VC Funding: By.S.Tomar

VC Funding
By.S.Tomar
Starting of VC
In 1946 the ARD Corp. at General Doriot started the institutalization process and achieved the success of converting $70000 in 1957 to $355 million by investing in Digital Equipment Corporation, giving a 101 % CAGR. In India GOI appointed Late Shri R.S.Bhatt to find the unconventional ways to fund the new business. The committee recommended the VC industry in India
Ventureast APIDC-VCL Biotechnology Fund
VC .. The Indian beginning

In 1988 GOI wanted to institutionalize the VC Industry. CCI ( Controller of Capital Issue )formed. In 1991 CCI abolished and the VC Industry becomes unregulated.
VC the Indian Experience

1999 - Warburg Pincus (through its investment company Brentwood Investment Holdings Limited) acquired a 19.05% equity interest in Bharti Tele-Ventures.( representing 62 million shares ) At the time of the IPO in 2002 the price was Rs.45.
The VC Experience
In 2002, Warburg had paid $40 million when it acquired a 64% stake in WNS from British Airways. NYSE-listed WNS, Indias second-largest BPO firm, may fetch a valuation of around $800 million. Wednesday, Feb 15, 2012 at 0207 hrs IST Private equity major Warburg Pincus has reduced its stake in BPO firm WNS Holdings from 48% to 29%. The BPO firm told FE that last week it raised $110 million through a combination of primary and secondary offerings. We have got about 50 new top investors on board, said WNS Group CEO Keshav R Murugesh.
VC FUNDING OF BIOTECH/ BIOTECH-PHARMA VENTURES

1. VC UNDEFINED 2. VC DEFINED 3. VC CRITERIA FOR INVESTMENT 4. ENTREPRENEURS CRITERIA FOR VC 5. RISKS OF A VENTURE 6. UNIQUE NATURE OF BIOTECH VENTURES
7. SOME USEFUL HINTS
WHAT IS VC FUNDING?
IS IT JUST THE STORY OF THE MAN WITH THE IDEA AND THE MAN WITH THE MONEY?
VC FUNDING IS NOT JUST ABOUT

FIRST GENERATION ENTREPRENEURS
TECHNOCRATS HIGH TECHNOLOGY
FIRST TIME TECHNOLOGIES

SEED CAPITAL AT SOFT TERMS
WHAT VC FUNDING IS
IT IS THE BUSINESS OF EMPLOYING CAPITAL PATIENTLY TO MAXIMISE RETURNS WHILE MANAGING RISKS IN A RELATIVELY HIGH-RISK VENTURE VERSUS
SIMPLY MINIMISING RISKS FOR A SURER FIXED RETURN
VC FUNDING IS
DIFFERENT FROM OTHER TYPES OF FUNDING IN THE: - SELECTION OF INVESTMENT
- STRUCTURING OF INVESTMENT
- ACTIVITY FOLLOWING INVESTMENT - EXITING FROM INVESTMENT
SELECTION OF INVESTMENT BY THE VC WILL SPAN ...

PROMOTERS WITH SIGNIFICANT & PROVEN BUSINESS TRACK RECORD, WHO WILL DEVELOP NEW TECHNOLOGIES &/OR BUILD NEW BUSINESSES
TO
PROMOTERS WHO ARE TECHNOLOGY SAVVY, HAVE DEVELOPED INNOVATIVE TECHNOLOGIES TO A SIGNIFICANT EXTENT, BUT HAVE NO RELEVANT BUSINESS TRACK RECORD
VCs WILL, IN STRUCTURING THEIR INVESTMENT, FAVOUR

EQUITY Vs DEBT
UNLITSED EQUITY Vs LISTED EQUITY LONG-TERM Vs SHORT-TERM INVESTMENT
NO SECURITY Vs FULL SECURITY

SHARINING UPSIDE POTENTIAL Vs FIXED INCOME
IN THE POST- INVESTMENT STAGE, VCs WILL

ADD VALUE Vs ONLY MONITORING AND RELYING ON COLLATERAL RECOVERY HELP WITH FINANCIAL, MARKETING, TECHNICAL & PERSONNEL LINKAGES
PROVIDE INCENTIVES FOR BETTER PERFORMANCE Vs PENALTIES FOR LACK OF IT

MONITOR CLOSELY THROUGH BOARD REPRESENTATION PLUS CONTINUAL CONTACT
VC WILL LOOK FOR EXITING FROM INVESTMENT THROUGH...
- IPO - THIRD PARTY ACQUSITION - BUYBACK BY ENTREPRENEUR
WHAT VCs WILL LOOK FOR IN INVESTEE COMPANIES - 1

PROMOTERS INTEGRITY, RELEVANT EXPERIENCE, DRIVE LEVEL UNIQUENESS OF THEIR IDEA FOCUS ON/COMMITMENT TO THEIR IDEA
HIGH ENTRY BARRIERS

COMPETITIVE ADVANTAGES GOOD MARKET SIZE & GROWTH RATES
ACCEPTABLE GEOGRAPHIC LOCATION

APPROPRIATE STAGE OF INVESTMENT
WHAT VCs WILL LOOK FOR IN INVESTEE COMPANIES - 2

COMPANY Vs OTHER ENTITIES UNLISTED Vs LISTED ACCEPTABLE % OF EQUITY ACCEPTABLE SIZE OF INVESTMENT NUMBER OF YEARS THAT INVESTMENT MUST BE HELD TYPE OF FINANCIAL INSTRUMENTS ALLOWED DESIRED RATE OF RETURN
CRITERIA INVESTEE CO SHOULD LOOK FO IN THE VC

