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IVCJ Conference for Private Equity for IT & ITES Early Stage Financing 29 th April 2009, Taj Lands End, Mumbai Atul Khekade Director – Netz Capital

Netz Capital Early stage venture capital fund

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Netz Capital Early Stage venture capital fund and advisory. Presentation delivered during Indian Venture capital journal event at Taj Lands End, Bandra, Mumbai, India

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Page 1: Netz Capital Early stage venture capital fund

IVCJ Conference for

Private Equity for IT & ITES

Early Stage Financing29th April 2009, Taj Lands End, MumbaiAtul KhekadeDirector – Netz Capital

Page 2: Netz Capital Early stage venture capital fund
Page 3: Netz Capital Early stage venture capital fund

Company Stages

Idea

Business Plan

Team

Working Model

Operations

Exit

Seed/Pre-Early

VC

PE IPOAcquisition

0.5%

$10K - $50k

$2M - $5M

>$5M

Page 4: Netz Capital Early stage venture capital fund

Fund StructureIdea

Team Technology Infrastructure Early Promotion

<$5K <$10K <$10K <$5K

•Early Customers

•Self Sustaining Operations - $1M Revenues

•Gearing up for Next Round

•Scalability

•Portability

•Interface

•Operational Efficiency

•Market Size

•Biggest Competitor

<$30K

Page 5: Netz Capital Early stage venture capital fund

Fund raising Challenges(In recession time)

• Scalability• Operational Efficiency/Low fixed costs• Revised Exit Strategy/Profit making as first priority• Recession Proof Check• Serves a very basic need at ½ x price• Serves emerging/recession free markets• Long term viable and economic model

• VC/PE Limitations• Scarcity of Capital• Bad M&A and IPO market• Painful Term Sheet, giving away majority control

Additional Evaluation

Criteria

Page 6: Netz Capital Early stage venture capital fund

Strategy: Winning or Surviving?

• Highest quality, fair price

• Fixed cash outflow model

• Self funded Growth

• Budget as per market price

• Advertising

• Find Employees

• Sales start after operations

• Fair quality, ½ x price

• Negative cash outflow model

• Partnerships/Franchising

• Bootstrapping / Re-inventing the budget

• Public Relations

• Find/Nurture Entrepreneurs

• Sales first

In tough times

Page 7: Netz Capital Early stage venture capital fund

Moving to the next round of Capital

• Is it absolutely necessary?

• A successful company is the one that makes more profits – not the one that raises more capital.

• Thought about raising capital from customers?– Long term commitments– Pre launch sales– Clearer revenue picture of the future.

Raised $6.2M from 125,000 wiki users

Raised $100M as deposits from customers

Tata raised $5 million on nano forms

Page 8: Netz Capital Early stage venture capital fund

Seeding the Leader

LEADERProcess

Business Model

Early Customers

Sales Process

Presentation Skills

Media Friendliness

Organized

Role Model

Vision

Consistency

Page 9: Netz Capital Early stage venture capital fund

Growth - A reality?

• Recession – Greatest Opportunity to rise

• Opportunity for cheaper alternatives of existing products

Real Estate Automotive Travel Food Energy Entertainment

Cost effective housing

•Second hand cars

•Electric cars

•Car Rentals

•Full service to low frill airlines

•Airlines to trains

Franchising Green Energy sources

•Cheaper theatres

•Movie rentals

Page 10: Netz Capital Early stage venture capital fund

Exit Strategy

• Profit Making as soon as possible

• Surviving till the markets recover

– Undervalued M&A

– Undervalued acquisition bids

Page 11: Netz Capital Early stage venture capital fund

Valuation

• “It is better to own 10% of a $100 million company than owning 80% of a $5 million company”

• Company’s leader deserves controlling interest

• Valuation Criteria– Revenue– Competitor’s revenue– Early entrant? Or crowded space?– Early customers– Market size

Page 12: Netz Capital Early stage venture capital fund

Thank You

• Atul Khekade

• Info @ netzcapital.com

• +91 98203 72810