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The second block is scalable business model. VCs look for scalable business models. What do we mean by that? We need to look at the term scalability from the lens of capital. Suppose to make revenue of 50 lakhs, you had to invest 10 lakhs in the capital. As time passes, you should be able to make a revenue of 1 crore for the same capital investment. Let's look at an example. Consider the business of shopping malls. To create a mall, you will have to lease land, physically construct the mall, and attract tenants. All of this requires, say, 10 crores of investment. After a couple of years, the mall starts making an annual revenue of 100 crores. As the owner of the mall business, if you have to double your revenue to 200 crores, what will you have to do? Simple. You will need to go through the entire cycle of leasing land, constructing infrastructure, etc. Which will take you to the next step. You will require another 10 crores of capital infusion. For every 100 crores of incremental revenue, you will require a capital infusion of 10 crores. As per VCs, this traditional malls business is not a scalable business. Now consider e-commerce. By building an online platform and forming partnerships with brands, logistic service providers, and warehouses, you can service the entire country, or rather the entire world. E-commerce was a darling of VCs. Because of the scalability angle.


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The next building block is value proposition.


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The next building block is the proof-of-concept block. Ideas don't fetch you funding. Execution does. Ideas translate into products. Products translate into businesses with revenue. Investors want to see if your product has found customer validation and traction. Investors do not invest on the basis of an idea or a paper plan. Without proof-of-concept, the probability of funding is very, very low.


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We will now look at the next block, the monetization model.


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Moving on to the next building block, which is the market size. There are so many pitch decks that claim a 5 billion or a 10 billion market size. But where do these figures come from? You obviously need to justify these figures.


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The logic for calculation of market size for this business is very very interesting.


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Can the company take 10% of the market share? If it does, it will be a 720 crore top-line company.


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Pause the video here, think of the logic for calculating market size for your business and put the logic along with the numbers in the block.


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Now, the last block, exit. Why do investors invest in a business? Returns. And returns can be a reality only if there is a profitable exit. During your pitch, be prepared for this question from investors. How will you give us an exit? Your first investor can get an exit in subsequent rounds of funding. Maybe your business model can become a great fitment for a large strategic player who can eventually acquire you. Of course, you can reach a massive scale and take your company public. From an exit perspective, while things might not turn out exactly the way you have planned, it is still important to be prepared to answer this question. How will you give us an exit? Pause the video here and fill in your exit block. The funding matrix is now complete.


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all your plans should be finally converted into revenue that you will make in the coming years and the costs that you will incur. Financial modeling is the process of converting your future plans into financial numbers like revenue and cost.


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During this session, you will be able to create a quick model that plots your revenue, costs, and funding amount. Let's start by forecasting the revenue.


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Open the financial model template and study how we have calculated the key matrix.


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Now, once you have filled in the historical data, use that as a base and show growth in traffic, percentage conversion and so on.


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The key to projections is identifying the growth levers. Example, in the template, month-on-month percentage growth in traffic, customer conversion percentage, repeat customer percentage, and average ticket size determine the revenue number. Grow these percentages based on historical data and in fact show steady improvement. Once you input these numbers, you will arrive at the monthly revenue number. Create at least 18-month projections. Pause the video here, study the revenue sheet, and create your financial model template. The outcome will be your month-on-month revenue number.


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There are three major cost heads, marketing, hiring, and product development.


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This number, especially in new-age tech business, is a very important metric. Calculate CAC for historical period, say last 3-6 months at least. Now use this data to predict the CAC. Your CAC is dependent on multiple factors. Initially, when you start, your CAC is lower, but as you start penetrating deeper, the CAC increases. It also changes based on what your competitors are spending on marketing.


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If you re-look at the revenue sheet, we have already calculated the total number of customers that will convert on our website. We simply pull that number into the marketing sheet and multiply it with CAC to predict the total marketing spends. You can then assume other costs like PR, basis the quotes that you have received from vendors for the activities that you plan to undertake post-funding.


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If you notice in the template, we have divided key resources required under key function areas. We will start with the current team members and ramp up the requirement. Example, we currently don't have an SEO expert in our marketing team, but we intend to onboard one immediately post funding. We also intend to increase the number of creative associates and content writers in the month three of our projections period. Step three is to assume realistic salaries for each function.


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Finally, all you have to do is to multiply the number of people in each functional area with the monthly salary to get the total salary cost at the firm level. The template takes care of this step automatically.


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Now let's move on to technology cost. Tech cost is basically the cost incurred for servers, transactional emails, SMSs, etc. They are either fixed or variable, based on the traffic or customers or instances. In the template, depending on the nature, fixed or variable, you can plot these costs for the next 18 months. Take quotes from service providers and plug in the numbers. Finally, to run a venture, there are multiple costs such as rents, electricity, Wi-Fi, laptop, travel, etc.


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We have finished mapping all the major costs. To summarize the logic for forecasting expenses, it includes identifying key expense areas, analyzing the existing costs, and using that as a base to ramp up the cost in the coming months.


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If you are using the template provided by us, you don't need to do anything specific. P&L will get populated automatically. Currently, if you see, your operating profit or your EBITDA is in red. Your costs are higher than your revenue. This is also termed as the monthly burn number. The reason for a burn is in your growth phase, you are front-loading your marketing, manpower and tech expenses. The impact of this will not be seen immediately on the profitability but in the later years. At least that's the assumption. You are burning not because your business is not doing well but because you are growing at a very fast pace. So your funding requirement is nothing but the sum of your negative monthly EBITDA or your monthly burn for the next 12 to 18 months. This is the amount of capital you need. To fuel your expansion plans. So to summarize, revenue minus all your costs will give us the burn amount and the sum of this burn for 18 months will give us the funding requirement. This is how you build your basic financial model. You can now use the template and prepare one for your own business. Once you are done with your first cut business model, you can share it with us and we will be happy to provide you with a template. The samples that you create will be shared by your own business owners depending on an object and the numbers of effort you put into it. Also Leave us a comment below which item you want posted on this video. So the most important thing in your ticketing business is that your business is successful. At least you also have an abundance of market value. You are making profits by using all the data available and you are also making money with an average market value as reward. You should always steadily trap others to close your business or contact a company that would offer something from your own business. Though you may be structured if not one bigger part of your business wants to see this product. Anyway, keep an eye on your business. Thanks for watching the video. Keep a close eye on your financial Johnson and Johnson Syrianvert global hedge fund stocks thatnak the rar vauboy Dro PRO resume strongThen online share'm


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We will now explain to you the transaction-comparable method to find your company's valuation. In this method, we estimate the valuation by analyzing valuations of funded companies operating in the same space or having similar business models.