RESPONSIVENESS SUPPORT Vs INTERFERENCE Or INDIFFERENCE UNDERSTANDING OF YOUR INDUSTRY/ SECTOR ABILITY & WILLINGNESS TO ADD VALUE ALIGNMENT OF THEIR EXIT OBJECTIVE WITH YOURS
RISKS IN VENTURES
FINANCE PEOPLE RESEARCH & DEVELOPMENT IMPLEMENTATION PRODUCTION REGULATORY MARKETING EXIT
THESE RISKS ARE PRONOUNCED IN BIOTECH/BIOTECH-PHARMA INDS
LONGER LEAD TIMES

MOSTLY NASCENT TECHNOLOGIES FAST EVOLVING TECHNOLOGIES
HIGH CAPITAL REQUIREMENT

HIGHLY REGULATED NET, PHARMA/BIOTECH VENTURES ARE SIGNIFICANTLY RISKIER!!!
SO, WHAT DO WE DO WITH THESE RISKS
- EXAMINE THEM CAREFULLY - QUANTIFY THEM, WHERE POSSIBLE - MANAGE THEM - OFFSET BY COMMENSURATE RETURNS
SOME USEFUL HINTS: 1

THINK A GREAT DEAL ABOUT THE BUSINESS
DO NOT CONVINCE YOURSELF THAT THE BUSINESS IS RIGHT.BE AS LOGICAL AS POSSIBLE.

ENSURE COMFORT WITH
- GESTATION PERIOD
- CAPITAL REQUIREMENT ENSURE ABILITY TO KEEP PACE WITH TECHNOLOGY CHANGES CHANGE AVOID HERD MENTALITY

DISPLAY A PROFESSIONAL APPROACH AT EVERY STEP
TEST EVERY ASSUMPTION IN THE BIZ PLAN

LEARN FROM SIMILAR MODELS IN INDIA AND ABROAD
SEE HOW YOU COULD BE DIFFERENT AND BETTER AT EVERY STEP

BE SURE OF SALES PROJECTIONS AND ACHIEVEMENT OF TARGETS

ENSURE COHERENCE AND SYNERGIES IN THE TEAM
CHECK THE VC TEAM BACKGROUND AND PAST PROJECTS

UNDERSTAND CLEARLY THE TERMS OF VC FUNDING & THEIR IMPLICATIONS DO NOT SIGN THE TERM SHEET BLINDLY UNDERSTAND POST-INVESTMENT APPROACH OF THE VC FOLLOW A WIN-WIN APPROACH
THE XY VENTUREAST BIOTECHNOLOGY FUND FUND SIZE: RS. 45 CRORES MINIMUM FUND WILL INVEST IN EARLY-STAGE BIOTECH, BIOTECH-PHARMA VENTURES AVERAGE SIZE OF INVESTMENT: RS. 4 CR AP GOVERNMENT LEAD INVESTOR FUND MANAGER HAS EXTENSIVE INDO-US CROSS BOREDER EDUCATION, WORK EXPERIENCE, ENTREPREURSHIP, NETWORKING & VC TRACK RECORD
Resources
http://feeds.feedburner.com/venturecap www.feld.com www.askavc.com www.venturebeat.com http://www.indiavca.org/abt_mission.aspx
THANK YOU

VC Funding: By.S.Tomar

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VC Funding: By.S.Tomar

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VC Funding

VC .. The Indian beginning

Ventureast APIDC-VCL Biotechnology Fund

VC the Indian Experience

Ventureast APIDC-VCL Biotechnology Fund

VC FUNDING OF BIOTECH/ BIOTECH-PHARMA VENTURES

7. SOME USEFUL HINTS

VC FUNDING IS NOT JUST ABOUT

FIRST TIME TECHNOLOGIES

SIMPLY MINIMISING RISKS FOR A SURER FIXED RETURN

SELECTION OF INVESTMENT BY THE VC WILL SPAN ...

VCs WILL, IN STRUCTURING THEIR INVESTMENT, FAVOUR

NO SECURITY Vs FULL SECURITY

IN THE POST- INVESTMENT STAGE, VCs WILL

PROVIDE INCENTIVES FOR BETTER PERFORMANCE Vs PENALTIES FOR LACK OF IT

VC WILL LOOK FOR EXITING FROM INVESTMENT THROUGH...

- IPO - THIRD PARTY ACQUSITION - BUYBACK BY ENTREPRENEUR

WHAT VCs WILL LOOK FOR IN INVESTEE COMPANIES - 1

HIGH ENTRY BARRIERS

ACCEPTABLE GEOGRAPHIC LOCATION

WHAT VCs WILL LOOK FOR IN INVESTEE COMPANIES - 2

CRITERIA INVESTEE CO SHOULD LOOK FO IN THE VC

THESE RISKS ARE PRONOUNCED IN BIOTECH/BIOTECH-PHARMA INDS

LONGER LEAD TIMES

HIGH CAPITAL REQUIREMENT

SO, WHAT DO WE DO WITH THESE RISKS

SOME USEFUL HINTS: 1

DO NOT CONVINCE YOURSELF THAT THE BUSINESS IS RIGHT.BE AS LOGICAL AS POSSIBLE.

SOME USEFUL HINTS: 2

TEST EVERY ASSUMPTION IN THE BIZ PLAN

SEE HOW YOU COULD BE DIFFERENT AND BETTER AT EVERY STEP

SOME USEFUL HINTS: 3

CHECK THE VC TEAM BACKGROUND AND PAST PROJECTS

Ventureast APIDC-VCL Biotechnology Fund

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