Netz Capital Early stage venture capital fund
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IVCJ Conference for
Private Equity for IT & ITES
Early Stage Financing29th April 2009, Taj Lands End, MumbaiAtul KhekadeDirector – Netz Capital
Company Stages
Idea
Business Plan
Team
Working Model
Operations
Exit
Seed/Pre-Early
VC
PE IPOAcquisition
0.5%
$10K - $50k
$2M - $5M
>$5M
Fund StructureIdea
Team Technology Infrastructure Early Promotion
<$5K <$10K <$10K <$5K
•Early Customers
•Self Sustaining Operations - $1M Revenues
•Gearing up for Next Round
•Scalability
•Portability
•Interface
•Operational Efficiency
•Market Size
•Biggest Competitor
<$30K
Fund raising Challenges(In recession time)
• Scalability• Operational Efficiency/Low fixed costs• Revised Exit Strategy/Profit making as first priority• Recession Proof Check• Serves a very basic need at ½ x price• Serves emerging/recession free markets• Long term viable and economic model
• VC/PE Limitations• Scarcity of Capital• Bad M&A and IPO market• Painful Term Sheet, giving away majority control
Additional Evaluation
Criteria
Strategy: Winning or Surviving?
• Highest quality, fair price
• Fixed cash outflow model
• Self funded Growth
• Budget as per market price
• Advertising
• Find Employees
• Sales start after operations
• Fair quality, ½ x price
• Negative cash outflow model
• Partnerships/Franchising
• Bootstrapping / Re-inventing the budget
• Public Relations
• Find/Nurture Entrepreneurs
• Sales first
In tough times
Moving to the next round of Capital
• Is it absolutely necessary?
• A successful company is the one that makes more profits – not the one that raises more capital.
• Thought about raising capital from customers?– Long term commitments– Pre launch sales– Clearer revenue picture of the future.
Raised $6.2M from 125,000 wiki users
Raised $100M as deposits from customers
Tata raised $5 million on nano forms
Seeding the Leader
LEADERProcess
Business Model
Early Customers
Sales Process
Presentation Skills
Media Friendliness
Organized
Role Model
Vision
Consistency
Growth - A reality?
• Recession – Greatest Opportunity to rise
• Opportunity for cheaper alternatives of existing products
Real Estate Automotive Travel Food Energy Entertainment
Cost effective housing
•Second hand cars
•Electric cars
•Car Rentals
•Full service to low frill airlines
•Airlines to trains
Franchising Green Energy sources
•Cheaper theatres
•Movie rentals
Exit Strategy
• Profit Making as soon as possible
• Surviving till the markets recover
– Undervalued M&A
– Undervalued acquisition bids
Valuation
• “It is better to own 10% of a $100 million company than owning 80% of a $5 million company”
• Company’s leader deserves controlling interest
• Valuation Criteria– Revenue– Competitor’s revenue– Early entrant? Or crowded space?– Early customers– Market size
Thank You
• Atul Khekade
• Info @ netzcapital.com
• +91 98203 72810
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