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Consider this company Terraman. It is a D2C company selling men's grooming products such as shaving foam, beard wax, face wash, body wash, etc. This company was founded a year ago by Rohan and John, both coming from an FMCG background.


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Lion Capital has completed evaluating TerraMan and is keen on investing in the company.


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Now, Lion Capital starts analyzing this deal. If the founders are willing to give a 10% stake for a 3 crore investment, it means that the 100% worth of the company or the valuation is 30 crores. Lion Capital has to now verify whether 30 crore is the right valuation for Terraman. To do this, they follow six simple steps of the transaction comparable method.


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If Terraman, brands such as Beardo, Bombay Shaving Company, Ustra are perfect comparables.


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The objective is to find the following details for the comparable company. Investor name, date of funding, funding amount and stake bought by the investors.


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The outcome of step 2 is getting the valuation figure of the comparable company.


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Step 3 is to find the next year revenue of the comparable companies. So, what do we mean by the next year revenue? If the company received funding in 2020, the revenue of the company in 2021 is the next year revenue. For example, the Mann company raised funds in 2017. Their 2018 revenue or the next year revenue is 12.5 crores. You will again have to revisit ROC or databases mentioned earlier to get this value.


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In the men's grooming segment, the average revenue multiple comes out to 2x. What does this 2x indicate? It tells us that in men's grooming segment, valuations typically are 2 times that of the next year revenue.


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Let's take a look at the formula of revenue multiple. As we have seen, revenue multiple is calculated by dividing the valuation by the next year revenue. We've already found the average revenue multiple which is 2x. The founders are projecting Terraman's next year revenue to be 10 crores. Let's plug these figures into the revenue multiple formulae. As you see, the valuation can now be found by simply multiplying 2x with 10 crores. The valuation of Terraman is hence estimated at 20 crores. This is also termed as the post-money valuation of the company.


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100% worth of the company is 20 crores. Then for a 3 crore investment, they should get a 15% stake in the company. Here, there is a disconnect between the founder's comfort and the investor's expectation. So at what valuation will this deal happen? At 30 crore, like the founders wanted? Or at 20 crore, that Lion Capital has estimated bases the market data? Nobody can tell this. This is where founders' reasoning and negotiation skills play a critical role in closing the deal. As entrepreneurs, you should be prepared to justify your valuation ask. The best way to do it is to be ready with a transaction-comparable analysis for your business.


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Since no investment has happened so far in the company, the price per share is equal to the face value of the share, which is 10 rupees. This tells us that the number of shares issued to Rohan and John is nothing but dividing share capital of 1 lakh rupees by the face value of shares, which is 10 rupees, and this comes out to 10,000 shares.


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Let's take a look at the cap table that represents this shareholding structure.


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The value of shareholding for both Rohan and John is 50,000, which is nothing but 5,000 shares multiplied by 10 rupees, which is the price per share.


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This cap table represents the company's shareholding before funding. Hence, this is called the pre-money cap table.


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Rohan and John raise 3 crores from Lion Capital. Against 3 crore investment, Lion Capital gets a 15% stake in the company. Here are the things that will now change in the cap table. Stake across all previous shareholders. Total number of shares. Price per share.


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Remember, we previously noted that the sum of stakes across all shareholders is always 100%. This can be used to verify the dilution calculation we just saw. If we add stakes of Rohan, John and all investors, now we get 42.5 plus 42.5 plus 15 which is 100%. This shows that our calculation is correct.


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Before investment, Rohan owned a 50% stake and 5,000 shares in the company. After investment, this has changed. John owns a 50% stake and 5,000 shares in the company.


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This gives Lion Capital 1,765 shares. These are the number of shares that need to be created for the investment of Lion Capital.


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Plugging the values in the formula, we find the new price per share to be 20 crores divided by 11,765, which is approximately 17,000 rupees.


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Also, note that now the value or the price of the total number of shares in the company is 20 crores, which is the company's valuation.


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Hi, welcome to Fund Enable's course on investment deal structuring. In the last course, we learned how to find valuation using the transaction comparable method. Now imagine you propose a valuation number, but your investor do not agree to it. Then what should you do? Do you walk away from the deal? Well, if there is money on the table, you should try your best to arrive at a common ground. This is where certain innovative structures and instruments can come to your rescue. In this course, we will study these structures which play a very vital role in closing a deal faster. By the use of these structures, the determination of valuation happens not today, but at some point in the near future based on an event such as future revenue or next round of funding. Let's begin. In this course, we have studied Ccd and Convertible Notes in depth We would like to point out that the best way to close a transaction with the investor is to agree upon a valuation and percentage shareholding upfront unjustly. Opt for the Ccd or the convertible method only when there is a disconnect between you and your investor on the valuation number. Go for the Ccd when you are confident about Solving the万时数占卦으占卦书卒卢占卦书占占卦占卟占卦卦占占占占占卦占卦占卦占占占占假占� carte кар程agnize Volkswagen,ro Som都有 ume when you are confident about making revenue in the coming year. This is because the valuation in CCD is dependent on the actual revenue you make in the next year. If you underperform on the revenue front, you will end up giving more stake to the investor. Convertible notes are the way to go when you are confident about raising the next round of capital in the next 18-12 months.


