netz capital early stage venture capital fund

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