SIDBI

Venture Capital Finance : 

<![CDATA[ Venture Capital Finance Early Stage Funding Ajay Kapur, C.E.O., SIDBI Venture Capital Ltd.]]>

Agenda: 

<![CDATA[ Agenda Stages of Business and VC Investments Investment Process Exit Options ]]>

Slide3: 

<![CDATA[ A Venture and venture capital VC investment at different stages of business Time Revenue Prototype Roll-out Inception Growth Maturity Expansion Early stage financing Seed > Start-up > First stage Later Stage Founders Third stage financing Mezzanine Bridge Financing Exit ]]>

Seed Stage : 

<![CDATA[ Seed Stage Seed Stage Business in concept stage Investment required for Development of product prototype Market and Other research to develop the product Development of business plan VC Investment is very low Angel Funding is more likely ]]>

Early Stage : 

<![CDATA[ Early Stage Early Stage Investment required to convert concept to tangible business Product has a potential market The product/service is undergoing testing Funds used to expand operations Angel investing is more likely]]>

Later Stage : 

<![CDATA[ Later Stage First Stage Existing business Sales show upward trend First level Team in place Looking to go into large scale production, Preferred Stage for investment Second Stage Funds required for Capacity Expansion Working Capital Requirements Entry into new markets]]>

Key Investment Criterian: 

<![CDATA[ Key Investment Criterian Need addressed by disruptive technology Technology backed by defendable IP Business model Valuation/Exits: IRR; 5-10x return Cost of development and time lines Competition]]>

Slide8: 

<![CDATA[ Management Commitment, breadth, experience and future requirements Market Clear need – differentiation - market drivers – growth and market share – channels to market – ability to find and sell to customers – competition Products Product development: time, costs and risks Financials Cashflow – future funding - growth - margins Key Investment Criterian]]>

Investment Process - Notes: 

<![CDATA[ Investment Process - Notes Access to VC’s are best done through “warm” introductions from familiar sources Getting a meeting is hard. Getting a deal done is harder. Total process typically takes 4-6 months from initial contact. Maybe longer. Make sure you have enough cash cushion entering the fundraising process. Investor pool may include Angels, Incubators, Institutional and Strategics Syndication can slow the process but adds more experience to investor group and reduces risk to management. Be careful about auctioning. It’s a double-edged sword. NDA’s are over-rated. Plus, most VC’s will not sign them. You don’t get a second chance to make a first impression. Be over-prepared. Success in each step, earns you the next step. ]]>

Investment Process – Do’s and Dont’s: 

<![CDATA[ Investment Process – Do’s and Dont’s Do Do approach an investor only if you are completely prepared Do share your idea among trusted mentors to get honest feedback Do invest in the right advisors – you will be judged by the company you keep Don’t Don’t allow non-institutional investors to set terms. Try a convertible? Don’t be greedy. The size of the pie is more important than your slice. Don’t underestimate the time, effort, and disruption involved in raising capital.]]>

SIDBI’s VC strategy: 

<![CDATA[ SIDBI’s VC strategy SIDBI General Fund started in 1994 SIDBI’s three tier VC strategy Has supported many state level VC funds Focussed on software/IT and knowledge based industries Assisted 2 Incubators at IIT, Kanpur and BIT, Ranchi]]>

SIDBI Venture Capital Ltd.: 

<![CDATA[ SIDBI Venture Capital Ltd. Wholly Owned Subsidiary of SIDBI Established to carry out business of setting up, advising and managing Venture Capital funds. Professionally managed AMC Currently managing two national level funds, viz. NFSIT & SME Growth Fund]]>

Role of SVCL : 

<![CDATA[ Role of SVCL SMEs require high level of handholding Active management participation by SVCL Nominee directors appointed on all investee cos. Help create systems, provide advise through industry experts Help in second round fund raising]]>

National Venture Fund for Software and IT Industry (NFSIT): 

<![CDATA[ National Venture Fund for Software and IT Industry (NFSIT) A 10 years (close ended) fund with a corpus of Rs.100 crore set up in 1999 Contributed by SIDBI, MCIT (GoI) and IDBI Fund objective: Meet fund requirement of software & IT companies with focus on SMEs Invested in 31 Companies from Software services, products, ITES & Internet sectors Co-investment with International, Private and State level funds]]>

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