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Here are 11 standard terms, rights and clauses included in a standard venture capital or angel investment term sheet. Let us understand them one by one.


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First set of clauses are related to the valuation and deal structure. In this clause, we clearly define the investment amount and the percentage stake to be offered to the investor and what structure is used. It is a CCPS or is it a CCD or convertible node structure? Both these concepts are covered in detail in our course on understanding valuations and deal structuring.


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Exit clause. The next clause which is possibly the most important from the investor's perspective is exit clause. Why do investors invest in a business? Simple no-brainer answer to this is for a profitable return and that will happen only if an investor is able to exit.


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Now, what happens if the founders cannot provide an exit to the investor? The investor will now go out in the market and start looking for a potential buyer. The investor comes across a buyer who's willing to buy 51% stake in the business. But the investor holds only a 10% stake in the company. In this situation, the investor can drag the founder along with him to sell the founder's 41% so that they can create a block of 51% to be sold to the interested buyer. This clause is known as the drag-along clause. While this clause will always be a part of the term sheet for a sizable investor, you can negotiate on a fall-away threshold for drag.


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What we studied is the waterfall model of exit. If one exit option does not work, the other option is explored and so on. At the end, if nothing works, the investors technically have to write off their investments. Always remember, as a founder, you should be clear about one thing. Is there any clause that is forcing you to provide an exit to the investor? By using your personal funds, then you should put your foot down because you don't want to take any personal liability. Ring fence your personal assets. This should be your topmost priority and this is much more important than valuation, the funding amount that you are looking to raise, etc.


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So let's say an angel investor has a 10% stake in the company. This company raises a series A round of 10 crores. Now this angel investor has the right to participate in this series A round and subscribe to shares worth 1 crore. So if an investor is holding 10% stake in the company and goes for the next round of funding of 10 crores, then the existing investor holding a 10% stake has the right to participate in the round and subscribe to shares worth 1 crore. Of course, this is not an obligation on the investor but just a right that the investor can exercise. This right has no downside impact on the company or the founder and hence no negotiation is required on preemptive right.


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The whole objective of this clause is to protect the capital. The liquidation event does not only include winding up or bankruptcy, but also includes events such as acquisitions. So both bad and good events are a part of the definition of liquidity event.


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The second part includes pro-rata participation in the remaining liquidation proceeds. Let us understand this clause with the help of an illustration.


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Investor will first take out 1x of the investment amount, which is 5 crores. Now, the remaining proceeds are 50 crores minus 5 crores, which is 45 crores. From this 45 crores, investor will take a pro-rata share, which is 30%. So, 30% of 45 crores is 13.5 crores. The total amount that the investor will take will be 5 crores plus 13.5 crores, which is 18.5 crores. The founder, on the other hand, will take the remaining amount, which is 50 crores minus 18.5 crores. Founder's share will be 31.5 crores. This is how liquidation preference clause works.


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Rofer is a very simple clause that suggests if the founder wants to sell his personal shareholding, then he should first come to the investor and offer it. Only if the investor refuses, the founder can go out and find a buyer. Now, in case the founder finds a buyer for his shares, the investor tags along, which means for every one share that the founder is selling, an investor's one share has to be also sold. Tag along, right, is to ensure that the founders don't sell out, leaving behind the investors in the company with new shareholding. However, what if the founders have to sell shares due to some emergency or to capture some value by liquidating a part of their stock? In this case, always remember to carve out a small shareholding, say 5%, on which the tag along clause will not kick in.


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Board Seat and Reserved Matter Clause Let us now talk a bit about board composition. Investors typically take a board seat post-investment. Company is governed by the board and the key decisions on the way forward are taken by the board. Board decisions are based on majority. To have a control over board decisions that are material to investors, reserved matter clause becomes an integral part of the term sheet. This clause gives the investor director a veto over certain defined decisions which means when it comes to certain decisions, investor approval is a must.


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Even in this case, you can decide a fall-away threshold. So, as the shareholding falls below a certain minimum threshold, the investor does not get veto right or there is a smaller list of reserved matters.


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Post signing the term sheet, the exclusivity clause kicks in. This is in good faith. As per this clause, the investor expects the founder to stop all conversations with all other investors and work on closing this particular round. Negotiations with investors on various clauses can go on and on. To work on tight timelines towards closure, the term sheet is typically valid for 30 days. So, all the negotiations should happen within the 30-day time frame. Also, once the term sheet is signed, the founders and the investor agree to close the round within 90 days. All these clauses that we studied are negotiated and finalized and then the term sheet is signed by both parties. However, as stated earlier, signing the term sheet does not mean that the deal is done. The term sheet gets expanded into a legally binding SHA drafted by the lawyers. The deal is done only when the SHA gets signed.


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After signing the term sheet and before executing the shareholder's agreement, there is a crucial step and this step is a tricky one. I'm not trying to scare you here. I'm just saying this is a step which can make or break your deal. You need to be prepared to clear this hurdle called due diligence. In this session, we are going to focus on how to steer through the due diligence process. We will start by understanding what exactly is due diligence. We will then go through details of what do investors look for during DD. Finally, we will go through the step-by-step process to prepare for due diligence. Let's get started.


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All of it actually depends on how well the company is prepared for the due diligence exercise. The output of DD is a list of red flags. In case where there is a fraud in the company or there is a potential of a huge liability arising, then the investor calls off the transaction. In case of non-critical findings, a list of conditions are included in the shareholder's agreement that the company must fulfill.


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Let's start by understanding what exactly is due diligence and where there is a need for doing due diligence.


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There are several rules, regulations and filings related to the Ministry of Corporate Affairs that a private limited company has to comply with. All such relevant compliances or related filings are checked. On the finance front, your historical financials, analysis of revenue streams, costs, receivables, payables is done. Also, relevant payments and filings related to direct and indirect taxes are checked minutely. On the HR front, the list of key employees, their salaries, bonuses, ESOP promises and letters, all of this is thoroughly analyzed.


