VCs invest in companies that have the potential for rapid growth and high returns. They look for companies in large markets with scalable and defensible business models. The ideal company will have an experienced founding team, a product or service close to market readiness with initial customer traction, and validation of key assumptions. It's best to approach VCs once a company has a product or service live in the market with early revenue and customer feedback. Alternative funding options include self-funding, friends/family, angel investors, government subsidies, bank loans, or growing organically through customer acquisition initially before seeking outside capital.

1. Nuts & Bolts
of
Risk Capital
Vivek Mohan

3. Is your company a good fit for VC?
VC LifeStyle
Coverage
Growth rate
Type
Benefit
Future
National or Global Local or regional
Fast or Hyper Slow & Medium
Game changing Traditional or Conventional
Investors, founders,
and shareholders
Founders and shareholders
EXIT / SELL / IPO Keep in Family

4. 1/3
Why VCs
don’t show
interest
in you?
Entrepreneur
Lack of experience / knowledge
in related area
Lack of sales and operational
experience in founding team
Mindset: Always prioritizes
profits over growth
Mindset: Not open to
feedback, change
1
2
3
4

5. Market
Small Market / aiming to build a
20 Cr company in 5 yrs
Uncertain Business model,
Scalability challenges
2/3
1
2

6. Differentiability and
Competition
Me too product / service
Capital Requirement
Risk of consuming too much
capital
3/3

7. Maturity
Time
Self/Angel Seed VC PE IPO
Feasibility Stage:
Product Development,
Value Proposition
Early Customer
Feedback
Select Hires.
Market Validation Stage:
BD, Fine tune Biz Model,
Partnerships
Product/Service live
Early Revenue Model
Customer Feedback
Team build out
Mature Stage:
Focus Execution
Financial Predictability
Risk Management
Concept Stage:
Ideation
Initial Market
Feedback
Market Sizing
Growth Stage:
Scalability, Teams,
Process, Profitability
Market Validated
Biz model validated
Product Diversification
The
lifecycle of
a venture
business

8. What do VC look for?
Team
- Founders
- Core Team
Large Market
- Nascent, hyper Growth
- Large but disruptive
Value Prop.
- Why you will win
- Why now
Scalable
- Rapid Build out
- Capital Efficient
- Operating Leverage
Defensible
- Intellectual Property (IP)
- First Mover Advantage
- Network Effects
Exit Prospects
- IPO
- Trade Sale

9. Team Risk
Technology / Product risk
Competitive Risk
Market / Business Model risk
Exit Risk
1
2
3
4
5
5 Types of Risks

10. VC unlikely to make a bet on multiple risk factors
Product ready / close to being ready & customer traction
Some validation of assumptions, business model, market size
Presence of Business and Operations guy on team
1
2
3
4
When to approach a VC?

11. What if you don’t want VC money?
Customer Money
(Organic growth)
Government
Subsidies / Loans
Self
Funding
Friends and
family
Bank Debt
Angel investors
(e.g Ratan Tata)

12. When I started Biocon in 1978, the
obstacles I needed to navigate were
manifold - ranging from infrastructural
hurdles to issues related to my
credibility as a business woman.
With no access to venture capital,
money was scarce and high-cost, debt-
based capital was all I had.
“
Kiran Mazumdar-Shaw

13. Maturity
Time
Self/Angel Seed VC PE IPO
Feasibility Stage:
Product Development,
Value Proposition
Early Customer
Feedback
Select Hires.
Market Validation Stage:
BD, Fine tune Biz Model,
Partnerships
Product/Service live
Early Revenue Model
Customer Feedback
Team build out
Mature Stage:
Focus Execution
Financial Predictability
Risk Management
Concept Stage:
Ideation
Initial Market
Feedback
Market Sizing
Growth Stage:
Scalability, Teams,
Process, Profitability
Market Validated
Biz model validated
Product Diversification
I AM TOO
LARGE FOR
VCS, SHOULD
I JUST LIST?

14. Bigger Bets (300 Cr+ Investments)
More mature companies, typically
profitable
Mix of control deals and minority
deals
Lower Return expectations than
VC (3x/25% irr)
Low Failure Rates
(<5% pe backed companies fail)
1
2
3
4
5
VC vs PE

15. Assistance/sounding board for strategy
Large network of customer contacts, advisors
Active assistance in hiring senior members of team
Appointment of Board, Advisors
Corporate governance
Enhanced credibility IMPORTANT FOR AN IPO
Most of above – varies by stage of investor.
1
2
3
4
5
There is more to investors than just money
6
7

16. Higher Accountability / Governance
(spending, reporting)
Decisions being made by a
balanced board rather than founder
Lower equity holding (but
potentially much higher value)
1
2
3
Investor Expectations

17. Thank You