What happens when you have 6 VCs in a room - and I mean apart from a lot of money! You get see a lot of experience, tough questions and some very enlightening answers. That sums up the second class of SLP Hyderabad. A big thank you and congratulations from all Hyderabad fellows to the CEO, Asha Jayaraman for putting together an eminent panel of venture capitalists comprising Sateesh Andra of DFJ, Raghu Batta of Ojas Ventures, Purushottam Modani of Mumbai Angels and Alberto Alonzo and Brooks Schaden of Baseline Partners . She definitely has raised the bar quite high for everyone else in the course.
Shreedhar Kanetkar from ISB, kicked off the day's proceedings by warming up everyone to the idea, purpose and importance of a (good) business plan. For an entrepreneur, a business plan is not just something that he needs to present to a VC. It is also a guiding light which can hold the team together. And this is a point that one should bear in mind - the audience for your BP is not only an external VC but also the internal team. A few important questions/points that emerged after discussion with the fellows
How do you measure your market in the initial stages. Especially if your market is unorganized and lacking clear data points. In fact one of our VCs made a very pertinent point about estimating your market - "You cannot get away by saying America is a USD 14 trillion market". So those with wishful numbers on their presentations, its back to the drawing board.
It is always a good idea to get your business plan vetted/reviewed by others. You will be amazed at how different your versions 0.9 and 1.0 look.
A business does not necessarily have to look at the long term plan. It greatly depends on how young your startup is. As one of our VCs succinctly put it, "We do not look at more than a quarter or two is its an early stage startup". So if if your projections were stopping you from completing your business plan, there is hope.
When preparing a business plan, do not get bogged down by templates. In fact you do not even have to follow one if you know what exactly you need to present. But remember, the benefit of a template is that it gives you an idea of what most people think about business plans.
Audience - how your business plan looks depends a great deal on who is the audience for your business plan. If you are pitching to a bank, your presentation may need to cover financials in detail whereas for a VC the focus may be on the market opportunity and idea.Abhishek Nayak of Gharpay, took over from Shreedhar and gave a presentation on what he thought was important to keep in mind when writing your business plan. Interestingly, Abhishek did not have a business plan to start with. He had to create one when a particular VC got interested in his venture and asked him to make a presentation - which definitely is a good situation to be in. Abhishek emphasized on the need to believe in the problem and in your ability to solve it. You need to know why a problem has not been solved before and this is going to help you when you are developing your solution. All this and more will happen when you are writing your business plan.
In the next part of the session which comprised of two 15 minute presentations and more than 20 5 minute ones, all VCs on the panel including the gracious Suchitra Shenoy took turns and gave feedback to the presenters. However, in hindsight, we do feel that it is better that entrepreneurs with existing ventures present the longer pitches. This helps because the contours of the problems they are face are defined, at least more clearly as compared to ventures which are yet to take their first step. This helps the whole class discuss real issues that they may face in their startups. Raghu exhorted the fellows to answer three important questions to themselves before they venture out with anything - "What is being bought", "by whom" and "why".
Even though the focus was on business pitches, the panel was kind enough to provide feedback on the business as well as the presentations. Shreedhar gave the fellows some very important pointers about presenting. After seeing a few of the speakers trying to rush through the presentation to stick to the 5 minutes timeline, he shared his thoughts about the same. If one's presentation is time-bound, he suggested that the speaker take a moment and then speak the most meaningful concluding remarks. His reason about the audience being less interested to hear rushed material was absolutely spot on.
The idea behind the 5 min pitches (shortened from the usual SLP norm of 7 mins) was to help fellows hone their presentation skills and learn how to present things in a crisp, concise and most importantly, in a manner which gets the point across.
A few important points that emerged after the panel discussion
Do not rush through your presentation. Remember, your objective is to convince your audience not to finish the presentation. Practice definitely helps and so does the structure of your presentation.
Make all efforts to identify your market....correctly! As mentioned earlier in this post, you really need to know the market you are catering to. Sweeping generalizations are just a sign of pure laziness and are in fact a bad portent for your startup. As they say "If you don't know where you are going any road will get you there"
Research adequately on your competition. Only when you do that can you start highlighting your differentiators.
Identify and evolve your revenue model and financials. Many people leave this most important bit for the last or to God. Your revenue model shows how seriously you are thinking about the sustainability of your venture.The day ended with an informal gathering at News Cafe with promises of much more learning and fun in the next session.