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In the DD exercise, employee contracts are checked. If you don't have any contract, then the DD agency will suggest you get it drafted and executed. Every business has some intellectual property. For tech business, it is the code. For product company, it is the design. For pharma, it is the formulation.


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A simple example of this is when a founder buys a domain name for the business. Typically, it is bought from the platform such as godaddy.com by swiping his or her own credit card. Now the URL is technically bought by the founder and hence the founder is the owner of the company URL. The company URL has to be owned by the company and not the founder. We've briefly gone through what DD is all about and what kind of information is gathered during the process. Now let's look at the most important question. How do we prepare for DD exercise? We have provided a detailed DD checklist so that you can exactly know what information is expected from you during the process. This is like appearing for prelims before going for your final exams. We will go through three simple steps for our DD preparation. Step 1. Step 1 is to create a deal room. Use Dropbox or Google Drive to create folder structure as per the DD checklist. In the checklist, the first point is incorporation certificate. So create folder number 1.


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It is okay if you don't have a particular item. Don't hide it from the investor. They will eventually find it out. The key in any relationship is transparency, and the investor-founder relationship is no different. Remember, most entrepreneurs take the DD process lightly. The savvy ones who have raised multiple rounds mark this as the most important step in the entire fundraising process. This is make or break. So you have two options. One, wait for the term sheet signing stage. As soon as it is done, you will be handed over the first DD checklist. Get overwhelmed, start running around, and delay the entire process. Or, take the DD checklist and start today. The idea is to be DD ready even before going to the investors.


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Hi, welcome to FundEnable's course on creating a pitch deck. Pitch decks have become synonymous with fundraising. After getting that sought-after meeting with a prospective investor, your pitch defines if you get the next meeting or get shown to the door.


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Every pitch deck should include the problem, target market, solution, competition and so on. The trick is to weave these elements into a compelling narrative rather than just a sequence of slides giving loads of information. Through this course, we are going to share with you our recipe of creating an impactful pitch deck. So let us begin.


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Last but not the least, if you are pitching for the first time, make sure you prepare a slide-wise script. Most entrepreneurs focus on just creating or designing slides and not so much on what to speak along with the slides. This is why many entrepreneurs fail to create an impression. We hope that we have simplified the process of creating pitch decks for you.


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Hi, welcome to Fund Enable's course on Financing Pathways. The greatest hurdle in raising capital is actually getting an opportunity to meet the right set of investors. Where does one find these investors? Do you reach out to them on LinkedIn? Do you shoot cold emails or apply to widely publicized startup pitching events?


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We're sure that by now, you've identified the stage of your business and the amount of funding that you need to raise. For simplifying the process of finding investors, refer to Fund Enable Investor Matrix. With this tool, you will be able to identify active investors suitable for your sector and stage. You can visit www.fundenable.com and submit your pitch decks for further support on Investor Connect. Looking forward to seeing you in the next course. Bye.


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most of you might be looking at raising your first round of capital and exit may not even be on your immediate horizon. But exit is the logical conclusion of the capital raising journey, both for you and your investor. This is where the value gets realized. Until then, valuation is just a number on the paper. Even before you enter the capital raising arena, ask this question to yourself. How will I give an exit to my investors?


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Squareoff, Ricoh are some of the most successful crowdfunding startups in India. These startups have raised upwards of 50 lakh equity-free crowdfunding. Interesting, right? We will explain how these startups managed this feat in this course. We will explain how crowdfunding works and how to set up a crowdfunding campaign step by step. Let's get started.


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The next best advantage of crowdfunding is that it paves the way for angel and venture capital investments. The success of the crowdfunding campaign confirms the market, customer demand, and establishes the fundability of the business.


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Even Square Off raised 11.5 crore rupees from K-Start Capital and India Quotient.


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Now that you understand the nitty-gritty of crowdfunding, you can go ahead and evaluate this new option to raise money for your business. Wishing you all the best. Thank you.


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Hi there. Welcome to Fund Enable's course on Cap Tables. In our previous course, we have looked at how to prepare pitch decks and financial models. We have also seen how to identify investors and how to reach out to them. Now it is time to deep dive into the math of actually closing a deal with your investors. In this course, we will start by explaining how dilution works and how shares are issued to investors upon investments. We will explain this through the means of cap tables. Simply put, cap tables tell us who owns how much of a company at any given point in time. Here is how cap table looks. As you can see, a cap table tells us details such as who owns how much of a company at any given point in time. Who are the shareholders in the company? How much stake they own? And how many shares are issued to them? And what is the value of their shareholding? Without further ado, let's get started on how to build cap tables and why they are important in the process of funding.


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Cap tables are critical in the funding process. They capture the changes in the company's shareholding before and after investments. In fact, cap tables are also included in the term sheet and the shareholders' agreements.


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Hi, welcome to Fund Enable's course on building a financial model.


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Through this course, we will explain how to project your revenue and cost, basis assumptions and historical data, and finally, come up with your funding requirement. And don't worry, if you're not well-versed with finance, we have simplified this process and will help you from scratch. We recommend that you use FundEnable's financial model template and build it step-by-step with our instructions. In the next 40 minutes, you will be ready with your first cut financial model for your business. So let's get cracking.


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Now that your pitch deck and financial model are ready and you know how much to raise, it's time to approach the investors. Where do you find these investors and how do you approach them? We will answer these questions in our upcoming course on Financing Pathways.


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Hold on. Term sheet is not legally binding. Once the term sheet is finalized and signed, lawyers convert it into a legally binding contract called the Shareholders Agreement or the SHA. Now, how does one make an SHA legally binding? Simple. By paying stamp duty and registering the agreement. The investment money is transferred into the company's bank account only after the SHA is signed by the investors and the founders.


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Let's revisit Terraman's valuation.


