Venture capital

I have never had the chance to go up to a VC and pitch for funding, and funnily never built a business plan either. My Dad gave me the startup capital we needed, and thankfully didn't ask me to present about market size, and growth plans. We've just grown on sheer luck and hard work. But, I've lately been toying with the idea of approaching VC's to get funding for some of our expansion plans. Although, we're very close to starting our own Middle East operations, we'll definitely need funding if we are to establish local presence in the US or Europe or Singapore. Unless we decide to keep growing organically at the current pace.

I have spent some time reading up on building business plans, and managed to get through Mike Mc Keever's "How to Build a Business Plan". It's pretty useful and has some nice reality checks in it. There's really a lot of material out there on building business plans and pitching to VC's. One of the best resources I've found is the MIT Entrepreneurship Center.

Browsing through Guy Kawasaki's blog, I also came across a couple of interesting postings: Top Ten Lies of Entrepreneurs as well as the previous posting Top Ten Lies of Venture Capitalists. Having sat through some business plan presentations of MBA grads, I have come across about half of those reasons. But then again, if I were presenting my case, I'd probably also be talking about market size, and our potential share of the market. Hmm...how else does one get a VC interested in what returns they could be looking at? Most people are really passionate about their ideas. I think one of the key things is competitive analysis. In my experience, most ideas, although original, aren't usually unique. So if you could truly show you plan to measure up to the competition it might help. Also demonstrating that competition exists, also proves that the market exists.

There are other options for funding besides VC's - bank loans, hedge funds, and angel investors. It all depends on how much money you need, at what terms, and what state of your business you're already in. For us, as a profitable company looking to expand rapidly, we'd probably still prefer VC funding, because of the scale of the funding we would be asking for, as well as for the potential contacts a VC might bring in.

Incidentally, if you're looking at starting your own business in India, and need some funding or mentoring, drop me a line.