage,
Bridge
financing
Asset-based
financing
VC Investment Process
Pitching/Originat
ion of Deal
Screening
Due diligence
(Evaluation)
Deal structuring
Post investment
activity
Exit plan
Opportunity introduction/
Pitching
He has to make a presentation with the team before the intended angels or
VCs.
Concept/idea of Venture
Executive summary
Product
Mile stones
Cash flow
(only 5% business plans are read beyond executive summary, 10% passes
initial screening, out of this 10% proposal goes for due diligence and
funding)( success ration is 0.05%)
Dont get depressed if your idea is rejected at the time of pitching (keep
exploring apportunitities)
What is customer need and how the product is satisfying that need?
Why your solution is better then the competitors? Or why people will approach for your
product?
Financial Projection Test achievable or not? (Cost as well as revenue) (break even)
Conditional loan
Participating debentures
No interest at specified
Lower Rate of interest when sales and profit generates
High rate of interest at growth stage
Quasi Equity- Is loan without interest or lower rate of interest with
no condition attached to it
Income note
Time of exit from the firms capital is almost never predetermined, but
depends on the development of the company.
IFCI VC Fund
IFCI VENTURE AS MAINLY FOUR FUNDS WHICH ARE OPERATING
TODAY
Recent Development
On 23rd Jan 2015- mint reported that
- Telegana Govt begun constuction of Technology Incubator
for start up in the capital Hydrabad
- Planning to invest in the infrastructure for start up 200
crores
- 300000 sq ft construction with hi tech infrastructure
- also tied up with IIIT-H and Nalsar univercity to IPR and other
training
- Planning to create fund of 600 cores with other VC funds
Revolution has been started- Other state will also launch the
same scheme later on
VC deals 2014
VC deals 2014
Blume Ventures - 19deals
Size of investment is relatively smaller compared to
other fund
The companies it invested last year include
TaxiForSure, VoxPopClothing, Zopper, HashCube, Instamojo,
Railyatri and Covacsis.
Other follow-on investments
Exit in Spunk Media Pvt Ltd sold to San Fransisco-based
mobile payments company Boku
VC deals 2014
Helion Venture Partners 19 deals
Very aggressive in the year 2014
The companies it invested last year include
TaxiForSure, Housing, Yepme, BigBasket, Indiahomes,
Pubmatic and Jivox
In Non Tach Industry
Shubham Housing Finance, ID Fresh Foods and Dentys (A
dental chain ).
Role of Chartered
Accountant
Chartered Accountant can provide their services in following areas
Act as mediator for angel financing function/ VC
1.
Help in coming to the amicable deal for benefit of both the parties
Helps in preparation of
2.
1.
2.
3.
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4.
5.
6.
Business Plan
Cash Flow forcast
Giving financial presentation and explaining revenue model at the time of
pitching the proposal before VC and Engle Investors
Cover Sheet
Executive Summary
Table of Contents
1)
Statement of Purpose
2)
3)
Business Description
4)
Market Analysis
a.
Customers
b.
Competition
c.
Marketing Strategy
6)
Management
7)
Operations
8)
Financial Plan
9)
Appendices
Identity information
The words Business Plan
business name
Company logo
Address
Telephone number
Fax Number
Email Address
Web Address (URL)
Submission date
Purpose
30-second test
Concise explanation
Venture objectives
Market prospects
Financial forecasts
Sources and uses
List of headings
Major
Subsections
Same font!
Industry analysis
Competition
Marketing Strategy
Industry Analysis
Customer Analysis
Individual customer demographics
Competition
Marketing Strategy
Marketing Strategy
What is Cost Post start up and when the funds are required
Factoring way of funding and its cost during working out estimated
financial pojection
ROI working
Supplemental materials
Resumes of management team
Past financials if available
Interim income statement and balance sheet
Copies of potential contracts
Financial Projections
Brochure of the product
Prototype description details
Details about technology with more specification
Schedule of implementation
Letters of reference
Supplemental materials
Resumes of management team
Past financials if available
Interim income statement and balance sheet
Copies of potential contracts
Financial Projections
Brochure of the product
Prototype description details
Details about technology with more specification
Schedule of implementation
Letters of reference
Summary
planning
Term Sheet
Term Sheet
Points to be considered while drafting term sheet
Amount of Investment
Equity shares should classify class of shares if differential voting rights are given
Preference shares
Share warrant
Debenture
Or combination of above
Term Sheet
Investors rights
Term Sheet
Other General Points to be covered
Thank You