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Days passed, and Pip remained perched within the safety of his nest. His wings, once instruments of freedom and joy, now felt heavy with trepidation.


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Great! So now we have projected the revenue as well as all the major costs. We simply need to bring them all on one single sheet and this becomes your P&L or profit and loss sheet. Revenue minus all the costs will give you your operating profit or what we call as EBITDA.


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It wasn't long before Wilbur, an old owl with eyes like molten gold and feathers dusted with the wisdom of many winters, noticed Pip's absence from the skies. Wilbur was...


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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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Pip, he hooted softly, interrupting Pip's.


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Without further ado, let us take you through the example to help you understand this method.


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Why do you hide yourself away in this nest, Bjorn? Pip's voice was small and tremulous as he recounted his fall, the wind's betrayal, and the burgeoning... Burgeoning?


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Wilbur listened intently. His head tilted in understanding. When Pip finished, the old owl fluffed his feathers, and thoughtfully. When Pip finished, the old owl fluffed his feathers thoughtfully. Ah, fear, he murmured. A cunning beast it is, ensnaring us with its invisible threads, heavier than any chain.


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The highlight of the company is that all its products are made from natural ingredients and they have a digital-only sales strategy with no retail presence. In one year of operations, the company has made a revenue of 1 crore. The founders now have plans to expand their business. They want to develop and launch a new product range. This product range will actually sell this inventory. They want to create a digital marketing push and hire quality people to manage growing operations. With this expansion strategy, the founders are targeting a revenue of 10 crores in the next financial year. Now for this expansion to happen, they will need 3 crores in funding. After multiple meetings with various investors, they finally secured the interest of a venture capital fund called Lion Capital.


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Fear is but a shadow, and shadows only exist where there is light. You must find that light again, little one. Pip looked skeptically at the vast, intimidating expanse beneath him. His heart fluttered with a similar pang of dread.


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Encouraged by Wilbur's wise words, Pip stood at the edge of his nest, the following dawn. The air was sweet with the scent of pine and wildflowers.


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The question now is, at what valuation do they invest? Like the start of every valuation discussion, Lion Capital asks the founders about their expectations of the valuation. The founders get back saying that they are comfortable offering a 10% stake for a 3 crore investment.


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We first find comparable companies. We look for companies in a similar sector who has raised around the same quantum of funding. If this is Terraman's first round, then look for companies in the same sector with similar business models that have raised their first round.


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With a tentative leap, Piff flapped his wings. Once, twice, each beat shakily growing but stronger. His heart raced, not with fear, but with the burgeoning exhilaration. The wind, as if in alliance, caught his wings, and soon Piff was aloft.


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We will now try to find out the details of their funding rounds. This is our step 2.


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Pip soared until his little heart was content, and his song spilled from him in a cascade of triumphant melody.


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Though he knew he might falter again, he also knew that he had the courage to rise.


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But how does one get this data? One way is to get this data from the Registrar of Companies, ROC portal of the Ministry of Corporate Affairs. But this might be a slightly tedious process. An alternative to this is the various databases some websites such as Crunchbase, Venture Intelligence, PitchBook, Capital IQ etc. provide. Sometimes a very basic Google search or news publication can also get you these details.


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And so, Pip, the little bird with the bright yellow feathers, reclaimed the skies, his heart as light as his wings. His song, a beacon of joy, triumphed, echoing through the forest. The attic of the old manor was a forgotten realm, a repository of relics untouched by the time's relentless march. As Amelia ascended the creaky wooden stairs, the musty scent of antiquity enveloped her.


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All you have to do is divide the funding amount in column E by the investor stake in column F. For example, in Beardo's case, Venture Catalysts invested a 3.5 crores for a 49% stake. This means that Beardo's valuation is 3.3 crore divided by 49% which comes out to 6.6 crore.


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The attic was dim, save for a single shaft of sunlight that broke through the dusty air, casting golden spears across the floorboards. It was here that her adventure, oh my god.


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It's wood was etched with intricate carvings. It's wood was etched with intricate carvings, wheels and geometric.


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far removed from the sleepy town of poor upbringing.


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Its surface was tarnished by time, yet it pulsed with a faint, outwardly glow that seemed to breathe light into the air around it. Amelia reached out.


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Once you get the next year revenue, we move on to step 4, which is finding the revenue multiple. Finding revenue multiple is quick math. Just divide the valuation number by the next year revenue. In the case of the man company, the revenue multiple is the valuation of 16.5 crores divided by the next year revenue of 12.5 crores, which comes out to be 1.3x. We repeat this exercise for all comparable companies. Step 5 is the easiest. All you have to do is find an average of revenue multiples of all the comparables.


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The context sparked a vision so vivid it stole her breath away. She saw a vast desert stretching endlessly under a scorching sun.


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Now, we have all the data we need to estimate Terraman's valuation. This brings us to our final step.


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a mirage of lush greenery in the midst of bareness. And within that, a cloaked figure emerged, whispering words that seemed to echo across centuries.


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Lion Capital follows exactly these six steps to arrive at Terraman's 20 crore valuation.


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As quickly as it had appeared, leaving Amelia gasping in the dusty silence of the atmosphere.


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vague and swirling with uncertainty of a dream. But it was all she had. Compelled by her foes, she couldn't...


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Days of travel, far away from the familiar, the landscapes changed as she ventured into the unknown. Guided by the pulsing of the amulet,


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It was on the fourth evening, with the sun, a molten orb, dipping towards the horizon, that Amelia crested a dune and halted, breathless. Before her, a scene


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Undulating dunes gave way to a real, tangible oasis, its water a sparkling contrast to the dry sands around.


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When an equity investment happens, the investor buys a stake in the company against investing capital. Making the investor a shareholder in the company, this changes the shareholding structure of the company completely. Let us understand how changes in company shareholding structure are captured in the cap table. Consider Terraman, a D2C company that sells men's grooming products. This was founded last year by Rohan and John. To start the company, Rohan and John invested Rs. 50,000 each as share capital. This means that the total share capital for Terraman is Rohan's Rs. 50,000 plus John's Rs. 50,000, which equals to Rs. 1 lakh. This share capital is actually the value or the price of shares issued to Rohan and John. If we put this into perspective, we get the number of shares issued multiplied by the price per share, which is equal to the total share capital.


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whispering of old buried things. It was then that the cloaked figure from her vision appeared, materializing from the shimmering heat as if conjured by the desert itself.


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Since Rohan and John contributed equally to the share capital, Rs. 50,000 each, both of them are issued an equal number of shares. So, Rohan gets 5,000 shares and John gets 5,000 shares. Hence, they own an equal stake in the company, that is 50%.


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A gasp escaped her lips. The face that turned towards her was her own, lined with the years and weathered by elements she had yet to endure.


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The elder Amelia, for who else could it be, lifted an arm, revealing the twin amulet to the one Amelia held.


