Shekar Kirani of Accel Partners and Vijay Anand of The Startup Centre, did this talk at the NASSCOM Product Conclave 2013 held in Bangalore.

1. BUILDING A
FUNDABLE
STARTUP
Vijay Anand
Shekhar Kirani
OCTOBER 19, 2013. Vijay and Shekhar
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2. STRUCTURE OF THIS TALK
HOW TO BUILD COMPANIES THAT HAVE GREAT….
EXIT VALUE
OCTOBER 19, 2013. Vijay and Shekhar
TEAM
MARKET
BUSINESS MODEL
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3. Exit Value
$200M
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4. TARGET MARKET SIZE?
TO GET TO $200M+ EXIT COMPANY
Size of the Market
(India Jewelry)
Size of the Market
(Transportation)
$64B+
$15B+
Addressable Market
(Studded Jewelry)
Addressable Market
(Taxi booking)
$8B+
$3B+
Target Market
(Organized Jewelry)
Target Market
(Top 10 cities)
$800M+
e.g.
OCTOBER 19, 2013. Vijay and Shekhar
BlueStone
$300M+
e.g.
TaxiForSure
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5. REVENUES FOR GETTING $200M+ EXIT
Margin
Gross Margin (65% for GOOG.
Operating Margin (25% for GOOG.
1.5% for AMZN)
100M+ Revenue
e-commerce.
Niche tech service providers.
40M+ Revenue
Non-subscription business.
Field sales force.
Medium margin.
OCTOBER 19, 2013. Vijay and Shekhar
Massive Usage
20%+ of online India.
Weekly Interaction.
Growing like weed.
e.g. WhatsApp
Deep IP/Tech
Few Anchor Customers.
Protected IP through Patents.
Has global appeal.
e.g. HealthCare Device Co..
$20M+ Revenue
Enterprise SaaS.
Online/Offline business.
Good operating margin.
Growing at 30%+.
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6. TYPICAL COMPANY EXIT SCENARIO
Value Creation
8x returns on invested $
4.7x is the 2012 Average
$25M
CAPITAL
Equity Distribution
Time Impact
20% to 30% for founders ($60M)
Revenue: $0M, $1M, $2.5M, $8M,
$20M+…
Non-linear growth
6 YEARS
OCTOBER 19, 2013. Vijay and Shekhar
5% to 10% for Angels ($20M)
$200M+
Exit
55% to 75% among 3 investors ($40M)
3
INVESTORS
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7. WHAT-IF
QUESTIONS
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8. FUNDABLE TEAMS
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9. YOUNG ENTREPRENEURS
Good in
Tech
No business
experience
26 Years
Individual
contributors
No product
experience
Passionate
Ideas from
their world
Minimal G2M
experience
OCTOBER 19, 2013. Vijay and Shekhar
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10. WHAT SHOULD YOU DO?
YOUNG ENTREPRENEURS
3
1
2
4
Interact with
your customers.
Crate your
Product.
Learn
Marketing,
Sales, Product,
Hiring.
Talk to
Users,
Mentors.
Investors.
See a
Big
Opportunity
LAUNCH
PAY SELF
LEARN
RAISE $$
• Experiment and learn. Iterate faster. Skill building phase.
• Survive. Generate revenues and if possible even “exit”.
• Gain domain experience and deeper insights
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11. OUTSTANDING TEAM MEAN WHAT?
Ability to work together
Experimenters
Decision Makers
2 Co-Founders
v/s one Founder
Passion &
Commitment
Street Credibility
Deep product
experience
Operational
background
Domain
Experience
Strong G2M
experience
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12. WHAT-IF
QUESTIONS
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13. TARGET MARKETS
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14. FUNDABLE MARKETS
Exit Friendly
Large competing players
Existing players are slow to react
Customer behavior is changing
New players can grow fast
e.g. Enterprise SaaS, AdTech,
Payments, Healthcare Devices
Effciency Play
Platforms, Tools, Enterprise Apps
e.g. Atlassian, SalesForce, Marketo
Shifting Money
Online version of offline business.
First-mover advantage.
Convenience and Efficiency.
e.g. BookMyShow, RedBus
OCTOBER 19, 2013. Vijay and Shekhar
Network based
Narrow functionality.
Applicable to large population.
e.g. WhatsApp, Instagram
Marketplaces
B2C and B2B marketplaces.
Fragmented Suppliers.
Non-value added Intermediaries.
e.g. CommonFloor, 99Design,
oDesk
New markets in creation
Uncovering latent demand.
Offline resources are enabled.
Technology enabled.
e.g. AirBnB, Lyft, Fiver
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15. PREFERRED BUSINESS CONSTRUCTS
WHAT SCALE COMPANIES WOULD CHOOSE
1
License
v/s
Subscription
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3
In-Prem
v/s
Cloud
4
Revenue-side
v/s
Cost-side
Revenue flow
Start
v/s
End
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16. PREFERRED BUSINESS CONSTRUCTS
WHAT SCALE COMPANIES WOULD CHOOSE
5
Single
v/s
Multi Tenant
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Inbound Sales
v/s
Outbound Sales
7
Inside Sales
v/s
Field Sales
8
India
v/s
Global
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17. WHAT-IF
QUESTIONS
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18. DEALING WITH INVESTORS
1. Target the right firm. Match your company type to
investments firm’s investment thesis.
2. Individuals make decisions. Not a VC firm. Target the right
investor.
3. First meeting is the “most important meeting”. Founders
should know more about their business, product than the
investor. Do your homework.
4. It is a comparison game. There is a “deal pace” and
“risk/reward” profile of the deal. The best deal on the table
gets “the money”.
5. Make sure you guys are excited about the investor beyond
“money”. It is a 7 year commitment, probably very next to
“commitment of marriage”.
OCTOBER 19, 2013. Vijay and Shekhar
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19. Q&A
facebook.com/accelpartnersindia
facebook.com/thestartupguy
@skirani
@vijayanands
skirani@accel.com
vijay@thestartupcentre.com
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20. WATCH THE
VIDEO
http://www.youtube.com/watch?v=fj8ZquMV44I
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