Essential Insights for Mentors and Investors V1.pdf

insights into whats needed from a mentor and potentially an investor in a startup

1. Essential
Insightsfor
Mentors
and
Investors:
Navigating
theStartup
Landscape
Anand Kumar Padmanabhan
COO, Witmer Health | Partner, Utilis Capital | Mentor, FC UAE
[email protected]

2. Entrepreneur
Types
There are essentially two kinds of entrepreneurs:
the “lifestyle” entrepreneur, and the “high growth”
entrepreneur.
Lifestyle entrepreneurs are those entrepreneurs
who are primarily looking for their business to
provide them with a decent standard of living. They
are not focused on growth; rather, they run their
business almost haphazardly, with minimal or no
systems in place. They do not necessarily have any
strategic plans regarding the growth and future of
their business and gladly accept whatever the
business produces.
The high-growth entrepreneur understands that a
successful business is one that has basic business
systems—financial management, cash flow
planning, strategic planning, marketing, and so
on—in place

3. What is your Purpose
and why ?
Best
LARGEST
First
Contribute
Impact
Change
Most Innovative
Start with the basics - Purpose
NAME
FAME
MONEY
IMPACT
….
OTHER
Factors
To meet your purpose, you need to sustain your business, this
makes financial planning a very essential element of your day to day activities

4. Typical Startup Challenges
Which Founders May Need
help in

5. About Validating Ideas
Approach validating new ideas or
features within an established
startup to ensure alignment with
the overall business strategy?
How important is rapid prototyping
or minimum viable product (MVP)
development when testing and
validating new ideas within a
product?
Approaching A/B testing or
experimentation to assess the
performance and user response to
different variations of an idea?
Getting started with an idea
validation process, especially
considering limited funds and
resources?
Balancing between addressing
immediate customer needs and
exploring innovative ideas that may
shape the future of the product?
Approaching validating ideas for
efficiency and scalability, ensuring
alignment with the startup’s long-
term goals?

6. About How to Get Customers
Customer and user acquisition can
often be one of the hardest parts of
the process for a startup to tackle,
especially since it can involve
marketing, sales, and product
simultaneously.
How do I determine what channels
might be most effective for my
startup to acquire users?
How do I balance the needs of
working on the product vs.
marketing the product in the early
days?
What metrics and key performance
indicators (KPIs) to use to evaluate
the success of customer
acquisition efforts?
How to approach targeting different
market segments or niches to
diversify customer acquisition
channels?
How can we best utilize customer
feedback to improve our customer
acquisition loops?
How should our early stage startup
balance short-term customer
acquisition projects with long-term
customer retention and loyalty?
What are some cost-effective
customer acquisition channels for
a startup with limited resources?

7. About Product
Market Fit
How do you define and measure product-market
fit, especially in the early days of a startup?
How to know when a pivot was necessary to
achieve product-market fit, and if so, how to
navigate that decision?
In the early stages, how to balance staying true to
your vision while remaining adaptable to market
feedback and changes?
What strategies for validating product-market fit
before scaling efforts?
Challenges in achieving P-M fit? How did you
navigate those challenges?
When should I start looking at competitive analysis
when it comes to achieving product market fit?

8. About Getting Funding
What are our different
options for getting funding?
Do we have different
avenues we can pursue
within bootstrapping or in
VC investing?
How can I decide whether
continuing to pursue
bootstrapping/VC funding is
a good option for my
startup?
What’s the best way for me
to decide if joining an
accelerator is worth it?
How do you approach
negotiating favorable terms
and conditions with
investors while maintaining
a positive relationship?
Strategies for building
relationships with potential
investors and creating a
strong network within the
investment community?
For bootstrapping startups,
what’s the best way to
create a strong network that
might lead to partnerships
in the future?

9. About Finding Your Ideal Customer Profile
How important are
demographics for identifying my
ICP?
In the case of B2B SaaS, how do
you approach creating Ideal
Customer Personas when
dealing with multiple
stakeholders within a potential
customer organization?
How can I validate whether my
theories about our assumed ICP
play out with our real-world
market?
What should I do when my team
has multiple very different
opinions regarding who our ICP
is?
What data and metrics should
we look at to identify our ICP?
How do you juggle the needs of
your ICP with the roadmap
features you need to prioritize?

