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Have a biz plan? Here's how to get VC funding
Shishir Bhate | August 03, 2006
If you have a great business plan and need funding for it, there's an eager venture capitalist waiting out there to help you set your business enterprise rolling.
All you need to do to see your dreams come true is to e-mail a five-page executive summary of your project plan to the ISB at TiE-ISBConnect06@isb.edu before August 15, 2006.
The Wadhwani Centre for Entrepreneurship Development (WCED) at the Hyderabad-based Indian School of Business, along with the Hyderabad chapter of The IndUS Entrepreneurs (TiE), has launched a joint initiative -- TiE-ISB Connect -- to bring together aspiring entrepreneurs, start-ups and growth-stage entrepreneurs, venture capitalists, successful entrepreneurs and academicians, on a common platform to interact and help build successful enterprises.
What is it all about?
So what is this initiative all about? Subramonia Sarma, Director, Wadhwani Centre for Entrepreneurship Development, at ISB, who has over 25 years of experience in supporting hi-tech entrepreneurs and evaluating projects, designing strategies and mentoring budding entrepreneurs, explains.
"The idea is to promote entrepreneurship. We believe in helping budding entrepreneurs, mentoring them and supporting them in their enterprise, since business is not a function of money alone. It also needs assistance in various areas: management, strategies, building the right ecosystem, and sharing knowledge, apart from other things," says Sarma in a telephonic interview with rediff.com.
About 30 venture capitalists, angel investors and private equity funds from across the globe, along with 30 successful entrepreneurs will be available during the event at the ISB Campus, Hyderabad, from September 20 to 22, 2006.
Great networking opportunity
TiE-ISB Connect will be a great networking opportunity for entrepreneurs with over 500 delegates expected to participate in the event.
Some of the keynote speakers at the event include serial entrepreneur Kanwal Rekhi, Air Deccan chairman Capt G R Gopinath, rediff.com founder and CEO Ajit Balakrishnan, Headstrong Corporation chairman and CEO Arjun Malhotra, Naukri.com CEO Sanjeev Bikhchandani, and Satyam Group chairman Ramalinga Raju.
Among the venture capitalists to be present at the event are Carlyle Group, Sequoia Capital, DFJ, Helion, August Capital, NthOrbit, Comcast, Sherpalo Ventures, TSI Ventures, ICICI Ventures, and Actis Partners.
"The event helps create an opportunity for budding and established entrepreneurs. It offers them a platform to pitch their ideas to the venture capitalists and garner funding for their dreams, and to network with other of their kind and to pool their resources and ideas to launch a business. The workshops at the event will help them in understanding how to go forward, what to do to scale up their businesses," says Sarma.
"The initiative not only offers a platform to these entrepreneurs but also helps them before, during and after the event, providing ongoing assistance, mentoring support and enabling people to meet," says Sarma.
"The entrepreneurs need to e-mail a 5-page summary of their business plan by August 15, 2006. TiE-ISB Connect will help in match-making by finding the right investors for specific plans. You (entrepreneurs) can present your plans and seek funds from a set of investors whose focus area matches with your project, or to a group of investors and entrepreneurs who could be interested in helping you to take your idea forward," he adds.
Who can participate?
"Whoever has a bright idea that can make wealth," Sarma puts it succinctly.
To elaborate, basically three categories of enterprises can participate:
How will your plan be selected?
"A two-stage evaluation process is used to select the plan for funding. This includes preliminary screening based on the summary business plans received and final short-listing based on complete business plan. The full plan must be sent by September 10, 2006. All participants invited to submit business plans can avail mentoring support from the TiE-ISB team," says Sarma.
What is the best way to present a winning plan?
"Well," says Sarma, "there are five basic questions that venture capitalists ask before finally deciding on funding an enterprise. These are:
"1. What is the problem that you are trying to solve through your business plan? Is it a critical problem that you are solving?
"2. So what? How is your solution different from the ones existing in the market? What is the value you will provide to consumers?
"3. What is the size of the market that you propose to serve? Can it grow? What is the uniqueness of your solution, how long will its uniqueness last, and is it protectable?
"4. What are the resources you will require for the plan? What do you need to make and deliver your product, or services, to the market in terms of technology, funds, people and partnerships?
"5. What are the risks and rewards involved? That is, what are the investment risks and profits in this venture," Sarma informs.
He says that an important attraction at the TiE-ISB Connect this year is the discussion on emerging entrepreneurial opportunities in eight different sectors: IT / IT-Enabled Services, Internet technologies, infrastructure and real estate, technology, biotech / pharma and life sciences, new media and entertainment, retail, and sports and fitness.
The event also comprises a 'Start-up Mela', which other than the investor pitch, offers entrepreneurs two more unique avenues for participation:
Is venture capital coming into India now?
Sarma says: "Early-stage investment is still low in India, although it has begun to rise somewhat now."
"However, investment in second-stage firms has really picked up, with lots of US-based venture capitalists and private equity funds setting up Indian operations, and even some angel investors showing interest in India," he adds.
How do VCs work?
Sarma says that "venture capitalists closely evaluate the business plan before short-listing some that they like. Say, if there are 400 plans, VCs normally would shortlist about 40 of those, and finally fund ten of the 40. Of these ten, at an average, three enterprises fail, four are average, two are fairly successful, and one is a top-class world-beater."
"Venture capitalists make their money that way. Our aim, through TiE-ISB Connect, is to help entrepreneurs get into that 40 bracket," adds Sarma.
What specific areas in India interest VCs?
The WCED director says that there are quite a few areas where VCs have show interest. These include:
Manufacturing, says Sarma, is not yet hot enough as scalability is a problem here, and unless there is a huge market for your product which promises big volumes and growth potential, investor interest is low.
"ISB," says Sarma, "is doing this as it is a pleasure to help people and to create entrepreneurs."
So if you have a great business plan, ISB is ready to help you pitch it to the right venture capitalist.