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Exit for Startups : An investor perspective

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Startups Exit is one of the paramount issue in the VC community in India and also at the same time often overlooked or misunderstood by many. Fact of the matter is that scale / exit strategy determines the type of investor.

Publicado en: PYMES y liderazgo
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Exit for Startups : An investor perspective

  1. 1. © Shailesh Vickram Singh Exits for Startups : An investors’ perspective Shailesh Vickram Singh twitter : @svickram blog : fringenotes.in
  2. 2. © Shailesh Vickram Singh (shameless)Self promotion • 20 years of experience as entrepreneur, venture investor and corporate strategy professional • Building a fun and incubator in area related to Climate change, Renewables, Agriculture, Food chains, Water & sanitation   • Executive Director - SeedFund India • Was MD with a PE fund ($170 mn fund, 2.1x return) for 5 years before moving to venture space • Exits ~ RedBus (triggered the deal with GoIbibo), 3 IPOs, 5 M&A / Strategic sale • Co-founder of Zygote Tech in 1999/2000, Successfully scaled up without any external fund infusion • Guest faculty, mentor and jury member at various IITs / IIMs / FMS etc • Passionate about Environment / Rural  Development / Startups / Technology • Writer/author on Policy, Economics, Environment, Tech & Startups  • B.Tech (GB pant - Pantnagar) + MBA - (IIM Lucknow), TiE Charter member
  3. 3. © Shailesh Vickram Singh Portfolio Ah Exits !!! Where are they
  4. 4. © Shailesh Vickram Singh The Startup Haiku “They created a website with a brief video. It went viral, They bought a yacht” source - Dan Norris http://wpcurve.com/is-startup-validation-bullshit/
  5. 5. © Shailesh Vickram Singh However as it happens, all these stories always happen with Neighbor son or with Some US startup. In immediate world, the exits loos like
  6. 6. © Shailesh Vickram Singh Obvious & simple path to exit
  7. 7. © Shailesh Vickram Singh Why Exits matter that much ? Profitable business 30 Cr revenue Buy back by founders? 3x return is wastage of money 100x / 50x
  8. 8. © Shailesh Vickram Singh The moron VC
  9. 9. © Shailesh Vickram Singh The VC Math • 2: 20 model • 8 Year Fund life + 2 years ( on Average) • Fund deployed (88% or less, rest fee) • Need to earn a minimum 3x (pass grade return)
  10. 10. © Shailesh Vickram Singh Life cycle of a company 100x 3x
  11. 11. © Shailesh Vickram Singh What does this mean for you?
  12. 12. © Shailesh Vickram Singh The exit Quantum matters and that determines nature of exit and that determines type of business
  13. 13. © Shailesh Vickram Singh means … Following doesn’t matter : •Just another business •Profitable business •Super niche business •Highly profitable but tiny niche business or •Buy back by founders
  14. 14. © Shailesh Vickram Singh Hence … When you think of starting up •Think of exits and not anything else, as exit scenarios determines the nature of investor as well as behavior of investor
  15. 15. © Shailesh Vickram Singh Creating focus on exit When you think of starting up •Think of exits and not anything else, as exit scenarios determines the nature of investor as well as behavior of investor
  16. 16. © Shailesh Vickram Singh So what creates great exit? (in theory) • Trust / Chemistry between Fund & founder • Value creation by investors • Great corporate governance • Solid management team
  17. 17. © Shailesh Vickram Singh However as it happens, the reality is a bit different
  18. 18. © Shailesh Vickram Singh Trust / Chemistry between founder & fund
  19. 19. © Shailesh Vickram Singh Value creation by investors
  20. 20. © Shailesh Vickram Singh Great corporate governance
  21. 21. © Shailesh Vickram Singh Rock on CEO
  22. 22. © Shailesh Vickram Singh Portfolio Ah Exits !!! Where are they
  23. 23. © Shailesh Vickram Singh Thank You twitter ~ @svickram blog ~ fringenotes.in

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