10. About Sales
How can my startup establish a
successful sales process
without expending a large
budget?
What key metrics and
performance indicators should a
startup prioritize to measure the
success of their sales efforts?
Can you provide examples of
successful sales strategies that
have worked well for you and
your team in the past?
How do you ensure a smooth
transition from the sales process
to onboarding and customer
success for a product?
Will the price of our offering
affect what sales strategies we
can use?
How do you stay informed about
market trends and changes in
customer needs to adapt the
sales strategy accordingly?

11. About Launching a Product
How to run a resource-
efficient product launch?
Addressing potential
customer concerns or
objections preemptively
during a product launch?
Strategies to recommend
for creating a compelling
value proposition that
resonates with the target
audience during a product
launch?
Leveraging digital
marketing and social
media to amplify the
impact of a product
launch?

12. About User Research
How can we prioritize and
conduct user research with a
limited budget?
What difficulties will exist
when it comes to conducting
user research?
What are some of the most
cost-effective routes for a
startup to recruit users for
user research?
What methodologies and
techniques do you
recommend for conducting
effective user research in the
early stages of a startup?
How can you build a system
that collects and organizes
user feedback so it can be
used efficiently, especially in
the long term?
How frequently should a
startup engage in user
research activities to stay
closely aligned with user
needs and preferences?
What challenges should a
startup anticipate when
implementing a user
research program, and how
can these challenges be
mitigated?

13. About Improving Customer Experience
How focused should we be on
improving customer experience
in the early days?
What strategies do you
recommend for gathering
feedback on the current state
of customer experience and
identifying areas for
improvement?
How should an early stage
startup approach product
personalization, especially on a
limited budget?
What strategies do you
recommend for maintaining
communication with
customers post-purchase to
gather ongoing feedback and
ensure satisfaction?
How do you ensure that
customer feedback is kept out
of a silo and effectively
communicated to the product
development team to drive
continuous improvement?
How does a startup ensure a
consistent and positive
customer experience as the
business scales and the
customer base grows?
How do you approach
addressing and resolving
customer complaints or issues
to turn negative experiences
into positive ones?

14. About Running The Business
When should we put a focus on running the business effectively? Should we put processes in place from day one or wait until the
startup has matured more?
What key performance indicators (KPIs) should a startup monitor to gauge the efficiency of its operations?
How do you create and maintain a culture of efficiency and productivity within the startup team?
How can an early stage startup balance the need for agility with establishing processes and organization?
What strategies do you recommend for effective communication and collaboration among remote or distributed teams?
How do you balance cost efficiency with quality in an early stage startup?
At what point do we need to consider hiring a dedicated chief operations officer?

15. About Leading a Team
Building a strong company
culture that fosters
collaboration, innovation,
and a positive work
environment?
Maintaining a healthy work-
life balance while leading a
startup team?
Balance hiring needs with
maintaining an agile team?
Building trust and
credibility with team
members, especially in the
early stages of a startup?
Balance between being
approachable and
maintaining authority as a
leader within a startup
team?
What tasks and
responsibilities should a
founder prioritize versus
those that can be
delegated to team
members?
Approaching performance
evaluation and feedback to
ensure continuous
improvement and
professional development
within the team?

16. About Pricing Strategies
Approach setting the initial pricing
strategy for a new product,
considering both market conditions
and the product’s value
proposition?
Insights on the role of competitor
pricing analysis in determining the
optimal pricing model for a startup?
Ensuring our product’s model is a
good fit for a certain pricing
strategy?
Role perceived value plays in
determining pricing, and how can a
startup effectively communicate
and enhance the perceived value of
its product?
Balancing between affordability for
customers and maximizing revenue
potential?

17. A Good Business Plan
Tell a complete story about the
company: its management team,
product or service, financing
needs, and strategies, and the
financial and nonfinancial goals
the company expects to achieve.
Be a balanced document,
highlighting both the positive and
negative aspects of the business
opportunity.
Be a forward-looking document
with a time frame of at least three
years.
Be clear, concise, and organized. Be simple to understand.
Provide realistic data to
substantiate its claims.
Propose the deal to the investors—
what the expected returns on their
investment are, and what the exit
or liquidation options available to
investors are.
Provide historical and projected
financial statements.