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This is to say that Terraman raised 3 crores in debt. This debt will have zero interest and will get converted into equity at the end of one year.


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On day, when the investment happens, the founders and Lion Capital agree on three things. The investment amount, the instrument and the revenue multiple. After one year, we see that Terraman makes 10 crore in revenue. At this point, the 3 crore debt will get converted into equity at a 20 crore valuation. This means that the equity stake that Lion Capital gets is 3 crore divided by 20 crore, which is 15%.


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To protect both the investor's and the founder's interest, we use a floor and a cap structure. The cap ensures that the founder doesn't end up losing half of their company due to poor performance, while the floor ensures a certain minimum stake that the investors are entitled to, regardless of how well the company performs.


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Here is a table on your screen that tells us the stake that Lion Capital will get for different revenue that TerraMan makes. We recommend that you pause the video and study this table.


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In summary, using convertible node structure, you determine valuation of your first funding round bases the valuation in the second round.


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Globally, there were over 6 million crowdfunding campaigns in 2020. This number is expected to grow to over 12 million by 2023. In India, the most prominent crowdfunding platforms are Indiegogo, Kickstarter, Keto, Catapult, Fundable, Wishberry and Fuel Dream.


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There is a notable significance associated with the word project. For raising money from angels or VCs, one needs to incorporate a private limited company. In crowdfunding, an entrepreneur can raise money for an idea without having incorporated a company beforehand.


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Then comes funding level. Funding level denotes if a project has been successful in achieving its goal. There are three funding levels. Unsuccessful when project raises money less than their goal. Successful when project raises money equal to their goal and overfunded when project raises money greater than their goal. Last but not the least, we have backers. Backers are the people who invest in a crowdfunding project. Let's now deep dive into crowdfunding campaigns.


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Donation crowdfunding is charity. The backers become patrons of the project. High social media impact opt for this crowdfunding.


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A study on Kickstarter suggests that 10 Facebook friends gives a 9% chance of success. 100 Facebook friends gives a 20% chance of success. 1000 Facebook friends would mean a 40% chance of success.


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Here's a peek into Square Off's Facebook page. It boasts over 7,000 followers.


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Hello, welcome to Fund Enable's course on incubator support for startups. As an early stage entrepreneur, you're probably looking for office space, people for product development, mentors for guidance, and of course, funding. What if we tell you that there are over 500 incubators that provide you with all this and more? You heard it right. In this course, we will explain how a founder can benefit from incubation support. We will also help you identify the right incubator and guide you through the incubation application process.


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We've just seen how incubators can support early-stage startups. As an entrepreneur, it is an absolute no-brainer to avail of incubation support.


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leveraging incubators. So let's now understand how exactly can startup founders leverage support from incubators and how do we get access to the incubation ecosystem.


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Incubators supported by AIM are called Atal Incubation Centers or AICs and the ones set up under the umbrella of DST are called as Technology Business Incubators or TBIs. Both AICs and TBIs are mainly situated inside large universities or technology institutions.


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As a part of the incubator tool, we've provided a database of more than 200 incubators which you can choose the right one for your business depending on the city and the sector.


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We call them the four P's that include place or the physical infrastructure, paisa which is the capital, people like mentors, service providers, team members and proficiency in the form of entrepreneurial training and development programs. Let us look at each of these support areas one by one.


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The incubation spaces are known to be vibrant and full of high-energy startup founders and their teams.


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A startup founder need not invest in the equipment and software required for product development. The incubator takes on that responsibility and creates common infra for startups. To summarize, the first P of incubation support, a founder gets office space and facilities like cafeteria, meeting rooms, printers, high-speed internet connection, etc.


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The primary scheme through which incubators can invest in startups is called NIDHI Seed Support System. Through NIDHI SSP, select incubators get anywhere between 5 crores to 10 crores to invest in startups. These incubators can invest up to 1 crore in select startups. The average ticket size ranges from 25 lakhs to 50 lakhs per startup. Let us now go through the process of raising money. Step 1 is to get incubated at a DST-funded TBI which has NIDHI SSP funding. As a part of this scheme, it is mandatory to be associated with an incubator at least for a period of 3 months before pitching to the selection committee. Once you become eligible for application for NIDHI SSP, you can create a presentation and pitch to a seed subcontractor. Step 2 is to get incubated at a NIDHI SSP funding. SSMC is an independent panel comprising of experts that take the final call on investment. Once the panel gives a go-ahead, the incubator conducts a small due diligence of your business where basic documents related to registration of the business and compliance, annual filings, etc. are checked.


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Nidhi SSP funding becomes a stepping stone for founders to reach customer validation stage and raise money from VCs.


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To summarize the second pillar, Paisa, VCs invest in businesses that have attained customer validation. The funding gap to develop the product, do test marketing, and hire the first set of team members can potentially come from the incubators. Most incubators have a strong network of angel investors and micro VCs. Once a startup gets incubated, this network can be leveraged to raise funding. Let's move on to the third pillar, which is people. As quoted by Ola founder Bhavesh Agarwal, During the initial days of your startup, raising capital is definitely tough. But attracting talent and getting the right people is a tougher task for the founders. As a startup founder, you cannot afford to be a startup founder. You cannot afford to give market-level salaries to your team members. The biggest challenge is how do I get access to quality people who can work with me?


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They can help you with the tech product development, digital marketing, ideation, etc. Many startups have effectively leveraged this talent student pool, especially during the initial stages of their fundraising journey.


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Apart from access to talent, every incubator has a strong pool of mentors. These mentors come from varied expertise such as fundraising, marketing, tech development, compliance, etc. These mentors can become your sounding boards and advisors. In a nutshell, incubators give you access to domain-specific mentors that help you in solving business challenges.