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As you can see, the cap table tells us the following details. Terraman has two shareholders, Rohan and John. Both own a 50% stake in the company. Both have been issued 5000 shares each and the price per share is 10 rupees.


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The sands shift, futures intertwine, the older voice rasps.


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Notice that the value of shareholding is equal to the share capital invested by Rohan and John.


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Intimately, a sound both foreign and intimately familiar. You hold a relic of a forgotten age. Whispers speak.


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She managed, her voice barely above a whisper.


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We are one and the same. Echoes across the expanse of time. The amulet chose you as it chose me.


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The choice, as it has always been, is yours alone.


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The amulet in her hand felt heavier now, its glow dimmer,


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Now, we would like to remember two key points. First, the sum of stakes across all shareholders is always 100%. Second, the value of shares of the company is the company's valuation. So right now, Terraman's valuation is the value of all 10,000 shares with a price per share of Rs. 10. This means the valuation of Terraman is Rs. 1,00,000. Let's fast forward by one year and find out what happens when this company raises a round of capital.


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It was as if the fading light of day had imbued it.


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The amulet's pulse was like a heartbeat against her palm.


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It was a canvas, vast and empty. The desert was no longer just a place of sand and heat, it was a canvas, vast and empty, waiting for her to paint her path. She thought of


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Was this her destiny? To become a sentinel of Grotten...


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With the dawn, Amelia's resolve solidified. She would not let the amulet define her journey. Instead, she would define it herself.


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She would travel further, dwell deeper, and seek out the untold stories hidden in the world's shadowed corners. The desert stretched before her, indifferent and vast.


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Let's first see how the stakes across all previous shareholders change. This change happens because Rohan and John are not selling their stake. So how does Lion Capital get a 15% stake in the company? If you thought dilution, then yes, you are right. To give Lion Capital a 15% stake in Terraman, Rohan and John's stake will get diluted to the extent of 15%. That is, Rohan and John's stake will now be lesser than 50%. Here is how dilution is calculated. Dilution stake is equal to pre-investment stake multiplied by 1 minus investor stake. For Rohan, this becomes diluted stake equals to 50% into 1 minus 15%. This comes out to be 15%. 42.5%. Similarly for John. Hence, Rohan and John's stake reduces from 50% to 42.5% and Lion Capital gets its 15% stake.


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its glow a gentle, encouraging thrum.


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And so, beneath the watchful eyes of a thousand stars, Amelia began her true journey.


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Now for Lion Capital to own a 15% stake in the company, we will have to issue them shares. Note that since Rohan and John are not selling their stake, they will not transfer their shares to the investor. New shares will be created for the investor.


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This means that 10,000 shares represented 100% shares of the company. However, after investment, Rohan and John are both diluted to 42.5% stake and still own 5,000 shares each. This means that 10,000 shares now represent only 85% of the company. By simple math, 85% into total number of shares equal to 10,000. This gives the total number of shares equal to 11,765 shares. This means that Rohan's shares plus John's shares plus Lion's capital share is equal to 11,765.


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Yes, we travel far and wide to bring you only the best, because we believe every morning should be exceptional. Imagine this. You're stepping outside, a gentle breeze kisses your face, and in your hand, a warm cup of Morning Bliss coffee. With each sip, you taste hints of chocolate, citrus, and a touch of spice.


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Now one last thing. We need to calculate the change in price per share. Remember, the company's valuation is the value or the price of total number of shares. Total number of shares multiplied by price per share equals valuation. That means price per share is equal to valuation divided by the total number of shares. The valuation of the company can be simply found by cross-multiplication. The proposed deal suggests that 3 crores is equal to 15% of the company. This means 100% of the company is equal to 20 crores. We've already found out the total number of shares, which is equal to 11,765.


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or a relaxing weekend at... Let every morning be a blissful escape. Cheers to the blissful morning every morning. Morning Bliss Coffee, where every step...


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Let's take a look at the cap table now. As you see, there are three shareholders now. Rohan, John and Lion Capital. Rohan now owns a stake of 42.5% in the company and has 5000 shares. The price per share is 17,000 and the value of Rohan's shareholding is 8.5 crores. The same is the case with John. As for Lion Capital, it has bought a stake of 15% and is issued 1765 new shares. The price per share is 17,000 rupees and the value of the shareholding is 3 crores.


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This cap table represents the company's shareholding after funding. Hence, this is called the post-money cap table. On your screen right now, you can see both the pre- and the post-money cap tables. These simple tables are capturing all shareholding details of the company before and after funding. You are now ready to start creating your company's cap tables.


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As the valuation here is dependent on the subsequent funding rounds, we hope this course enables you to make the right decision when it comes to closing a round of funding. Thank you.


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Valuation and deal structuring.


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Good morning everyone. What's the best way to start a day full of promise and possibility? With a bowl of Sunrise Crunch, of course.


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Sunrise Crunch isn't just any cereal, it's a blend of golden, crispy oats and delightful chunks of real fruit, designed to power your mornings with a burst of energy and a splash of joy.


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Each spoonful is filled with fibre and essential nutrients, ensuring you're not just satisfied but also nourished. And guess what? Sunrise Crunch comes in a variety of flavours, whether you're a


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to a whole new level of deliciousness. Deliciousness.


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Uses of fund clause. Moving on to the next clause, which is uses of funds. This clause defines how the company will utilize the investment amount. When you present the business plan to the investors, you also share the details of your funding utilization. The business plan gets approved by the investor and so does the utilization of the investment proceeds. The founders have to stick to the utilization plan. In case there is any material deviation, say 10%, the founders have to go back to the investors and take an approval. To track the utilization, investor money is parked in a new bank account and no revenue is booked in that account. Also, there are certain restrictions. In case the company wants to spend more than the defined threshold amount in one go, let's say 25 lakhs, then 1. an explicit approval from the investor will be required. Three points are clearly defined in this clause. How will the funds be utilized? Approval mechanism for material change in fund utilization and spending beyond defined threshold and third, tracking process for funding utilization.


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No problem. Sunrise Crunch is quick to serve. Perfect for those on-the-go mornings where you need a nutritious breakfast that keeps up with your pace. Just pour, add milk, and you're good to go. It's that easy, that tasty, and that fast.


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Founders need to provide an exit to the investors at the end of five years through either an IPO or a secondary sale or an acquisition. At times, the minimum return expected by the investor is also clearly stated.


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Here's to good mornings, great starts, and delicious journeys all day long.


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While this clause will always be a part of the term sheet for a sizable investor, you can negotiate a fall-away threshold on drag, which means if the investor's shareholding goes below 10%, then the drag clause falls off. Also, try and negotiate for a cap, which means instead of a full drag of up to 100%, negotiate for a cap dragged up to 49%. Now, what if even the investor has not been able to find a buyer? In this case, the buyback option gets triggered. This means the company or the founder should buy back the shares from the investor. At times, there is an obligation on the company or the founder to buy and they don't have a choice but to buy. This is called a put option.