18. 5 Financial Objectives You Need To Keep In
Mind As A Startup
Burn rate
coverage
Revenues and
profitability
Minimizing equity
dilution
Optimal selection
of fund options
Maintaining
effective control

19. Financial Statements – Picture Of Your Startup
Balance Sheet –
overview (assets ,
liabilities and equity)
Income statement – is
money coming or going
(profitability)
Cash flow statement –
how is money flowing
and where (cash
movement)

20. Key Financial Statements For Your Startup
BALANCE SHEET:
The State
of affairs of the
organization:
01
PROFIT AND LOSS
ACCOUNT:
Working results for
a given period:
02
CASH FLOW
STATEMENT: Cash
receipts &
payments during a
period:
03

21. Mentor View

22. Mentor View
Founder's
Commitment
Coachability
Alignment of
Values
Clear Vision
Founder
Mindset
Team
Dynamics
Stage of the
Startup
Innovativeness
Market
Understanding

23. Mentor View
Mentor’s
Expertise Fit
Problem-
Solution Fit
Industry
Knowledge
Business
Model
Product
Development
Founder’s
Network
Previous
Feedback
Execution
Ability
Startup’s
Agility
Commitment
to Growth

24. Mentor View
ResourcefulnessFinancial HealthClarity of Goals
Mentor’s
Potential Impact
Cultural Fit
Openness to
Experimentation
Customer
Feedback
Alignment on
Expectations
Time
Commitment
Founder’s Vision
for Mentorship
Mentor’s
Learning
Opportunity

25. Investor
View

26. Investor View
Founder's
Vision
Team
Market
Opportunity
Product-
Market Fit
Unique Value
Proposition
(UVP)
Scalability
Business
Model

27. Investor View (Ctd.)
Traction Go-to-Market Strategy Financial Health Unit Economics
Growth Metrics Technology/Innovation
Competitive
Landscape
Market Entry Barriers
Exit Strategy
Legal Structure and
Compliance
Ownership Structure

28. Investor View (Ctd.)
Intellectual Property
(IP)
Customer Validation Sales Strategy Partnerships
Capital Efficiency Burn Rate
Founder
Commitment
Risk Factors
Vision for ScalingIndustry Trends Investor Alignment
Sustainability and
ESG (Environmental,
Social, Governance)

29. Types Of Funding Options

30. Types of investors
Angel
investors
Public
funding
agencies
Venture
capital
companies
Private equity
(PE) firms
(mature)
Strategic
investors
Banks

31. Doing Your Homework
Investment criteria
Industry
preference
Preferred stage of
development
Funding range
Favored funding
structure
Choice of exit
strategy (time
horizon, expected
ROI or type of exit)

32. Know Your Investors
Primary objective of any investor is to make money
Prospective investors are not looking for an opportunity to financially support someone’s hobby.
Do not assume that an investor would be willing to fund an enterprise benefiting a worthy cause that offered little or no
returns.
Do not succumb to the mad scientist syndrome. Symptoms include:
Harboring the belief that a brilliant innovation is sufficient to impress investors, attract investment capital, and crush any and
all competition. No matter how spectacular and intriguing your innovation is, investors are more interested in profits.
Enjoying the development aspects of the business so much that you forget you are managing a business and fail to seize
opportunities to go to market and generate revenues.
Non-revenue-generating R&D.

33. Boot strapping
Self funding
is the
easiest
option
Difficult to
raise funds
on an idea
(unless you
are lucky)
Savings or
friends and
family
Interest rate
is very
flexible

34. Seed funding
Investment
happens with key
milestones
Start MVP product
launch (1
st

product) (SEED)
0.5-1M (3-5 investors)
Market entry
(SERIES A)
3-5M 10-30%
Growth (SERIES B) Exit

35. Seed Funding Stage
The primary objectives of this
stage are proof of concept through
the development of a working
prototype and protection of
intellectual property (IP).
The development of a prototype
has to progress to at least the
point at which it can be offered on
a trial basis to test users with the
expectation that useful and
actionable feedback can be
collected.
The prototype must be sufficiently
presentable to prospective
investors, who are primarily
interested in determining its
commercial viability.
Common seed stage funding
sources include individual friends
and family, angel investors, early-
stage venture capitalists, public
funding agencies, and private
incubators/accelerators.