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The final P is proficiency. Incubators keep conducting entrepreneurship development training programs around topics such as go-to-market, product development, finance, etc. More importantly, at any incubator, you are surrounded by many other founders who are sailing in the same boat. Peer learning is the biggest value addition that a founder gets by being at the incubator. The question now is, how do we get incubated? Here are four simple steps. Step 1 is to prepare a quick presentation that gives an overview of the business idea. We have provided you with a template that you can use to create a basic presentation for your incubation application. Step 2 is to go through the incubator database and select the right incubator and select the right incubator for your incubation application. Step 3 is to go through the incubator database and select the right incubator for your incubation application. You can also check if the incubator has a seed fund. You can then apply for incubation program through the online application form on the incubator website.


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Some incubators also take very nominal incubation fees or discounted rentals. There are some incubators who provide all the services for free. The support that incubators have provided in the form of place, paisa, people and proficiency has translated into many startup success stories. Companies such as Citrus Pay, Work India, Donate Cart, etc. were once a part of accelerator and incubator programs.


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The very first stage is the problem solution fitment stage. In this stage, the entrepreneur has identified a customer problem and has found a solution to address the problem. The product or the service is provided is not yet launched. The founder will need money to launch the product and test it in the market for viability. At this stage, the founder has to put in own capital. Raising money from outside investors at an idea stage is near to impossible.


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The next stage is the proof of concept stage. In the proof of concept stage, the product has demonstrated customer validation. Basically, customers are buying your product and your product is actually solving their pain point. You now need a round of capital to go for an extended POC, which means improving the product, basis the customer feedback, and market it to more number of customers. At this stage, you can raise money from angel networks, micro VCs, and incubators. Here are a few names of active angel networks, micro VCs, and incubators who invest at the proof of concept stage. A more detailed list is available as a tool. The typical check size at this stage is one crore to five crore.


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The ticket size at this stage is upwards of a million dollars. The first VC round is called Series A round. The subsequent funding rounds are termed as Series B, Series C and so on. The company can go ahead and raise any number of funding rounds. Finally, Stage 5 is where the company is now well established and has significantly captured the market.


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The fundraise is mainly for this purpose. This is where large foreign VCs and private equity funds come to picture. Example, Baiju's acquired companies like White Hat Jr., Topper, Akash, etc. through the fund raised from large foreign funds such as Sofina, Silver Lake, BlackRock, General Atlantic, etc. As a first step, we should identify our stage and then map the relevant investors who back companies in that stage. We can further narrow down the investor list by focusing on sectors or themes. To understand this, let's look at this company, Under the Mango Tree.


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The way UTMT helps farmers is by installing bee boxes on a farmer's field. Bees foster pollination and results in increase in the yield. In case of certain fruits, the yield increases by 15 to 20 percent. This means 20 percent more money for farmers just by having a bee box on the farm.


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This is how you can focus on specific themes or sectors to create a target list of investors. Remember to include certain specific slides that might interest a particular investor. Example, your pitch to a social impact investor should include slides that talk about what impact are you creating on creation of livelihood and how do you measure the impact. Now that we have discussed how to shortlist investors, let's discuss how do we approach them. Here is a little secret about fundraising. Random cold emails to investors do not fetch you funding. Many founders write random cold emails to hundreds of investors.


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Connect with a few successful founders on LinkedIn and bounce off your ideas and take inputs. Look for someone who's one or two steps ahead of you. Get them on board as mentors and eventually request for investor introductions. Lot of founders rely on attending ticketed investor events to raise capital. In our experience, the best way to raise money is to create a real and intimate network of mentors, other founders, angel investors who can open doors and make introductions versus meeting investors at ticketed events.


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Over and above the stages and ticket size filter, add a sector and theme filter to come up with the final investor list. Reach out to these investors through introductions versus cold emails. Remember, creating a real network of mentors, founders, etc. who can open investment doors for you always works.


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By crowdfunding budgets, we are referring to the cost of manufacturing or procuring rewards, cost of delivering rewards to backers, cost of campaign promotions, among others.


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The next critical thing that needs to be figured out in reward campaigns is logistics. Backers might be from a different country altogether. Do consider all the geographical and associated budget variations before the campaign. Then there is a media plan. Successful campaigns often have an elaborate media plan which includes both online and offline media.


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Knowing the people behind the crowdfunding project is extremely important for backers. The logic is synonymous to venture capitalists getting to know the founders before investing. The credibility of the crowdfunding campaign increases by presenting the team behind the project.


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Where is the money going to be used? How will the crowdfund shape in the future of the project? What is the future scope of the project? Answers to these questions are critical for crowdfunding success. Lastly, you have to set the reward levels. Create different reward levels basis contributors by the backers. As you can see in the case of Square Off, a 19-pound contribution backer gets a handcrafted rosewood knight as a reward, while a 159-pound contribution backer gets a kingdom chest set.


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There you go. You are all set to create your crowdfunding campaign. But before you go, allow us to share some exciting campaign statistics. Crowdfunding campaigns with videos earn 105% more than crowdfunding without videos.


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We encourage you to study the crowdfunding campaigns of Square Off and some other companies like Leeko and Exploride.


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Welcome to the course on understanding term sheet. An investment is guided by many terms and clauses. And all these terms and clauses are included in a document called the term sheet. Simply put, term sheet is a letter of intent that is typically extended by the investors. The purpose of the term sheet is to detail out all the rights, responsibilities, and obligations of both the founders and the investors. Term sheet is not legally binding and is open for negotiations and discussions. In this course, we will study all terms included in a typical angel and venture capital investment term sheet. We will also discuss how to negotiate the terms. In order to safeguard your interest as a founder. Let us begin right away.


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Are you an incubator manager aspiring to take your career to the next level? If the answer is yes, then here's what you need to know.


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Incubation managers and CEOs are now expected to actively engage in startup investments through various seed funding schemes like SISF, NIDI SSP, and more.


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FundEnable has designed a unique certificate program on seed funding tailored specifically for incubation managers. This program equips you with everything you need to know about investing in a startup and helping them secure the capital that they need to thrive.