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Picture this, you're basking in the early morning light. A chilled glass of citric splash juice in hand, brimming with nature's best flavors. Every gulp like a refreshing dip in a cool, sparkling pool. And here's something for the heart as well as the palate.


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pre-emptive right. Next on the clause list is pre-emptive right. This right is given to the investor to participate in future rounds of funding in proportion to the shareholding.


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Liquidation preference clause. The next clause that we will look at in detail is the liquidation preference clause. Investors subscribe to preference shares. Preference shares, as the name suggests, have the first preference over money received from the liquidity event. Founders who hold common shares are entitled to receive any amount of liquidation proceeds after the preference shareholders.


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The liquidation event does not only include winding up or bankruptcy, but also some of the other events. Liquidation preference has two parts, the preference and the participation. Preference basically includes investors getting 1x of their capital back.


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An investor has invested 5 crores in a venture against a 30% stake. 5 years later, the company gets acquired for 50 crores. Now, how will this 50 crores, which we call as the liquidation proceeds, get divided between the investors and the founder?


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right of first refusal and tag-along right. The next set of clauses are right of first refusal or ROFR and the tag-along right.


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When founders decide to sell beyond this threshold, tag along would kick in automatically.


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Sample list of reserved matter is on your screen. Detailed list is available in the template section. The list varies depending on the investment amount and the shareholding of the investor. Investors with small shareholding obviously do not get a long list of reserved matter items.


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Finally, last few clauses. Investors expect the founders to be employed with the company till they exit. Also, founders are restricted from starting or investing in a similar company or a competing business.


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We are now slowly moving towards the ending of our fundraise movie. We are super excited with the fact that we have just signed a term sheet with the investor and we know the money is on the way. But like every movie, even here there is a small twist.


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DD is initiated post signing the term sheet. Depending on the stage of the investment, the process can go for up to six weeks.


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These conditions are corrective steps. CPs are a list of action points that the company must do before the money is transferred. CS includes a list of action items that need to be completed 30-45 days after the money is in the bank. Generally, Angel Stage DD is not at all exhaustive, like the Series A. The company has very little data to share during the Angel Round, but by Series A, the company has clients, employees, operating history, and this is where DD starts becoming quite intensive. Use the Fund-Enabled DD Checklist and follow three steps to prepare for due diligence. Remember, your objective should be to become due diligence ready.


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By now, the investor is convinced with investing in your venture and has already signed a term sheet. But what about evaluating a deal from legal and compliance perspective? Due diligence is evaluation of the company from a legal and compliance lens. And why is this important? Non-compliance, mistakes and no documentation can lead to hidden liabilities. For example, if provident fund related compliance is applicable on your company and you haven't done it, then it can lead to penalties and liabilities. One objective of the due diligence exercise is also to verify the facts mentioned during pitching and investor evaluation process. Details about revenue, cost, margin, customers, etc. are verified. The ultimate goal of this exercise is to figure out how to evaluate a deal from a legal and compliance perspective. Is this a good deal or a costly mistake? DD is undertaken by an investor-appointed law firm and an accounting firm. So what all is checked? The exercise looks into four major risk areas. Compliance, legal, finance, HR and intellectual property. Let's go through each of these items one by one.


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Typically, in an early stage company, an employee is hired by just sending an email confirmation or over a phone call. What is expected is an employment contract with clauses such as non-compete, confidentiality, termination clause, intellectual property rights, etc. In the due diligence exercise, employee contracts are checked. If you don't have any contract, then the DD agency will suggest you get it drafted and executed.


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Besides this, the company has its brand name and URL which defines the identity of the business. Due diligence exercise looks at relevant filings to confirm that the ownership of the intellectual property resides within the company and not otherwise. No employee, third party, vendor or for that matter, even the founder can claim the ownership of it.


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Step 2. In this folder number 1, start uploading all your documents relevant to company incorporation such as incorporation certificate. Step 3 is to repeat this exercise for all the points in the checklist. Also, update the status of the checklist. You might not always have the documents in place and hence we can work on it and come back. By updating the status against each point, you will come to know where are you currently standing.


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Due diligence, as we've just seen, evaluates a deal from legal, compliance, and financial perspective. The exercise is all about finding hidden skeletons. This might create huge liabilities for the company in future. The investor expects the capital to go towards expansion and not towards settling off liabilities due to non-compliance. The outcome of this exercise is a list of red flags. If the red flags are extremely critical, such as fraud by the founders, then the deal gets called off. If the findings are minor, then the company is given time to take corrective actions. Generally, angel stage DD is not as exhaustive as series ADD. This is because in the early stages, the company has very little chance. But by series A, the company has clients, employees, operating history, etc. Which makes the DD process very intensive. We hope this course helps you prepare for DD process and tackle it successfully. Thank you.


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There is so much material related to pitch decks on internet today. You can get templates for almost all types and sectors of businesses. But let me tell you, there is no cookie cutter approach to creating pitch decks.


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Now that we've built a pitch deck together, we would like to warm you against some common pitfalls. First, don't talk product, talk business. Entrepreneurs tend to put all their products and related features in the deck. Remember, you are not selling a product to a customer. You are trying to get investments into your business. Second, don't include detailed financials or valuations in the pitch deck. These are the agenda for your next meetings with an investor after you have secured their interest. Third, entrepreneurs often take the same pitch deck to different investors. It is a good practice to study a prospective investor. These investment theses and their portfolio companies give you a very good understanding of what an investor looks like. For example, if you are meeting with an impact fund, do not include a slide on how your business is creating a measurable social impact.


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Although we have covered a lot of ground in this course, we need to study one component of the pitch deck in greater depth, the financial component. Where do the numbers in the pitch deck come from? Your financial model. In our next course, we will guide you on building your financial model step by step. We look forward to seeing you in our next course. Thank you.


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we have known founders who have sent their pitch decks to a database of hundreds of investors. They've chased investors with this pray-and-pray approach for a long time, but to no avail. Through this course, we will help you tackle the problem of investor access by first, identifying relevant investors, and second, mapping the right way to reach out to the identified investors. At the end of this course, you will be able to come up with a list of investors having the highest probability of investing in your business. So let's get started.


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Why do investors invest in a venture? The simple no-brainer answer is returns. But private investments are extremely illiquid. What do we mean by that? If you have bought shares of a publicly traded company, with a click of a button, you can book your profits or your losses. You can easily exit. Whenever you are planning to go and meet an investor, be prepared to answer this. As a founder, you need to be sure about this because the onus of investor exit is on the founder. So what are the different ways in which you can provide an exit to the investor? This course explores various options and strategies to give a profitable exit to the investors.


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Hello, welcome to FundEnable's course on crowdfunding. So far, we've covered a lot of ground when it comes to equity fundraising. In this course, we are going to digress from equity fundraising and explore an alternative funding avenue called crowdfunding. Crowdfunding is rising in popularity in the early stage startup ecosystem.


