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Approaching a VC? Here is a checklist
By Sikta Samantaray   |   Tuesday, 16 March 2010, 20:04 Hrs   |    15 Comments
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Approaching a VC? Here is a checklist


Revenue Model

To make it easier for VCs to understand the financial plan, a company need to do a proper thought out strategy that may also help in company's growth plans. Vakil says that preparing a sound financial plan is very necessary for long run, and also a company needs to keep an eye on the total funding requirement over subsequent rounds till scale up and its impact on investor's ROI.

He also advices companies to analyze its present and future margins in detail, bearing in mind the potential impact of competition. The monetary projection should also include the sale prices or fee charging structures of your product or service.

Marketing Plan

Having everything, but no marketing plan can force any start-up to taste the failure soon. The objective of marketing plan should be to convince the VCs that the market for its product/service can be developed and penetrated. Also, the marketing plan should have all the details including pricing, distribution and promotion strategy for the product or service. All these details must be supported by verifiable data.

Apart from these few thoughts, VCs feel that in India first time entrepreneurs are unclear in their own heads about what their idea is about. In fact, many are even not able to articulate it in an easily understood manner either. Adding to this, these VCs also think that startups should raise the fund at right time. Vakil said, "VC funding taken prematurely can be very expensive capital, and company may end up giving up its ownership to the VC." He also thinks that startups should never think of raising fund if the business is not scalable. It will probably waste time unsuccessfully trying to raise finance. The real danger however is that, incase it succeeds; it does not only lose an opportunity to run a lifestyle business that is personally lucrative but is stuck with an unhappy investor.

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Reader's comments(15)
1: Heres my food of thought,
I have worked for a big VC fund in Midwestern US, funded by some top companies like Morgan Stanley, Wachovia etc.The biggest thing which can turn your idea into a funded idea is an excellent presentation and how you deliver the presentation.
The best idea if not presented well would end up in a dustbin. If you don't have the right skills to give a mind blowing presentation, find someone who can.
Posted by:MSK - 24 Mar, 2010
2: VC financing is good but how much can you trust your VC to
protect your business idea from not getting misused? How to find a genuine VC?
Posted by:Mayank - 21 Mar, 2010
3: When looking at the Indian market and people mentality, for IT ventures, the best idea I could think of is for smaller firms to merge together and work together rather than trying to find big investors. This would bring multiple talents, marketing & business services together with less investments and more profits. This will also help to make use of same employees for 2 or more of the companies involved in the merging process. I could experience this while I am still working with the US Clients here in US.
Posted by:ARun M - 17 Mar, 2010
4: This is an informative article, good for anyone looking for an investor. But how do we find these investors or VC's. I find that most VC's, that are written about, are only interested in IT or software related domains. Are there VC's funding non-IT ventures such as publishing, agri-industry project or food processing.
Posted by:Girish Gopal - 17 Mar, 2010
5: I experianced that investors are very selective, Normaly they don't want to inter in business in starting untill unless U give attractive return with gaurantti.
I have a good Agri business plan and struglling for funding.
J K Nigam
Hyderabad
Mob: 9963849333,jitendraknigam@gmail.com
Posted by:Jitendra Kumar Nigam - 17 Mar, 2010
6:
That's true, Jitendra.
raman Replied to: Jitendra Kumar Nigam - 17 Mar, 2010
7: well do guys dreaming of india starting up companies like US, with lots and lots of startups..hahha...that time is still too far in india...india is just being hyped..reality is different
Posted by:startup - 17 Mar, 2010
8: Indian start-ups have one track-mind, it seems teh way they approach VCs
Posted by:ramya - 16 Mar, 2010
9: Indian startups have still to go long
Posted by:Tamanna - 16 Mar, 2010
10:
can u describe that indian startup have still to go long
javed tyagi Replied to: Tamanna - 16 Mar, 2010
11:
Well, the Indian start-ups lack in most basic field , that is the presentation skill. They neither have the right voice nor a convincing plan to pitch before VCs.
Rajeev Replied to: javed tyagi - 16 Mar, 2010
12:
U r totally correct Rajeev.
Tamanna Replied to: Rajeev - 17 Mar, 2010
13:
I agree that presentation has to be good. But is it the only thing ? What else forms the secret sauce ?
sanjay Replied to: Tamanna - 18 Mar, 2010
14:
Apart from a great presentation, what VCs look for is how innovative and uique you idea is and how well it can start reaping benfits. At the end of the day VCs invest only to make fast bucks. Unless they are damn sure they won't.

For India, I think VCs should also act as business advisors or business partners. Indian ebusiness co.s need good mentors to walk them through the eworld. If this happens then I think ebusinesses in India too will spread.
Abhay Replied to: sanjay - 18 Mar, 2010
15:
we Indians need to go long no good startups are being funded except some ITes set up.
sanjay chaudhary Replied to: Tamanna - 17 Mar, 2010
Beautiful and dress selection, please go to Dresses
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