With global experience of more than two decades across continents, Paul landed up in India in 2005. Feeling the buzz and opportunity he joined the bandwagon by founding BenefitPLUS. He is also on the Board of Koovs.com and thePrivateSales.com and recently started VentureFund.com, a global mentoring and funding platform. Iamwire interacted with Paul to learn more from his experiences and ideas. Here are the excerpts of the interaction.
How did the idea of starting VentureFund.com come up? Tell us something about the Model
The idea was simple, start-up entrepreneurs were looking for advice and capital from experienced people who had previously built successful businesses or careers and these people often became angel investors. Angel investors were looking for the next big idea or start ups; there was no central or organized way of doing this online. So we simply thought, imagine if we could connect the two through an introductory online search and match engine with a full mentoring service. And wow since launch we have been amazed with the response.
- In 18 days over 400 business plans registered
- 350 under review
- 80% of the plans have had on an average 2 investor’s contact them
- Over 20 investor meets already in place
- And now $200m available from investors
- 3 of the largest VCs in India joined as they find it a great place to source quality deal flow
Our knowledge center and mentoring service has acted as a great resource centre for entrepreneurs.
It is lot more than just submitting a Business Plan to an investor, for the hope of raising funds. How do you think venturefund.com will help the system, being on Internet, as funding requires meetings with investors and presentations?
Through our mentoring service, we provide real knowledge. We qualify the plan. We prepare each entrepreneur on the type of questions investors will ask. So for example, how will you scale? Is it sustainable? How quickly and what resources will it take to raise a high barrier? What could make the whole thing go terribly wrong (Risks)? How will capital be allocated? Who has done this before and what successes have they had and how will you be different and so on. What we do is provide real examples by understanding their business so we can truly contribute and get them ready when they meet the investor which is naturally a face to face meeting.
What are the measures taken to ensure confidentiality of Business Plans and Ideas of Entrepreneurs looking to raise funds via VentureFund?
It is up to the entrepreneur what he wishes to reveal, our moderation team try to take care by helping them not to reveal too much whilst making the proposal exciting. And to be honest it works as we have already demonstrated the traction we have made.
What metrics do you evaluate while investing in a start-up at various stages?
- Proposition, how good, what needs does it fulfill, or problem does it solve and can it be scaled and sustained.
- USPs and barriers, what and for how long.
- Numbers and growth expectations how many customers or users, ability to grow and sustain and profitability after cost of acquisition etc.
- Scale, to what level can it scale and what funds will it require and bandwidth of team.
- Team, how well and what experience do they bring to take it to the next level.
- Competitive Landscape, who, where and their pricing points and how you will be different.
- Capital required and runway, how will you allocate capital and milestones you will achieve in next 12 month.
- Possible future value and exit (5 to 7 years)
Please solve the mystery of valuation of a start-up, how exactly one can come up to a certain number while raising investment by a VC. What are the key factors involved during valuation of a start-up.
Most investors look for the following to arrive at a number:
- The viability of the idea, so any proof of numbers you are achieving today, where has this been done before, what values did they command, who has exited this and on what value…
- The team that will execute, or given the money who will you need to hire and at what cost? And who can you attract to your advisory board, do you have the pull power.
- Scale, how and more importantly speed at which you can do.
- Barrier, do you have any barriers like patents or exclusive customers or suppliers.
- How well with you execute, what’s you plan.
Now if startups can at least attempt to answer these before thinking about I have an idea and I think I can command a value of $5m because others have done it (mistake), does not mean you will do it too, as the sheer energy and ability to focus and execute points 1 to 5 requires special skills and guidance. If you do this well and prove it, you can start thinking, you have started to create value, so what is that value? Value can be done by using different technique, DCF (discounted cash flow) which is what you may earn in the future and the possible value for your company may be worth using multiples on turnover or profits.
Some companies have no revenues but get value because they have lots of members, so there is future potential value may come from different revenue streams like adverting, like You Tube or Twitter did at 1st.
Every sector, idea, and team can attract different values and this will all depend on your negotiation ability if you have hit points 1 to 5. Generally i have seen startups get for e.g. $250,000 – $1m for giving away from 10% to 49%. Generally good investors do not take majority stake as they feel the value comes from the founders and they need to keep them motivated after all they will be the ones that execute the plan and create the longer term value.
What do you have to say about ‘Capital’ being more important than a ‘Business Idea’ for an entrepreneur?
Both are equally important as they need each other. A good idea attracts capital The trick it to remain focused and execute your idea without distractions and use your capital smartly, track it daily, yes daily so you can see if you are getting the desired returns, if not rethink strategies that work to support your growth.
What areas will be hot to invest in India?