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Many of our graduates have seamlessly transitioned into roles in venture capital funds and angel investment platforms, redefining their careers along the way. To learn more about our upcoming program, which is open to a select group of just 20 participants, reach out to us today. Join us in shaping the future of startup incubation and investment.


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The next 5 years is where the fund nurtures the portfolio of investments and by the end of the 7th and the 8th year, the fund enters the exit phase where it starts selling the stake in the portfolio companies.


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So how does an entrepreneur provide an exit to the investor? There are four primary ways. Secondary sale, acquisition, initial public offering and buyback. Let us look at each of these options.


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The money pumped in by the new investor does not go into the company for expansion but goes to the investor who is exiting.


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a group of 38 angel investors had invested roughly around 3.5 crores in a logistics automation platform called Loginext. A few years later, the company raised 290 crores. VC round led by Tiger Global and Steadview Capital.


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Future Ventures had invested 6 crore rupees for a 22% stake in a women's fashion apparel brand called And.


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These are a few examples of a secondary sale.


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In an acquisition, all the investors, including at times the founders, sell their stake to the acquirer.


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Another example of exit through acquisition is Flipkart. Walmart bought 77% stake in Flipkart for a whooping $17 billion. All the major investors like SoftBank, Tiger Global, Axel Partners exited by selling their stake to Walmart. The founder, Sachin Bansal, also exited by selling his 5.5% stake for $1 billion.


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In 2010, InfoEdge Group, the parent company of Naukri.com, had invested seed capital of 4.7 crores in food delivery app Zomato.


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During the IPO, InfoEd sold shares worth 750 crores and partially exited the venture.


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What we have seen so far is the positive side of exit. Now, what if, post-investment, the company does not perform as per expectations and has failed? Globally, 75% of funded startups actually fail to deliver on exit expectations, which means that they either fail or investor is stuck in the same venture with no one wanting to buy their stake. What happens in this situation? Reality is that the investors have to write off such investments, which means their value become absolutely zero.


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We are super excited that with the fact that we've just signed a term sheet with the investors and we know that the money is on the way. But like every movie, even here there is a small twist.


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So let us start by understanding what valuation really means. Valuation is nothing but the 100% worth of your company.


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In this method, we estimate the valuation by analyzing valuations of funded companies operating in the same space or having similar business models. Without further ado, let us take you through an example to help you understand this method.


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The founders now have a plan to expand their business. They want to develop and launch a new product range. To actually sell this inventory, they want to create a digital marketing push and hire quality people to manage growing operations.


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After multiple meetings with various investors, they've finally secured the interest of a venture capital fund called Lion Capital. Lion Capital has completed evaluating Terraman and is keen on investing in the company. The question now is, at what valuation do they invest? Like the start of every valuation discussion, Lion asks the founder about their expectations of the valuation. The founders get back saying that they are comfortable offering a 10% stake for a 3 crore investment. Now, Lion Capital starts analysing this deal. If the founders are willing to give a 10% stake for a 3 crore investment, it means 100% valuation of the company is equivalent to 30 crores.


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How does one get this data? One way to get this data is by downloading it from the registrar of company or the ROC portal. There are several other databases such as FundEnable which provide you with this data. FundEnable.com provides you with repository of all the multiples required for transaction comparable method with which you will be able to calculate your company's valuation. Your company's valuation is important because basis the 100% valuation, you will be able to arrive at a number or the percentage stake that you can give to the investor. The most important aspect for valuation is your current ARR. What is an ARR? ARR is nothing but annualized revenue run rate. Let's say you are doing a monthly revenue of 1.5 lakh rupees per month consistently. This monthly revenue of 1.5 lakh rupees is what we call as your MRR or the monthly revenue run rate. The monthly revenue run rate is basically that consistent revenue which you will keep making even if there is no funding available to you. Now, the ARR which is the annualized revenue run rate is calculated by multiplying the MRR with 12 which is the 12 months in a year. So, let's see how it works. Let's say if you are a startup doing an MRR of 1.8 lakhs, then your ARR is nothing but 1.8 into 18 which is into 12 which is somewhere around 18 lakh rupees.


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The last step is the easiest. All you have to do is find an average revenue multiple of all the comparables. Now, we have all the data that you need to estimate Terraman's valuation. This brings us to one final step. Let us take a look at the formula of the revenue multiple. As we have seen, revenue multiple is calculated by dividing valuation by the next year revenue. We have already found the average revenue multiple which is 2x. The founders are projecting Terraman's next year revenue to be 10 crores. Let us plug in these figures into our revenue multiple formula. As you can see, the valuation can now be found by simply multiplying 2x by 10 crores. The valuation of Terraman is hence estimated at 20 crores. This is also termed as post-money valuation of the company. The pre-money valuation of the company is nothing but post-money valuation of the company. So, if the valuation of the company is 20 crores and if the investment amount is 3 crores, the pre-money valuation is nothing but 20 crores minus 3 crores which comes out to 17 crores.


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100% worth of the company's 20 crores, then for 3 crores, the investment should be somewhere around 15% stake in the business. Here, there is a disconnect between the founder's comfort and the investor's expectation. So at what valuation will this deal happen? At a 30 crore like the founders wanted or will it be at 20 crores that Lion Capital has estimated basis market data? Nobody can tell. This is where founders' reasoning and negotiation skills play a critical role in closing the deal. The negotiation skills will be very, very critical. As entrepreneurs, you should be prepared to justify your valuation ask. The best way to do it is to be ready with a transaction comparable method analysis for your business. We are looking forward to you to be a part of this particular program. Thank you.


