What do investors look for in a business v share1. What do investors look for in an
business plan investment?
The 10 golden rules
20th May 2011
Ankur Gulati, Draper Fisher Jurvetson
agulati@dfj.com | @vc_in_india | +91-80-67823900
CONFIDENTIAL AND PROPRIETARY
OPINIONS EXPRESSED IN THIS PRESENTATION ARE THAT OF THE AUTHOR AND NOT DFJ
2. Contents
▪ About DFJ
▪ The 10 golden rules
▪ QnA
© Ankur Gulati, Draper Fisher Jurvetson | 1
3. Contents
▪ About DFJ
▪ The 10 golden rules that “usually” hold
– 5 related to team, mindsets and culture
– 5 related to business idea and market
▪ QnA
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4. 1 Top-team is more important than the idea a.k.a. what use is a washing
machine without electricity?
IDEA
Description
▪ Esp. in markets where the
“devil is in execution” (e.g.,
India)
▪ Is an important valuation
driver – contrary to what
entrepreneurs might
believe
TEAM
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5. 2 Know what you know and what you don’t know a.k.a. there’s
no shame in flunking 1 out of 5 exams
Description
▪ “Must-have” attitude for
today’s entrepreneurs
▪ Will determine how
founders are able to drive
a firm in a rapidly changing
environment
▪ Not every ball will be hit
out of the park (unless
you’re Chris Gayle), but
investors want you to be
able to adapt and give it
your best shot
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6. 3 Solve problems, don’t problem-solve a.k.a. just do it
Description
▪ Rate of innovation is much
faster today than it was
before
▪ Need people who can
solve problems (beg or
borrow, no stealing) and
get it done rather than
strategize endlessly
▪ Especially true in
peripheral functions – e.g.,
mid-level/low-level
manager recruitment
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7. 5 Metrics will deliver improvement insights a.k.a. “friend” the
numbers
Description
▪ While “analysis paralysis”
is not productive, it is
important to have a tab on
key metrics for your
business
▪ Perspectives matter.
Look at the metrics from
different perspectives.
Insights will come jumping
out.
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8. 6 Aim to be a rock-star a.k.a. the tyranny of the in-betweens
Investors Description
Entrepreneurs
▪ Why do investors repeat
the following rhetoric:
“Think big”?
▪ In general, investor and
entrepreneur incentives
are not completely aligned,
this is the tyranny of the in-
betweens (or the #huh
zone)
▪ All investments must pay a
premium for the expected
future “duds” in the
portfolio
# Fail # Huh? # Win
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9. 7 Important to know what your success hinges on a.k.a. cut
through the clutter
Description
▪ A 5-7 year thought process
is a must
▪ Priorities could and will
change over time, but an
“as-is” thesis of where you
will be in 5 years’ time and
how you will get there is
important
▪ Key is to think “end-
game”
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10. 8 Focus is usually important but not always a.k.a. work
consumer-back rather than investor-back
Description
▪ Investors love focus – this
is driven by “pattern
recognition” but
exceptions exist
▪ Chart your own course
working backwards from
the consumer. Don’t say
something just to sell to
the investor.
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11. 9 Have a feel for on-the-ground challenges a.k.a. the same
execution devil also resides in the details
Description
▪ You’re selling. And so you
need to convince. And so
you need to know every
single detail of the plan.
▪ You’re executing. And so
you need to know every
single detail of the plan.
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12. 10 Don’t go by momentum a.k.a. even turkeys can fly in high
winds*
Description
▪ Look-alikes can work, but
only in finite circumstances
▪ Momentum trading is ok,
but carving out 5 years of
your life based on
momentum is a travesty
*Credit for the line goes to Eugene Kleiner, KPCB © Ankur Gulati, Draper Fisher Jurvetson | 11
13. 11 Spend 20 % of your time building a phenomenal network a.k.a.
“meet and greet” helps Bonus Rule!
Description
▪ Building a great network
helps.
▪ Invest time and energy to
build and maintain
▪ Don’t burn any bridge! You
never know where your
next customer, investor,
supplier will come from.
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14. Contents
▪ About DFJ
▪ The 10 golden rules
▪ QnA
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15. Thank you for your patience!
Contact:
Ankur Gulati, Draper Fisher Jurvetson
Email: agulati@dfj.com
Twitter: vc_in_india
Phone: +91-80-67823900
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