… If you are a startup, the chances are you would have met a lot of VCs for funding. I am penning down few random pointers what I happened to learn.

  • So, your company is losing people? Attrition? If a minimum 1/3rd of the team leave. 2/3rd run the ship to the ground. #startups
  • Co-founder splits are the #1 reasons why many businesses have failed. Don’t expect to pay a co-founder like a friend. If you need an exit. You need follow-on funding.
  • Customer Acquisition: Getting them on-board is hard. Most biggest competitors are already burning as I write. Approx 1700 INR for an Andriod App install. Any startups need to burn a lot. What matters is repeat customers!
  • Company Act dictates — LLPs, Properitorship firms can’t get funded. If you are a OPC (One Person Company), #1 the chances of getting funded are bleak, #2 its pointless to get VC money as well.
  • If there is an Anti-Dilution Clause — Say No! #Equity
  • It is way better to work as a 3 member team. Governance, Operations, Finance. The key here is delegation. And, do it like a team.
  • Figure out how you’re shaping yourselves. Are you a service provider or product company? Why does this matter? Valuation. Usually, during the times you approcah for a funding, product companies are valued at 10x. And, service providers at 1x.
  • Usually VCs don’t like portfolio managers. So, work on one product and pitch that one great product. Many ESS get easy funding. But their Angels get a good bite on their equity. AP can provide, 10–15L for an equity of 10%.
  • An average VC expects 5x-10x returns on the profits. His pool of money is 40% from HNIs. An average PE expects 2x-3x returns on his profits. 95% of this funds are soverign.
  • VCs do not do DIVIDENDS. Most today opt for debt funds. First get funding from friends and family. Next try banks. Next VC/PE. And, “debt funds” come here, exactly between this stage.
  • Thinking about loans? There are very few schemes. AIM — 5 to 25L — In my best guess, probably they offer space, and money. For do-good society welfare startups — SANKALP, UNLTD. DIT/DISR, MIT, TDB — Large social loans — Upto 25L — Have 250 crores — 2 to 3% interest rates.
  • TePP: Govt grants to product startups, which show products can be physically displayed. 1st phase — 25L for prototyping. 40L for commercializing. 1 crores for Marketing.
  • Highly recommend to setup an Advisory Board. Ask why are you the person? Ask is there are better way we can scale?
  • Most of the Angels like proximity. Say if a LP has $120M. He may have 12–13 soverign funds. He deputes each of them to VCs.
  • If you’re not in the first page of Google, you are busted. You need ADwords. There is no point we can sustain a startup without Marketing. A few years back, you would need $125 per customer on an average for SaaS. Now, it takes $700.
  • VC is an alternate customer acquisition channel. What a VC expects? Who is the biggest offline player? How well are you disrupting him?
  • Got VC money? Now what? You have 18 months time to show 10x returns. And, if you are not achieving that in 12 months, you’re really unsustainable.

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