36. Convertible debt
Conversion rate (debt to preferred
shares)
Discount (20%) and caps
Automatic conversion on Qualified
financing
Term (within 6 months), amount (1m)
Interest
Converts along with principal. 4-12% with a median
of 8%
Example :
Seed money 50 lacs convertible debt from angels
with 20% discount to next round
6 months later : A VC offers a series A round of 1
crore investment at 10 rs per share
Angels will get (50 lacs / 8 rs ) series A shares

37. Crowd Funding
Raising small amounts of money from large number of people , typically
using the internet
Develop and put up a business description including goals, plans for
making a profit, how much money needed and why etc. Users can read and
give money if they like the idea
Wishberry, Ketto, Fundlined, Catapoolt, Kickstarter (us)

38. Angels
People with surplus cash and a keen interest to invest in startups. They
work as individuals or as groups (Chennai angels, Indian angels etc)
They may offer mentoring and coaching alongside the money provided
Occurs in very early stages and typically involves equity ~30%
The average is India is ~25 lacs or so

39. Venture Capital
Professional managed funds who invest in companies that have huge potential. They
usually invest against equity and exit when there is an IPO (rare) or an acquisition
Maybe appropriate for small companies generating revenues
Often look to recover investment in 3-5 years
Nexus, Helion, Kalaari, Accel, Blume, Canaan, Sequoia, Bessemer and many more

40. VC fund
Series A
•Usually convertible preferred stock (plus all
benefits of common stock)
•Preferred
•Preference over common stock on dividends,
liquidation etc.

41. How Does A VC Fund Get Set Up ?
Setup from investments from
funds, companies and HNI
Fund size $XX M – $ XXX M
Typically for 10 years
Compensation
•Management Fee ~ 2% (of total fund)
•Performance Fee ~ 20% ( returns)

42. Business Incubators & Accelerators
Early stage can consider this option
Incubators helps you by assisting and nurturing while accelerator helps you
run or accelerate
Typically run for 4-8 months and require some equity
Ginserv, RTBI, TBI (IISc), VIT …many

43. Contests and Hackathons
Build a proto or a business plan
Win prizes and use that to build up your startup
Nasscom 10000 startups. Microsoft BizSparks,
LetsIgnite etc.

44. Bank Loans (Rare)
Working capital loan
Funding
Typically involves sharing business plan, valuation details, project report
etc and typically involves collateral
SMS finance is what it is named

45. Microfinance & NBFC’s
Access to financial services for those who don’t have access
to conventional banking services
Non banking financial corporations (NBFC’s) provide banking
services without meeting legal requirement of a bank
SKS microfinance, Spandana Shhoorthy , Share microfin,
Bhartiya Samruddhi finance, Bandhan, Capital float etc

46. Grants
Best and most attractive option
Funds given without the expectation of return (typically) and anything in exchange
Free money
Typically looking to support an objective
Clearly look at the terms and conditions attached to the grant and think through long term
impact

47. Govt Programs
State and Central
Startup India

48. Valuation & Fund Raising

49. How Does A Startup Create More Value
By exploring value added
partnerships - Alliances and
partnerships, whether relating to
advisors/mentors or to operations
or to investment should lead to
value creation not value depletion
By understanding financial and
non-financial aspects of business
and transactions with partners and
impact on growth and
sustainability
Most importantly, analyzing every
relationship and assessing if it is
adding to your startup or not

50. Intellectual Property & Key Points
Patents
Copyrights
Trademarks
Industrial
design right
Trade secret
Level and necessity in
pursuing IP protection
Cost, time and effort
required
Cost to legally defend

51. Why Fund raising in steps
As you grow, value grows, so for less shares ; you get more
money
Seed
Bootstrap
Family, friends, fools
Angels
Early stage
Covertible debt
•Debt is converted to prefrred equity when aother round is rasied
•Incudes a discount on price for the ufturre round
•Easier transation than equity financing
•No valuation, delayed until next round

52. Successful fund raising
Planning for raising funding (do you really need to ?)
Defining the type of funding
needed
Debt financing
Grants
Angel / P/E
Getting act together
Elevator pitch
Investor teasor
Investor Memorandum
Supporting material (cash flow, break even analysis and other
documents)

53. Factors which influence valuation
■ The historical, present, and projected cash flow of the company.
■ Who is valuing the company?
■ Is it a private or a public company?
■ The availability of capital.
■ Is it a strategic or a financial buyer?
■ The company’s stage of entrepreneurship.
■ Is the company being sold at an auction?
■ The state of the economy.
■ The reason the company is being valued.
■ Tangible and intangible assets.
■ The industry.
■ The quality of the management team.
■ Projected performance.

54. Thanks!
Do you have any questions?
[email protected]
@anandkumarpadmanabhan
(linked in)