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Eligibility for Venture Capital Series-A Funding

Posted by Students Database | Students Database Providers | Students Database Seller | Education Database | Database of Indian Students| on March 21, 2017 at 8:55 AM

1. Net-Revenue not GMV should be minimum INR. 2 Crores. [ So that minimum valuation comes 10x of revenue in DCF Model]

2. Unit Metrics like- Monthly Recurring Revenue, Average Revenue per Account/User, Gross Profit, Lifetime Value (LTV), Deferred Revenue, Customer Acquisition Cost (CAC), Daily Active Users, Monthly Active Users, Month-on-Month Growth (MOM), Monthly Churn Rate, Retention by Cohort, Monthly Cash Burn Rate, Gross Margin, Annual Run-rate, Net Promoter Score, Organic Traffic.

3. Large Market Size at least INR.5000 Crores.

4. Founders should be alumnus of A++ Institutions.

5. At least 3 Co-Founders, will be highly accepted if each of them from Management Consulting Background. 

6. Your business vertical should be Mobile, Consumer, Internet, AI/ML/BI/VR, Enterprise Software/Hardware, Fin-tech, Food & Beverages, Hardware, Healthcare, Media & Entertainment, Security, SaaS and Ed-Tech.

7. Your business should not sessional or periodic like in education space major chunks convert in Jan/Apr/July Session.

8.  Strong entry barrier, may be in terms of brand name, track record, technology, team or exclusive partnership.

9.  Don't ask for equity shares in 1st pitch, ask for alternative and safe financing options like- Preference shares, Compulsory Convertible Debenture-CCD or Convertible Notes. 

10. Business should have Plan-B, Plan-C and Plan-D for exit if you crises with working capital.

11. Business should have positive EBITDA as soon as possible, don't burn cash to make revenue. 

12. Try to make self-sustaining business, should not be dependable on 3rd party financing.

13. If you have an issue with working capital don't go for VC Funding, raise short term invoicing finance or SME Debt Loan rather than shut. (Condition Apply- If you have clear vision for your start-up).

14. Don't make start-up culture, like weekend party...bear....sofa.....relax....learn from the classic traditional self-funded company, they are more focus on employees in other terms rather than cash burn.

15. Try to avoid give your 1st Finance round funding in Media, if you don't want others will jump and stand to be competitors. 

16. Proper document for due-diligence like MOA, AOA, Bank Statement, Last 2 years balance sheet, client/user/partner record, experience certificate of your last employer. 

17. Don't send them bulk-email or cold email. Try to connect via referral to the VCs.

18. Try to avoid give not more than 20% in seed or Angel finance found with 5% ESOPs.

19.  Participate in start-up award function like Deloitte, YourStory, VCCircle, ET or other well-known award functions.

20.  You have an excellent track record from your last work experience.

21.  Your business should not be a marketplace, it should be more inventory base more marketplace you will be loosing your dependency.

22. Your business should be a clear monopoly, there should not be any alternative options for partner/users/clients.

23.  Clear definition of your business.

24.  Should not be a new idea, that will take more time to mature, it should be last mover advantage rather than 1st mover. 

25.  Co-Founders should be known each other from last 3 years, with no conflict of interest. 

26. If you are an internet business, then your Alexa rank should be less than 1000 in INDIA. 

27. Don't show hypothetical projection, it should be stage by stage and very feasible to achieve. 

28.  Don't try to sell your own shares to make some quick bucks, success doesn't have the shortcut. 

29.  Always be open for other alternatives, if you feel you are bad CEO, then hire someone. Most important throw away your ego, don't waste time to write an email instead of do daily meeting. 

30. Valuation metrics should use Cost-to-Duplicate, Market Multiple, Discounted Cash Flow (DCF), Bill Payne Model, Book Value, Comparable Transaction. 


31. Last at least don't jump into entrepreneur world for fancy words like VC Funding, Valuation or net-worth. If you feel you can do business without these words at least 3 years then only jump otherwise do your present job and take a monthly salary. 


Source: Our 1st round of fund raise experience.:)

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