Funding doesn’t come just by approaching the people as per our own positive perceptions about our startup; it comes from creating the environment where the ideas can connect with the intellectual minds. So, going for the investor to get the funding will not make us succeed until and unless we are focusing on the long-term goal with the people who we work with.

Steve Job once said, “When you’re in a startup, the first ten people will determine whether the company succeeds or not.”

Whether it’s funding, scaling or any other crucial strategy which is required to build a strong and successful startup, Headstart is always ahead and tries to bring a memorable learning concept since its inception which is a monthly excerpt in the form of Startup Saturday.

This time at Startup Saturday Delhi, June 2018 edition, we organized an event on the topic “All About Startup Funding” which has come out to be an immense success at the American Centre, Cp.

The theme for the June 2018 edition of Startup Saturday Delhi was ‘All About Startup Funding’

One of the best venture capitalists visited as a speaker and panellist who tried to deliver their insights through communicative modus operandi about fundraising strategies and skills required by a startup to prove its worth of achieving the desired level.

The session started with Mr Prajakt Raut, Founder of Applying, an online investor pitch deck and assessment report platform for startups, and founding partner of The Growth Labs – a platform that helps mid-sized companies access advice from super-senior industry professionals, Business Mentor, Ex-Head of Operations of Indian Angel Network and Asia Director TiE. This was followed by a fireside chat with Mr Tarun Dua, founder of E2E Networks Limited. Further, a lightning pitch was also introduced to investors by Sourabh Moody, Founder of RealBox Data Analytics.

Prajakt stressed the importance of articulation and well-prepared attitude of an Entrepreneur while facing the investors.

According to him, entrepreneurs need to invest quality time and effort in understanding how the process of fundraising works for a startup. It’s not about the high-quality teams with brilliant concepts/products/services who come for pitch presentations to investors without understanding how the business of the investor works and therefore often end up presenting stuff that does not help investors make an investment decision. The first thing to recognize is the different ‘types’ of investors – e.g. family & friends, angel investors, seed stage funds, early-stage VCs, VCs, and PEs – participate in different stages of the venture’s journey. Hence, it is critical to determine which kind of investor is most relevant at a particular stage of the venture.

He advised that it is best to raise money from external investors as late as possible. The ideal time to go to investors is when a founder has a prototype or he has tested the concept in the market. While angel investors and seed funds do invest in companies at the concept stage, it is unlikely to happen if a founder has not even tested the concept with customers/users or have some evidence that the concept is likely to work in the marketplace.

He also recommended to overestimate costs and underestimate revenues in the excel sheets and try to work out the worst case scenarios and build the foundation to deal with them too. It is important to analyze your response and where the plan is going to be in different scenarios. Visualization of different scenarios could play a key role in understanding the growth structure of a business.

Later the panellist including Mrs Chandrima Sinha, Vice President at Invest India executed it as a moderator with Mr Prajakt Raut, Mr Ridhish Talwar, Head-Programs at AdvantEdge VC, Mr Raghav Rungta, Investment Associate at Asha Impact. All have joined together their rich dexterity and discussed the parameters which investors use to decide on an investment along with other issues?

Most investor’s decisions are based on the following:

  •    Is the potential large?
  •    Does the concept/product/service have a reasonable chance to be a dominant brand in the category?
  •    Quality of the team.
  •    Revenue streams and business model.
  •    Is the competitive environment conducive?
  •    Are the go-to-market plans practical and well-thought?
  •    Are the valuations within reasonable limits?
  •    Exit potential.

Overall, investors look for ’assets’ that can multiply their investment – a great business case does not necessarily mean a great investment case, and vice-versa. Also, a great product is not the same thing as a great business. Everybody emphasized on the quality team which is not important to have it from tops brands of B-Schools rather they must possess that zeal and quality to make it a boom in the market. Investors value it more than the idea or the size of the market or the technology or the business case. With everything else being right – product, potential, plan, profitability – if the team is not strong, investors will hesitate to invest in a venture.

Contributed by Heena Gupta

Volunteer, Headstart Delhi