Types of Funding for Startups and various risk involved with that. A workout session by Mohsin Khan, General Partner, Utthistha during NPC Hyd, 3rd Apr.
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By: Mr. Mohsin KhanUtthishta Yekum Fund
Funding for startups
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Arise Advance Ascend
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Stages of startup fundingRisks associated with startupsInvestor
lens/scorecardCase studyConclusion/takeaways
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Transcend Excel Glorify
Agenda
Time
Revenues of Company
First check investors
Venture capitalists
Funding stages of a Startup
Angel investors
Spur Stimulate Intensify
Microsoft Engineering Excellence
Microsoft Confidential
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The top three risks that startups face are as follows:Team /
Founders RiskTechnology / Technical RiskMarket / Customer Risk
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Emerge Swell Move Up
Risks associated with Startups
Chemistry between team membersHave they worked together before
or notPassion to work for the long haulComplementary skills. Eg.
One techie, one sales, etc.. Or same skills all techies..
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Aggrandize Glorify Soar High
Team / Founders Risk
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Ascend Outshine Go Places
Technology Risk
Technology on which the start-up is based will it work or
failDifferences in tech resources needed for different startups.
Eg. Software can be tested using just open source / free platforms.
Any other technologies require resources to create first
prototype
The most important or critical risks for a startup.Will
customers adopt or use the product / service or notWill customers
pay for the product / service or notIn the end if they are no
paying customers there is no startup
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Stimulate Incite Stir Up
Market / Customer Risk
TeamMarket sizeCustomer segmentationCompetitive
positioningCustomer acquisition processScalability(Technology
based)Internal systems and processesDifferentiator(Secret
sauce)Budget managementRevenue & ProfitExit & Return
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Arise Prevail Transcend
Investors score card
Case Study
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Spur Stimulate Intensify
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How to use the Score card?
Think like investorsAudience is divided into three groups- First
check, Angels, VCs.Read the case study and use parameters of
scorecard to score (1 5) the startup in the case studyJustify your
score. Why 1 (low) - 5 (high) ? Use the questions and pointers to
gain deeper details about the startup against each parameter
EvaluationCriteria
Answerthe questions?
Team
Is the team aligned with the business plan?Teamexperience in the
sector.
Market Size
How big is the market size and how many customers do you
have?How large is the focused customer segment market?
Customer segmentation
Where are the customers? Identify the segments?What is the
loyaltyor retention level?
Competitive positioning
How are they placed on the competitive map?
Customer acquisition process
Time and money taken to acquire a customer?Cost of customer
acquisition (COCA)vslife time value (LTV)
Scalability(Technology based)
Scalability of your business based on technology and not human
resources.
Internalsystems & processes
Is technology used to scalesystems with growth?How is the
customer feedback loop closed?
Differentiator (Secret sauce)
USP, key differentiators, Uniqueness of the technology
Budgetmanagement
Burnrate and survival time. Deviations and dependencies with the
current budget.
Revenue & Profit
Average price, Average customer, Ticket size, Monthly and annual
revenues, Break-even time, Cost margins, EBITDA
Exit & Return
Potential ROI & Exit Strategy
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Investor Score card
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Outshine Outstrip Outperform
Key Takeaways
If you want to raise money learn to Think like investorsStartups
need to prove traction and product prototype. This requires you to
show that there are reasonable number of people willing to pay for
and use your product.Then prove to yourself if the existing model
is scalable through technology and not people, if not rework on
it.After scalability, test your sustainability by evaluating
competition and internal systems and processes.
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Key Takeaways (Cotnd)
To sustain note your differentiators, customer profile and
acquisition aspects.Customer acquisition metrics (COCA) vs Life
time value (LTV). LTV > COCA (preferably 3 times)Then do the
number crunching for budget and revenue management.Circle back to
the stage of your company and value it with the evolution and
changes.We repeat, think like an investor because you are truly
investing your time and effort into it. You are a shareholder of
your idea end of the day.
Evolve Emerge Enlarge
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Thank You
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Arise Advance Ascend