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We hope this course has given you valuable insights into the crowdfunding process. Let us now look at some of the benefits of crowdfunding that go beyond just raising capital. First and foremost, crowdfunding is a very effective way to validate your idea and build a potential customer base. The backers are your potential customers, and these backers can come from a wide geographical region. On your screen, you can see a news clipping from Squareoff. Crowdfunding success led to Squareoff getting 2,000 pre-orders for their smart chessboard product from 70 different countries.


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Most of the companies that have been successful at crowdfunding have gone ahead and raised additional rounds of capital from angels and venture capital funds.


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Other advantages of crowdfunding are it increases publicity and media visibility, it attracts talent for your business, and gets your idea for further project innovation.


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Hi, welcome to Fund Enable's course on cap tables. In our previous course, we've 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 in 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 investment.


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There you go. You now know how to create pre- and post-money cap tables for your company. FundEnable's Cap Table Calculator will further simplify this process for you.


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Now that you have understood the math of cap tables, you are ready to explore the most exciting aspect of fundraising, which is valuations. We look forward to seeing you in our next course, where we will explain how to find valuations and negotiate with your investors.


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The most common questions that the investors ask during the pitch are, how much capital are you looking to raise? What do you need this money for? Over the next three to five years, what kind of revenue will you be making? And how do your cost structure and unit economics look like? To answer these questions, you need to have a detailed financial model in place. A financial model translates your future plan into hard numbers plotted on an Excel sheet.


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There you go. You just created your first financial model. One popular opinion among investors is that they like to see businesses with a hockey stick growth. Another school of thought is that your projections should be realistic and achievable. Our advice to founders is to project numbers that you are comfortable with because ultimately you have to take the ownership of achieving them. Also, do review your funding amount closely. It is not very often that a company has raised $10 million of funding with no or very little revenue.


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Welcome to the course on understanding term sheets. An investment is guided by many terms and conditions. All these terms and clauses are included in a document called the term sheet. Simply put, a term sheet is a letter of intent that is typically extended by the investors. The purpose of a 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 the terms included in a typical angel and venture capital investment term sheet. We will also discuss how to negotiate terms in order to safeguard your interest as the founder. Let us begin right away.


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We hope this course serves as a guide for understanding and negotiating term sheet. See you.


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was that I would record, like, a whole bloody paragraph, right? And I've gone through it, and I'm like, OK, I'm going to go back and listen and make sure that everything sounds great. And I'm halfway through it, and suddenly there's a freaking crow just cawing out of nowhere in the middle of my line. And that just ruins it, because now I've got this beautiful paragraph, right, that's all read in the same consistency, the same speed, the correct pronunciations, and now I have to go back and do it all over bloody again. And so that was probably one of the most challenging, enjoyable, and definitely out-there experiences for me, recording in a different accent for prolonged periods of time, and on a topic that was rather interesting, to be honest, to understand where the whole Russian-Ukraine situation happened and how it all unfolded and what they're still doing now with that. But yeah, I think to answer the question was, I think the most challenging... or rather, one of the most exciting projects that I've done in the near past was definitely the audiobook for the Ukraine-Russian war in an American accent, which, let me tell you, although they sound, you know, like it's so easy, like sometimes people think that the American accent is one of the easiest to do, it's not. It's not at all. Especially when you have to pronounce words and things that you're not familiar with in that accent, it becomes a bit more difficult. So yeah. To answer your question, that's probably one of the most scary and exciting projects that I've worked on in the recent past, at least. So Goa, that's a rather nicer part of my life, I would say. I moved to Goa back in 2021. It was just after the lockdown. It kind of like loosened up a bit and, you know, we were more free to move around and there wasn't as many restrictions. So it ended up being like a few weeks that I wasn't in. I was too happy with the way things were going and I wasn't enjoying my current job. I was basically working for a company called Radius Global Solutions, and they provided debt collection services. And that's probably one of the most competitive, as well as the most harsh kind of, you know, lines that you can be in. Because to be honest, you just, you have to be almost emotionless, you know, you can't have emotions. Because the minute you start feeling for the people on the other end of the call, you're not able to do your job right. You're not able to be able to collect on debts, be able to bring up your scores. And definitely you're not going to get any incentives because you've not collected enough debt. So that kind of really got me down. And especially it being the COVID time, you know, wherein everybody was kind of down and out, especially on finances. To call people and tell them that they needed to pay up or to demand money from them. For loans that they're taking because they had no other bloody choice, you know, they just trying to survive. So it was a bit taxing, I think, mentally for me, mainly. I mean, doing the night shifts was, is always taxing, but the mental strain of like having to call people and being, well, not rude, but you had to be, you know, you had to have a certain amount of firmness in your voice, like a command over the call, because otherwise people just take you for a ride, right? They don't want to. They don't want to pay, which is the whole reason that I'm calling them in the first place, because they, they're just trying to dodge payments. So, um, it became a little taxing on me mentally, especially when, um, not all of them were rude and some of them were rude. Um, the good thing is that I speak in an American accent, so they didn't really know that I was not calling from America. They thought I was like, you know, I knew that I was calling from India, but they thought I was calling from within the States and that kind of gave me a, a little bit of the upper hand. A little bit of an edge because, um, they believed almost that I was American because I mean, my name itself has, uh, you know, is, is a very popular and more, uh, Western name. So it, it w it did help a lot. And uh, what would happen is a lot of people will tell me stories about how they have to sleep in their car or they haven't had eating in months or they don't have enough money to eat. And, you know, I had to call them and tell them that you need to pay up or else you can, you know, you, you be, um, you could be subject to legal action. And, uh, some of the stories were just, you know, you, you knew they were bluffing and some of them, it was really heartbreaking, especially like when you would call single mothers or really old elderly people. And they're just trying to get by them. You know, they don't, they don't have the resources or the money to pay you back, but you have to, to have to have to try and get something with the other arts of them. Um, most of them would point blank. Just say no and hang up. But that would only mean that they will get more calls and more messages and more people trying to, you know, contact them and, and trying to collect the debts. So that definitely got really taxing for me mentally. And that's when I decided like I need to change and I need to do something that, you know, lifts up my spirits a bit and gets me out of that, that feeling of regret and remorse for having to call people during an already horrible time. And. Uh. That's when I moved to Goa and it was actually quite a funny story. I called my brother and he told me, uh, if you want to just like, you know, pack your stuff and come over and we'll, we'll figure out the rest. And that's exactly what I did. Um, I think we had a conversation on like the 6th or 7th of April. Um, I told him, I'm like, okay, how do I get there? And he's like, why don't you just ride down? It's not that bad. You know, you can just sit on your bike. Put. Put everything that you really, really need into a few bags, tie them to the bike and just fricking come down riding. And I was like, okay, that seems plausible. And um, the next day I got a bit nervous. I was like, maybe not, you know, what am I doing and leaving my good, leaving this job and what guarantee do I have of getting anything in Goa and is it going to be all that I thought it was going to be? How am I going to live there? How am I going to manage a loan? There was a lot of questions, a lot of doubt, of course, you know, self-doubt and, uh, for fear mainly. And fear is a funny thing. It can either drive you or it can make you completely immobile and stagnant. So what happened is I just decided, you know, the first thing that I do to move towards this plan is to basically pack my bags. So that's what I did. I just went into my cupboard and I opened it up and I said, Oh, bloody hell, what am I going to wear? Like what, what other clothes that I feel good wearing outside. Right? So I went ahead and I just like started. Taking out clothes and sorting through them, throwing out some of the ones I didn't want anymore and packing some of the best ones I had. And by the end of it, I think I had like maybe four bags, four or five bags. And I was like, bloody hell, how am I going to take all of this onto the block once the bike and mind you, I didn't have carriers. I didn't have any sort of storage devices. My bike is not even like meant for going that far. So it's a hundred and fifty CC Honda Unicorn with a single seat. It's a four cylinder and much no power. Well if you're curious, it had about, it supposedly has about 13 BHP, but I didn't believe that one bit. I think that's at crank and then you're more likely to get maybe about eight or nine at the wheel. So it's not exactly a tourer, you know what I'm saying? You can't, you can't just take it out and, and, and go riding for long, prolonged times and distances. I mean, you can, but the, the challenges that you can't do. Yeah. You can't do it very fast. So you're always slowing down, you can't strain the engine because you, you, you're afraid that you're going to blow it up. And, and the best part is that when, when I made my journey to Goa, I in fact had literally just built my engine. So the engine had new pistons, new rings, new valves, a new block. Everything was pretty much brand new, like bike was not, there's, there was nothing in the engine that wasn't worked on. And it was a brand new engine. Yeah. It was a brand new engine. And ideally you're supposed to run in your engine, which is you need about maybe 500 to a thousand kilometers before you can go ahead and actually, you know, ride, ride the bike like where, where you can be a little more brazen with the accelerator, or you can pick up speed faster than, than you would usually. And you could do things that, you know, well that excites you basically on the bike. And that was one of the main things that was really hard on the journey there is it's just maintaining low speeds. You can't, you can't train a freshly built engine. You will ruin it and it won't break per se, but it won't perform at its best because you're supposed to heat it and, and cool it down in cycles, wherein the, the metal isn't strained and the new parts get a chance to settle down and kind of talk to each other, rub off on each other a little bit, you know, they're supposed to clear it, create clearances and stuff like that. So.