Ecommerce, Education and Health care seem to be the hot buttons;
The biggest questions we get are how to scale? When to seek funding? How do you create a barrier? It seems there are lots of assumptions in these areas in what entrepreneurs think what these mean, but when we talk to them and give them an example they soon realize it’s something else. So the experience of how we have gone through these previously and the lessons we learned are really helping.
What is the revenue model for VentureFund? What are your plans for scale and profit regard to VF?
We are firstly pleased to state that we are the world’s 1st mentoring and funding platform for great ideas and start up communities around the world. So we are pleased this innovation has come out of India!
Our objective is to make it the world’s largest and we will scale by partnering with some of the world’s largest technology and strategic partners and are absolutely on track to hit our goals, the next few weeks will demonstrate that we have moved towards that. Our focus it to get India right 1st.
Thereafter, each country where we launch will have well known investors and experienced mentors so you get the local flavor as your opportunity may relate to conditions of that country such as user behavior, pricing points, regulations etc.
Our revenue model is simple, it free listings and you pay a subscription for a whole host of valued added service. The sheer testimonials that are coming in and use of the model is demonstrating we are providing a service that entrepreneurs and investors required. This service over the next few weeks is going to get very rich in terms of content. Watch this space.
Do you think that there is a lack of basics in Indian Entrepreneurs? If yes, what do you think is lacking and how can it be resolved.
Yes, I believe a lot of entrepreneurs think it’s easy and often forget about the basics. Why? Because most of them in start-up phases do not get the mentoring and often panic when they miss their numbers so they get distracted by offering and moving their strategies because the competition is doing it. You need to remain focused on your core business idea and for that to happen you need to be disciplined and often a good mentor will help you to remain on track and help you evaluate at what point you need to switch your strategy and the consequences and benefits of doing so, a good mentor will help you really think it through.
Please give some tips for entrepreneurs looking to raise funds.
We have great articles at our Knowledge Centre in Venture Fund that entrepreneurs should read that will surely help them. However a winning formula is often, demand and supply of what you’re offering (so how big is the strategic prize and is it exciting), what level and how quickly you can scale before others and can you sustain and finally who the wining team that will execute the plan.
Tell us about your different businesses in India and which amongst them are you enjoying the most? Which is the most challenging of all?
I have built a mobile VAS business, a reward and recognition company and contributed to 2 eCommerce businesses and lastly Venture Fund. I have enjoyed the challenge of setting them all especially in such a dynamic market. It stretches you constantly to think out of the box as you know there’s someone around the corner thinking of the same idea. Ecommerce has proved to be harder than most people thought including VCs. These business are actually more capital intensive than one 1st thought.
Also tell us your experiences, numbers, growth for B2C ecommerce of Koovs, and reason for going off with the deal section…
We felt that the deal space was not a long-term profitable business. Koovs is a fabulous brand driven by a very bright and passionate team who demonstrated when we invested that they could scale quickly. We feel this brand can be better utilized now at an interesting vertical which we will soon be launching with a world class team, technology and distribution, so watch this space.
Do you think there are very limited and highly competitive and even overpriced marketing options available for an ecom Start-up? How can one maximize the ROI in Digital?
I think one needs to be smart when looking at any marketing cost. You need to think outside of the box when coming up with digital strategies. It’s all about getting it to be viral, problem is theirs to many me too strategies.
How do you see the present discount game in Indian Ecommerce which has led ecommerce as a synonym for discounts & deals for consumers?
Discounts will always be in play, brands will always offer them as a way of promoting to introduce new products by bundling others and also getting rid of older inventory and finally to acquire customers. Everyone loves a deal, let’s face it!
Do you think there is some difference in Indian Consumer and Consumers of UK/US? If yes please highlight.
I think all consumers are the same, it’s all about price, quality and service. The only difference is each consumer will prioritize these differently according to their tastes.
I guess perhaps where I do see a difference is when I look at how people consume certain services like for example, mobile applications, in the West they don’t really like caller tunes but in India they love them. Ecommerce in the West; consumers pay by credit cards, in fact you don’t get cash on delivery, however in India you do, why? They don’t trust the internet when it comes to paying by credit card or are not sure of the quality of the goods, so here it’s about the consumer still having to build trust with online models.
Lastly, do you think ecommerce in India is driven by International Market Thrust more than the local consumer demand?
I believe it is a combination of both. International sites have educated users here in India they have also set the benchmarks. Local demand is on the rise and Indian ecommerce players are now meeting that need.
How big is the startup opportunity in India, and how it can be accelerated?
The opportunity is very large but it needs the support of the entire ecosystem and we are in talks with the Government and other interesting companies to support the startup community and we will make some interesting announcements in August.
Category : Investments