desi paisa or pardesi capital
TRANSCRIPT
191OCTOBER 19, 2013. Vijay and Shekhar
DESI PAISA OR PARDESI CAPITAL
Please leave your questions as a comment or tweet with tags
#NPC2013 or #DesiVsPardesi
192OCTOBER 19, 2013. Vijay and Shekhar
STRUCTURE OF THIS TALK
HOW TO BUILD COMPANIES THAT HAVE GREAT….
TEAM MARKET BUSINESS MODELEXIT VALUE
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$ 2 0 0 M
Exit Value
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Size of the Market(India Jewelry)
$64B+
Addressable Market(Studded Jewelry)
$8B+
Target Market(Organized Jewelry)
$800M+
TARGET MARKET SIZE?TO GET TO $200M+ EXIT COMPANY
Size of the Market(Transportation)
$15B+
Addressable Market(Taxi booking)
$3B+
Target Market(Top 10 cities)
$300M+
e.g.BlueStone e.g.TaxiForSure
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Margin
Gross Margin (65% for GOOG.Operating Margin (25% for GOOG.
1.5% for AMZN)
100M+ Revenue
e-commerce.Niche tech service providers.
40M+ Revenue
Non-subscription business.Field sales force.Medium margin.
Massive Usage
20%+ of online India.Weekly Interaction.Growing like weed.e.g. WhatsApp
Deep IP/Tech
Few Anchor Customers.Protected IP through Patents.Has global appeal.e.g. HealthCare Device Co..
$20M+ Revenue
Enterprise SaaS.Online/Offline business.Good operating margin.Growing at 30%+.
REVENUES FOR GETTING $200M+ EXIT
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$25M
CAPITAL
3
INVESTORS6 YEARS
$200M+
Exit
TYPICAL COMPANY EXIT SCENARIO
Value Creation
8x returns on invested $
4.7x is the 2012 Average
Equity Distribution
20% to 30% for founders ($60M)
5% to 10% for Angels ($20M)
55% to 75% among 3 investors ($40M)
Time Impact
Revenue: $0M, $1M, $2.5M, $8M, $20M+…
Non-linear growth
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WHAT-IF QUESTIONS
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FUNDABLE TEAMS
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Good inTech
No businessexperience
Ideas fromtheir world
26 Years
Minimal G2Mexperience
YOUNG ENTREPRENEURS
Individualcontributors
PassionateNo productexperience
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WHAT SHOULD YOU DO?YOUNG ENTREPRENEURS
Interact withyour customers.
Crate yourProduct.
LAUNCH
LearnMarketing,
Sales, Product,Hiring.
PAY SELF
Talk toUsers,
Mentors.Investors.
LEARN
See aBig
Opportunity
RAISE $$
1 2 3 4
• Experiment and learn. Iterate faster. Skill building phase.
• Survive. Generate revenues and if possible even “exit”.
• Gain domain experience and deeper insights
1911OCTOBER 19, 2013. Vijay and Shekhar
ExperimentersDecision Makers
Passion &Commitment
Domain Experience
2 Co-Foundersv/s one Founder
Street Credibility
Ability to work together
OUTSTANDING TEAM MEAN WHAT?
Operationalbackground
Deep productexperience
Strong G2Mexperience
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WHAT-IF QUESTIONS
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TARGET MARKETS
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Exit Friendly
Large competing playersExisting players are slow to react
Customer behavior is changingNew players can grow fast
e.g. Enterprise SaaS, AdTech, Payments, Healthcar
e Devices
Effciency Play
Platforms, Tools, Enterprise Appse.g. Atlassian, SalesForce, Marketo
Shifting Money
Online version of offline business.First-mover advantage.
Convenience and Efficiency.e.g. BookMyShow, RedBus
Network based
Narrow functionality.Applicable to large population.e.g. WhatsApp, Instagram
Marketplaces
B2C and B2B marketplaces.Fragmented Suppliers.Non-value added Intermediaries.e.g. CommonFloor, 99Design, oDesk
New markets in creation
Uncovering latent demand.Offline resources are enabled.Technology enabled.e.g. AirBnB, Lyft, Fiver
FUNDABLE MARKETS
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PREFERRED BUSINESS CONSTRUCTSWHAT SCALE COMPANIES WOULD CHOOSE
Licensev/s
Subscription
In-Premv/s
Cloud
Revenue-sidev/s
Cost-side
Revenue flowStartv/sEnd
1 2 3 4
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PREFERRED BUSINESS CONSTRUCTSWHAT SCALE COMPANIES WOULD CHOOSE
Singlev/s
Multi Tenant
Inbound Salesv/s
Outbound Sales
Inside Salesv/s
Field Sales
India v/s
Global
5 6 7 8
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WHAT-IF QUESTIONS
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DEALING WITH INVESTORS
1. Target the right firm. Match your company type to investments firm’s investment thesis.
2. Individuals make decisions. Not a VC firm. Target the right investor.
3. First meeting is the “most important meeting”. Founders should know more about their business, product than the investor. Do your homework.
4. It is a comparison game. There is a “deal pace” and “risk/reward” profile of the deal. The best deal on the table gets “the money”.
5. Make sure you guys are excited about the investor beyond “money”. It is a 7 year commitment, probably very next to “commitment of marriage”.
1919OCTOBER 19, 2013. Vijay and Shekhar
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Q&A
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