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Based on the transaction comparable method, we arrive at a 20 crore valuation. How did we arrive at this figure? We use the formula revenue multiple is equal to valuation divided by the next year revenue, which means valuation is equal to revenue multiple multiplied by the next year revenue. Revenue multiple was found by studying the hard data of actual funding rounds that have happened in the men's grooming sector. But what about the next year revenue? Where did this 10 crore come from? The founders have forecasted this number. It is calculated on Excel based on certain assumptions. But these assumptions may not hold true and the founders may or may not achieve the 10 crore number. It could go both ways. They can do more than 10 crores or less than 10 crores. Imagine that Terraman makes 12 crore revenue in the next year. With a 2x multiple, the valuation should be 24 crore. This is higher than the 20 crore valuation that we calculated. So the founders have lost out on a higher valuation. But what if Terraman makes only 2 crore revenue in the next year? With a 2x multiple, the valuation should only beat 4 crores, which is much lower than 20 crores. The investor has ended up overvaluing the company. This is exactly why valuations cannot be calculated based on a projected number from Excel. So how do we reduce dependency on projected revenue numbers? We do so by resorting to deal structures such as compulsory, convertible debentures or CCDs. So let's see how Terraman can structure their 3 crore funding deal with Lion Capital. The simplest thing to do is to not fix investor stake up front.


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How much stake will the investors get after one year when this conversion happens? The stake will be dependent on the actual revenue that Terraman makes at the end of one year. Effectively, what we have done is postponed determining valuation to the next year. By doing this, the valuation is now dependent not on the projected revenue, but the actual revenue that Terraman makes.


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fills up the tank full I came back home and by the time I came home I was like hmm am I really going to do this am I going to move to Goa take my bike climb my bags onto it and move to Goa is that really what I'm going to do so I decided you know what man if you don't live life and if you don't take those those steps that really make you feel weird in your stomach you know where you get the butterflies in your stomach that's the ones that really matter right because then then you know it's something that means something to you and it's not just a frivolous passing kind of mood you know I mean emotion or a sentiment you could call it so what I did was I decided not to ride directly to Goa because considering this would have been my first really long trip like I'd ridden to Pune a few times and Pune is about maybe 200 odd kilometers from where I stand so from where I live rather I'm sorry not stand but yeah and that was pretty tiring the first time first few times I did it at least because you know it takes a lot of consistency when you're trying to ride long distances your buttocks get really sore man your legs start giving up your buttocks get sore your wrists start hurting your palms start hurting a little bit because you're always you're always you know planted on the bike and you have to constantly keep it balanced and you have to you have to constantly make sure that nothing's going wrong with it right so I was a little bit nervous I was like I'm bloody hell man it's 800 kilometers almost and that's that's never done that kind of distance before and especially on such a small bike and then on top of that on top of all the things a small bike a great distance I had bad bloody hell so it got a bit you know scary towards the beginning of the whole journey but


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Now imagine two different scenarios. The COVID-19 pandemic has struck, and the business comes to a halt. Terraman has only been able to do a 1 crore revenue by the end of the year. This means that the valuation will only be 2 crores. This is lesser than the funding amount of 3 crore. This implies that Lion Capital will end up acquiring a 100% stake in Terraman. This doesn't make any sense for both the founder and the investor. The other scenario is that Terraman does exceedingly well and makes a 50 crore revenue. In this situation, the investor will end up getting an insignificant stake of 6%. This is not lucrative for Lion Capital at all.


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The cap is determined basis the minimum stake that the founders are willing to dilute. The floor is determined by the minimum stake that keeps the investors interested in the deal. In Terraman's case, the cap is kept at 20% and the floor at 10%.


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In summary, CCD is debt that gets converted into equity basis the actual revenue that the company makes. There is another way to structure this deal between Terraman and Lion Capital. This is by using the convertible node structure. This structure works on the assumption that the startup will raise a round of funding in the coming months. Let us see how convertible network works. Like CCD, convertible nodes is also initially a debt with zero interest. At the time of investment, the founders and investors agree upon the investment amount and a discount rate. Consider that Terraman raises a Series A round of 10 crores at a valuation of 50 crores. Now, the discount rate is applied on 50 crore valuation to arrive at a 40 crore number. This becomes a debt of 0.5 crores. Here comes the valuation at which Lion Capital's seed investment of 3 crores gets converted into equity. So this means that Lion Capital will get 7.5% stake in Terraman. But what if Terraman fails to raise funding for the next 3 years? In this case, Lion Capital will penalize the founders by taking up significant stake in the company upwards of 40%. This is called fallback valuation. This is called fallback valuation.