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There are two types of businesses. One is a vitamin business and second is a painkiller business. What is a vitamin business? I know that vitamin D is important for me for my good bone health. But did I pop in a tablet of vitamin D today before I started my day? Not really. Because even without popping in the vitamin D, I am able to actually stand in front of you for 8 hours and deliver the session. But what if I would have fallen in the morning? The first thing that I would require is actually a tablet of painkiller. I would ask someone to get me a painkiller at whatever cost, at whatever price for consuming it at this point in time. Businesses are also of two types. There is a vitamin business and a painkiller business. A vitamin business is a good-to-have business whereas a painkiller business is a good-to-have business. A vitamin business is actually solving a very, very severe pain point of the customer.


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We will now think through our revenue calculation. Let us consider that your market of business is actually online. You target audience sees your business or ads on Google, Facebook and are diverted to your website.


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Hi, my name is Vikrant Pothnis and I run a company called Fund Enable. Fund Enable is essentially a platform that helps startups in raising a round of capital. So we work with startups, technology startups, D2C startups, whoever is actually doing something new and wants to expand their business, we come in and we help them in raising a round of funding through equity. I actually was not into this field at all by, you know, during my school days, I came from a school called Parle-Tlyok Vidyalay, which was very high on activities, a lot of activities, right? So in fact, today coming to a studio is very nostalgic because I used to be a dubbing artist for a lot of cartoons of Walt Disney. So I used to dub at the UTV studio and most of the cartoons like Quack Pack, you know, Jungle Cubs, all these, I have actually done a lot of dubbings throughout my, you know, childhood. But then unfortunately, what happened was in the 10th, I scored well. And then the next thing is that, boss, go for science and you should do engineering. So unfortunately, my acting and dubbing, you know, kind of that whole hobby went down the drain and I got into engineering. At the end of engineering, I realized that. I don't want to do something which is related to technology. I want to kind of go into some other field. And that is when luckily on campus, I did my engineering from Sardar Patel Institute of Technology in Andheri. I was lucky enough that on campus, finance companies used to come to hire engineers because globally engineering is a four-year degree and globally all the degrees are actually four years. In India, we have three years. So they're global. Global parameter was that you should hire people with a degree with four years and therefore even for finance, they used to hire engineers, right? That is where I actually, and I took a bet that let's leave technology and let's at least try and understand investment banking and raising capital and so on and so forth. And that is where JP Morgan, I learned how to actually read financial statements. What is finance? You know how it is not technical, but it is basically numbers. And that is what we have learned in engineering all this while.


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What happened luckily was at that point in time, Flipkart was raising their first round of funding. And that was the first in India that here are a bunch of people who have just left their jobs. They have started something and some investor has actually come and invested 8-10 crores in the company. So at that point in time, it was very new. So me and a friend of mine actually started analyzing that what is this happening? You know, why are such small companies able to raise money and so on and so forth. And what we did was we left our jobs and we said what J.P. Morgan actually provides as a service to large companies. We will start doing that same thing for smaller businesses because for J.P. Morgan, etc. Morgan Stanley, J.P. Morgan, Bank of America, they don't take any work which is less than 200-300 crores. But in India, a lot of small, small businesses were wanting 20 crores. 50 crores, 30 crores. And until then, everyone was going to bank and raising loan. No one went to an investor at this early stage and raised equity. So basically, what we learned at J.P. Morgan for large companies, we started doing the same thing for smaller companies through this entire fundraising service platform per se. That time it was called Orega. So we ran it for a few years. And then we changed our business. We picked up another business. And in 2018, I had actually invested a very small amount of capital in a company, in a startup. And by God's grace, I got an exit from that startup. So whatever I'd invested, three years later, someone bought that stake from me for a higher valuation. So after that point in time, I was like, now, at least for the next three, four years, I don't need to make... I don't need to make money for a living, right? I can actually experiment. And that is when in 2018, I started Fund Enable. At Fund Enable, what we do is, we actually do three things. One is we work with smaller businesses and help them to raise money from investors. And those businesses then become large and then they list or they get acquired. Second is, every person in India who's starting a business wants to know how should I raise money. You know, what should I do to expand my business? So they know a bit about marketing, getting customers and so on and so forth. But the bloodline or the main important ingredient of growth is actually capital. If you don't have capital, you will not be able to expand. So we are now teaching founders, teaching everyone who want to start their business or existing founders, existing business owners, how to raise money through this equity capital route. And that happens through... We have an academy called Indian Academy of Venture Capital. So that is the second business where we train people how to raise money. And on the other side, we also train people how to invest money through what we call as Angel Investing. And the third module is that in India, there are 500 plus incubation centers set up by the government. The objective of these incubators is to support startups by providing them space, by providing them money, by providing them mentoring. But these incubators are actually housed in universities. So what we do at Fundainable is we go to incubators and we help them in running their operations. So today we are working with 50 such incubators in the country and providing our services to them. And that is essentially what we are doing. Right now, we are actually working towards creating more educational content. And this is exactly the reason why we are doing this entire... exercise. And that's my quick background. So I personally come from a middle class Maharashtrian family. My mother, her name is Neeta Pothnis. She is a teacher. She was a teacher in the school. She retired two years ago. So all through her life, she taught language at one school. All 30 years, she was a teacher at one school, taught language. I was actually a part of the same school. And therefore, it was quite interesting. That in the same school, you are learning and your mother is a teacher. It's actually quite challenging. My father, his name is Santosh. He runs his own business. So both my father as well as my uncle, his name is Dilip. Both of them ran businesses. And therefore, getting something into your own came very naturally to me. You know, a lot of people say that, you know, how did you switch from working somewhere to starting your business? Actually, it was not very difficult because for whatever 20 years, 15 years, you are growing in that environment. So you keep only hearing about those things. So I think in entrepreneurship or someone choosing to become an entrepreneur, one big factor is actually the culture, right? And 15, 20 years of prolonged culture in that atmosphere makes a lot of difference. You are no more worried about how do I get into this? I am worried about how do I get into something on my own. So that's my father's background. He still continues to run his business. He is 65 and still goes to his factory every day and runs it. I am the only son, but I was never interested in the business that he runs. It's too crude. It's too dhanda type, right? So therefore, I never went into that.