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Let us now understand what crowdfunding is. Crowdfunding is when individuals or startups raise small amounts of money from a large number of people through an online platform.


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Here are some of the crowdfunding terminologies that you need to know. First is project. A project could refer to an idea, cause, initiative, product or service for which you are creating a crowdfunding campaign.


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Next is a project goal. Project goal represents the amount of money you want to raise for your crowdfunding project.


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Crowdfunding campaigns can be of four types. Equity, rewards, debt, and donation. Equity crowdfunding is when the backers receive shares in return for their contribution to the project. Reward crowdfunding is when the backers are promised rewards for their contributions. Rewards can be priority access to the product when it goes live, pre-orders, goodies, or even recognitions. Debt crowdfunding is when backers receive interest payments for their contribution to the project.


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Among entrepreneurs, equity is reward funding and most popular. Note that in India, equity crowdfunding is not yet legal. In this course, we will explain reward crowdfunding through a case study of Squareoff crowdfunding campaign. Squareoff is an Indian startup that has raised 1.6 crore rupees from 799 backers on Kickstarter. The funding was used to develop the world's smartest chessboard. Squareoff's chessboard is AI-enabled and allows people to play remotely. One can also challenge the board's artificial intelligence to a game of chess. It is literally like the wizard chessboard from Harry Potter. Let's study Squareoff's crowdfunding campaign step by step. Step 1. Building a network A social media network is the foundation of every crowdfunding campaign. Crowdfunding platforms use social media to attract backers to your project. A big network leads to a wider reach, which in turn can lead to more backers and a large funding amount. Step 2. amphibians Step 3.APA Step 4.alternatives Step 5.auntments Step 6. bots Step 7.initers Step 8. specialized networks Step 8.itemspsedences


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Analysis of crowdfunding campaigns also suggest that 53% of email shares convert the backers making contributions, 12% of Facebook shares convert to backers, and 3% Twitter shares convert to backers.


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Step 2. Do your reach. Research is critical for choosing the right crowdfunding platform for your project. Research helps set a realistic expectation of the funding amount that can be raised for a particular project. Crowdfunding platform guidelines are a good place to start your research.


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One of the most important takeaways of this course is understanding how to get your first investment check from an incubator. So let's start.


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The seed investment provided by an incubator is a cherry on the top. Becoming a part of a known incubation program adds credibility to your startup. This is exactly why more and more investors look at incubators as hunting grounds for potential investment opportunities. FundEnable's Incubator Matrix tool will help you in identifying the right incubator. While the FundEnable's Incubator Starter Pack will help you in preparing for the application. So let's get started on your incubation journey.


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There are primary two government departments that have financially supported incubators across the country. One, Atal Innovation Mission, AIM, under Niti Ayog, and second, Department of Science and Technology, Government of India.


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Apart from the AICs and TBIs, most of the states in the country today have their own state-run programs and policies for supporting startups and incubators.


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Now, what kind of support do these incubators provide to entrepreneurs? There are four key support areas where incubators play a pivotal role.


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The journey to Pune reminded me of how little speed I could maintain while riding the bike because of the new engine that I mentioned earlier. So it was rather sad because I couldn't do more than 60 kilometers per hour. And that got frustrating after a point because I can see, you know, freaking rickshaws and huge trucks and basically anything that had two or four wheels just passing by all the time. And it became frustrating to the point where sometimes I was like, bloody hell, man, bugger it. You know, what if the engine does blow up? I'll just build it again. And then I realized how much I'd spent building the engine and how much cost and how much time it took and how much effort it took. So I was like, no, you know what, Jonathan, you're not going to lose your bloody calm. You're going to ride and you're going to get there in one piece. So that's exactly what I did. And to be honest, I'd never bloody packed bags on a bike or anything like that before. So. I kind of, um, I didn't really know how to do it. And when I, when I started off from home, everything seemed perfect. Everything seemed like it's not going to fall off. It's going to be fine. I was tilting the bike from left to right. And it all seemed like it was there and together. But little did I know that the minute I started riding down the bloody road and I actually encountered, you know, potholes, potholes, bad patches of road, speed breakers, and just in general, other people around me. It. It got horribly, the, the, the, the truth dawned on me. It just came on me like a bloody ton of bricks and my bugs, my bags just started falling off the side, almost dropped one on the bloody highway. The bike was pulling to one side because the bags were kind of heavy and it, they were kind of leaning off of this bike. So it got really, really, really scary up to a point. And that's when I actually stopped, um, a few kilometers later and I called my brother and he. He is one of the most extreme people I know when it comes to riding bikes. So he actually rode all the way from bloody Mumbai to Kulam Nalli, which is up in the north of India. It's about roughly about five and a half thousand kilometers. And he did that on his one 50 CC, um, Pajar Palser, which is one of the more well-known domestic market bikes in India. It's one of the best selling, most popular ones. Anyways, that's besides the point. Well, he has a. A lot of, a lot of experience with traveling and especially traveling with luggage. So he gave me a few pointers. I would joke, hold him on the way. And I showed him the condition of my bags and he had a good laugh before, you know, he had a good laugh. He took the piss before he actually told me what to do. And once I did what he told me, I mean, obviously again, cause it is me and I don't know what the hell I'm doing. I kind of understood what he meant to say. And I just kind of, you know, they have this word in India, they call it Jagad. I did a Jagad. And that's how I got through it. So I somehow made it to Pune the same night. And, um, it was, uh, it dawned on me again, the, the reality of the whole move and having to ride there with so many bags and the weight of the bags and how much fuel was going and how tired I was from just the 200 kilometer stretch. Kilometers or a kilometer stretch. But anyways, um, I ended up spending the night and then in the morning before I could even wake up my brother. The kind soul that he is. He went downstairs and he actually set up the entire bike. He took my bags, decided which one he wanted to put where, got, we went and bought the previous night, or rather the previous evening, we went out and got, um, or what I can only describe as bungee cords, the basically long stretchable rope that you use to tie your, your luggage onto your vehicle. And it has a hook on the end that you can hook into various places on the bike. So, um, not knowing that. That he was already awake and, uh, you know, he's gone downstairs to try and set up the bike for me before I could even ask him to. I go, I walk up and I couldn't find any of my luggage and I started panicking a bit. So I called him up and I'm like, Hey man, you seen my luggage anywhere? I don't see it anywhere. Did you keep it somewhere or where is it? Oh, I got worried. So he told me that he was actually downstairs and he was already setting it up for me and that he wants to warm up the bike and make sure everything was ready. So I was petrified, to be honest. I was not looking forward to the journey at all. It was definitely one of the most scary experiences of my life. And I just went and got ready and I went downstairs. Once I reached downstairs, to my surprise, he had set it up so well that it felt like the luggage was never not a part, not a part of the bike. You know, he had tied it down in such a precise manner and it was so comfortable, it was almost like I had a back support, like a sofa behind me because he tied the bags. And he positioned them in a way where it actually provided support for me as well. So throughout the journey after that, I just, I would lean back sometimes and there was so much of like back support. It was awesome. And, um, that was the journey there. And, uh, to be honest, it was one of the longest and most slow journeys I've ever had, but also one of the most enjoyable because the thing with riding slow, right? Although it's annoying and you don't cover much ground, you really get a lot of time to appreciate it. The scenery around you. So you look here and you look there and you see like, you know, fields that you would have never noticed before you get to look up at the clouds and just generally be able to soak in more of what's around you. So although it was slow and you know, my ass got completely obliterated, uh, you know, it was, it was a learning experience and definitely taught me how to ride slower, appreciate more of the nature and environment around me. And eventually I did make it to go a nine and a half to 10 hours later and towards the end of the trip course, I pleaded about, I mean, prior to leaving, I had about three or 400 kilometers on the bike, on the engine already. And I only needed a thousand. So towards the end of the journey, when we were, when I was close to go, I mean, I think I had about maybe two to 300 kilometers left, maybe a little less than that. I'm not too sure, but, um, that's when I realized, oh man, I've gone ahead and I've passed the thousand kilometers. So now I could start opening up the bike a little more, picking up a little more speed, maintaining a little higher, you know, cruising speeds as well. So that got really interesting. And then that was the most beautiful part of the journey. So I actually ended up just riding slow again, cause, um, I didn't want to take a risk with the engine as well as the scenery was so beautiful that I just couldn't help, but slow down and just look around and make sure that I'm taking in everything. So we had to go through, um, so the way. I. Did it was, um, there are two, three routes now don't ask me the specifics, but some of them are horrible, absolutely horrible. So my brother, uh, being the Explorer and the experienced biker that he is, he had already planned out and created a whole Google map for me with stops, the route and everything he'd, uh, plotted out stopping points with restaurants. And it was, it was just magical. So, um, I ended up stopping at a few places and one of the stops that he had was the. And Bali guard. And that was basically one of the biggest carts that they have. And in like, at least in, in the bottom of India. And it's one of the more beautiful ones where they have like big gorges and valleys and, and the lots of scenery around. And, uh, my brother so kindly had basically put it out. Um, one of the best spots at the top of the guard for me to stop and have a break and, ah, God, just him, man, he, he just absolutely killed it. Cause the minute I stopped over there and I looked over the bloody railing, it was just a beautiful, beautiful valley down there. And it made me realize that, you know, this journey was so worth it. Although my buttocks again were completely out of commission, not feel the, the, my behind at all. My legs were basically just two twigs trying to rattle to keep me up straight. And I pretty much had enough of the journey to be honest. I was tired. I was dirty. I was, uh, you know, very, very, very fatigued and I just wanted to go home and have a nap, you know, but anyways, I soldiered on and, um, I remember the first time that I actually entered Goa, um, it was, it was just unreal cause I, I realized that finally I had taken a step.


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Let us start with the first P, which is place. One of the core offerings of the incubator is the infrastructure provided to the entrepreneur that includes co-working and office space, meeting rooms, breakout areas, etc. During the initial bootstrapping phase, costs such as office rental, electricity, internet, especially in cities, can be a big burden. By providing infrastructure support, incubators ease the financial burden of the entrepreneurs.


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Every incubator has decided or defined a thrust area or area of expertise. Some incubators might support fintech startups, while others would support agri-tech ventures. The incubator hosts technology equipment and labs required by startups in that particular area. Example, an incubator which has IoT as a thrust area will have all the necessary IoT equipment and softwares related to that domain. You can see some other thrust areas on your screen.


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Apart from this, the technology infrastructure required by a startup for product development and testing is also available at the incubator. The first P, which is the place, plays a very critical role in cutting down both the capex as well as the operating costs for a startup during its initial years of operations. The next P is the most critical one, paisa. Incubators invest a small round of seed capital in select incubatees. Let's now shift our focus on understanding how a founder can raise a round of seed capital from incubators.


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After this, the incubator and the founder agree on a valuation and sign the shareholder's agreement. This investment can also at times come in the form of soft loans. Once the agreement is signed, the money is transferred to the company's account based on certain pre-agreed milestones like number of customers, revenue, product development phase, etc. There are certain restrictions on uses of capital. You can use the investment only for the purpose displayed on your screen.


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There are several other smaller schemes such as Nidhi Prayas for supporting product innovations through a 10 lakh rupee grant and Nidhi EIR where an entrepreneur is given a sustainance stipend of up to 30,000 per month.


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This is where incubators are playing a key role. Most incubators are located within large universities and engineering colleges. These campuses are buzzing with enthusiastic and talented students. The incubators provide access to the student pool and they can be a part of your team.


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Many startup founders have effectively leveraged this talented student pool, especially during the initial stages of their startup funding journey.


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There are several common services that every business requires, such as CAs, web developers, digital marketing agencies, patent and IPR attorneys, etc. Most incubators empanel these service providers and have already negotiated prices for each of these services. Founders don't have to run around to find a CA or a CS. The incubator gives you access to all these resources. To summarize the third pillar, which is people, you get young smart interns to work with you, mentor and also get mentoring support by industry experts and empaneled service providers.


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Finally, once you clear the evaluation process, you can be a part of the incubator and avail the support by signing an incubation agreement. An incubator supports startups over a period of 1-2 years. Against those services, the incubator takes a small equity stake in the venture that ranges anywhere between 1-5% as fees.


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We have split the fundraising journey of a company in five key stages. Each stage requires funding to go to the next stage and has a specific set of investors. The key to crack the fundraising game is to first identify the stage of your business and accordingly reach out to investors who look at companies in your stage.


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While a few companies have raised large amounts of capital at the idea stage itself, you may consider them as outliers. The fact is that the probability of funding at the paper plan is very, very low. Stage 2 is the product development stage. An electric vehicle battery startup will require to pump in money for creation of prototype, test it and finally come up with the launch-ready product. The company has not yet launched the product and has no revenue. This is where founders will have to pump in more money in the business. At this stage, the founders can also raise a small friends and family round. Basically, reaching out to your own network and raising money against equity. At this stage, another option is to raise money from incubators who invest money for product. Product development, testing, hiring, etc. To know more, visit the incubator module. Typically, the funding amount at this stage is on an average 1 crore.


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Stage 4 is the scale-up stage. Here, your product or service is well accepted by the customers. You have paying customers and repeat purchases. Now, you need money to expand your reach and attract a large number of customers. You are basically ready to scale up. This is where venture capital funds such as Sequoia, Matrix, Chirate, Bloom, etc. come in. VCs don't invest in the idea stage or at the product development stage. They come in when the product has been validated by the customers and the business is ready to scale.


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it now wants to further strengthen its leadership position and grow through an inorganic route like acquisition.


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Under the mango tree, creates opportunities for poor farmers and helps them in earning a livelihood.


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The outcome of this activity is honey. UTMT buys honey from the farmers, so this gives additional revenue for farmers. The honey collected is then packaged and sold in the global markets. For UTMT, the target investors can be social impact funds. Investors that back startups, creating a livelihood impact. Rather than reaching out to all the investors, it makes sense to only reach out to the relevant social impact investors. Look at their average investment amount, their portfolio, and reach out to them. UTMT has followed this strategy to successfully raise money from Acumen, a large US-based social impact investor.


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This is called spray-and-pray approach or what we call as the false start. Remember, you're raising capital, you're not selling credit cards. Instead, what works is introduction to decision makers. Find someone who can introduce you to an investor who can vouch for you. Here, you need a mentor and the best mentor can be another founder who has successfully raised capital.


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To summarize, there are 5 stages of capital and each stage has a specific set of investors. Pause the video here. Check out this table that gives you a quick snapshot of the 5 stages.


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Step 3. Pre-camping prep Before you take your campaign live, you need to work out three things. Budget, logistics and your media plan.


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Crowdfunding platforms typically charge a 5% to 10% commission on the total funds raised by the project.


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Here is a look at the media coverage for Square Off campaigns. Through leading media publications such as CNBC, Economic Times, DNA and more, PR helped Square Off attract more backers. Step 4. This is initiating the crowdfunding campaign. A crowdfunding campaign has five elements. Video, Description, Team, Detailed Plan and Rewards. Let us look at these elements for Square Off Kickstarter campaign. The first is the video. The video primarily describes the product and often showcases the prototype for the crowdfunding project. It should be high quality video and not more than 5 minutes long. The next is the description. As you see, the Square Off Kickstarter campaign, the description details the prototype and its features. It effectively communicates the value proposition of the product to the backers. The next is the team.


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Then comes the detailed plan. Why does the project need to be crowdfunded?


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These five elements, video, description, team, detailed plan, and reward levels are the building blocks of crowdfunding campaign.


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Average word count for successful campaigns is between 300 to 500 words. Crowdfunding projects by teams raise more funding than projects by individuals. The majority of successful campaigns have about 9 reward levels. Funded projects typically have an average of 300 backers. Updating followers at least 8 times throughout the campaign is important. Campaigns with update raise 126% more funding than campaigns without updates. Average crowdfunding campaigns last for about 9 weeks.


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Among entrepreneurs, equity and reward funding are most popular. Note that in India, crowdfunding is not legal through the equity route. In this course, we will explain reward crowdfunding through a case study. Square Off is an Indian startup that has raised 1.6 crores from 799 backers. Step 3 is the pre-campaign prep. Before you take the campaign live, you need to work out three things. Budget, logistics and your media plan.


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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 it. The investment money is transferred into the company's bank account only after the SHA is signed by the investors and the founders. We hope this course serves as a guide for understanding and negotiating term sheets. See you.


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Today's incubation manager role has evolved. It is not just about providing infrastructure, training, events and mentoring anymore. It is about investing in startups and supporting startups in their fundraising journey.


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One of the primary expectations from founders is that their incubation manager should guide them in securing the next round of funding.


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Our track record speaks for itself. We have successfully trained over 100 incubation managers and CEOs from across the country.


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A venture capitalist pools in money from H&Is, corporates, pension funds, insurance companies, etc. into a fund. This money is then invested into various companies. The promise by a VC fund manager to these investors is that their returns will be delivered at the end of a 10-year life cycle. This means the life of the fund is 10 years. During the first 2-3 years, the fund is in the investing life cycle.


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For an entrepreneur, the typical timeline for providing exit to a VC is 5 to 7 years after investment.


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A secondary sale is when a new investor comes in and buys out the stake of an existing investor in the company.


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Typically, angels who invest at a very early stage sell their stake to Series B or Series C investors and exit. This is an example of a secondary sale.


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All the angels exited in this round and got almost a 16x return on their investment.


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Five years later, a PE fund called General Atlantic Partners bought the 22% stake from Future Ventures for 145 crores.


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The next exit option is an acquisition, where 100% stake or majority stake in a business is bought by a large company for strategic reasons. Some of the reasons for taking over a business can be gaining a larger market share or entering a new business or geographic expansion. At times, acquiring talent can also be a key reason in acquisition.


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When Baiju's acquired White Hat Jr. for $400 million, VCs like Nexus, Omidyar, Owl Ventures, who had invested in White Hat Jr., got an exit. In 20 months, Nexus Ventures' investment of $4.7 million became $66 million. Omidyar's $3.17 million became $45 million and Owl Ventures' $2.8 million became $30 million.


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Next option, IPO. IPO is arguably the most sought-after and the flashiest way to give an exit to the investors. Exits through IPOs are rare, but they bring a certain level of prestige to the company and the founders.


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10 years later, when Zomato came up with their IPO, InfoEdge's stake grew to a massive 15,000 crores.


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Lastly, promoters or the company can also opt for buyback and give an exit to the investors. The founders and the company need to be cash rich to give an exit to the investors through a buyback option.


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We are slowly moving towards the ending of our fundraising movie.


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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 am not trying to scare you here. I am 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 DD process. We will be starting by understanding what exactly is due diligence. We will then go through the details of what do investors look for during the due diligence process. Finally, we will go through the step-by-step process to prepare for due diligence. Let's get started. Due diligence, as we've just seen, evaluates a deal from legal, compliance and financial perspective. The exercise is to evaluate the due diligence process. The exercise is to evaluate the due diligence process. The exercise is all about finding hidden skeletons that might create huge liability for the companies in the future. The investor expects the capital to go towards expansion and not towards setting off liabilities due to non-compliance. The outcome of this exercise is a list of red flags. If the red flags are extremely critical, such as fraud by the founders, then the deal gets called off. If the findings are true, then the deal is called off. If the findings are minor, then the company is given time to take corrective actions. Generally, angel stage DD is not as exhaustive as series A DD. This is because in early stages, the company has very little data to share. But by series A, the company has clients, employees, operating history, which makes the DD process very, very intensive. We hope this course helps you prepare. We hope this course helps you prepare for DD process and tackle it. Thank you. Thank you. Thank you.


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We will now explain to you the transaction comparable method to find your company's valuation.


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Consider this company, Terraman. It is a D2C company selling men's grooming products. In year one of operations, the company has made a revenue of 1 crore.


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With this expansion strategy, the founders are targeting a revenue of 100 crore in the next financial year. Now, for the expansion to happen, they will need 3 crores in funding.


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But is this 30 crore the right valuation for Terraman? To find this answer, Lion Capital will follow 6 steps of the transaction comparable method. Step 1. We will now try to find out details of their fundraising round. The objective is to find the following details for comparable companies.