On 11th March, the World Health Organization declared Covid-19 a Pandemic. The actions and reactions in the following week have impacted economies around the world. All 11 groups in the Standard and Poor’s 500 fell, with eight of them down at least 10%. Shares tumbled in Asia and Europe, where market stress has hit levels not seen since the 2011–2012 euro crisis. Gold failed again to capitalize on the rush to havens and reversed an earlier gain to tumble.
While each of us is trying to figure out what this means for us, start-up founders need to remember that, even though what we are experiencing is likely a Black Swan event, it is coming on the heels of a golden period for start-ups. In the last decade and a half, start-up funding has grown more than four-fold, from 30B to 140B! VCs have been raising enormous sums of capital as the value has shifted from Public to Private investment. And they will need to continue deploying it. Take for instance the case of India — 2020 started with a corpus in excess of $10 billion, to be invested in Indian start-ups. A majority of these funds still need to be placed as even in a zero-interest environment, the expectation is to deliver a return on LP investment. …
If a firm cannot raise more money, they obviously refrain from making new investments. It is therefore important for an entrepreneur to understand where the firm is in its current fund, how much of their current fund has been invested and how much is reserved for existing investments.
How do VC firms earn?
When VCs raise funds, they are paid in two ways: First, they get a commission on gains they produce for the fund called “carried interest.” Second, VCs receive a set fee, to run the business.
The fees are transferred to a separate legal entity, called a management company. The management company is where the true power lies; this is the entity that pays out expenses (salaries, rent, travel, legal, etc.), hires and fires employees, and owns “the franchise.” What is left over after expenses is the management company’s profit. The “franchise owners” (either a small group of partners or a couple of individuals — the founders) divide this up among themselves. …
“We are very happy to have worked with Marquee and would like to continue our work with them. We have gained access to a tonne of investors through their network and software, which we would never have had otherwise. Not only that, they’ve helped us put together necessary investor material, recommend changes and provided us with all the pre-requisites for being successful in our fundraising process. Their team has taken care of all administration and has been an absolute joy to work with. We highly recommend Marquee to any company that plans to work with fundraising in the future” -
“My fundraising problem was that my company fits between consumer & healthcare. Approaching VCs the normal way was not working to find us a good fit. I was initially concerned that Marquee Equity would be seen by VCs as cold-intros and get a low response rate. The reality was exactly the opposite. VCs I met and spoke with all said things like “I have had some interesting deals from Marquee, so I always look at what they send me”. I am very happy indeed with the work they have done on my behalf. …
In a nutshell, financial modeling is a numerical scenario of a real world financial situation used to ascertain the future financial performance by making projections. The objective is to combine accounting, finance and business metrics to create a representation of a business, forecasted into the future.
Financial models are essential decision making tools. It allows the decision makers to test out scenarios, observe outcomes and help make important decisions.
A good financial model should be well-structured with a solid layout. It should be simple, accurate and easy to follow with all the drivers and assumptions clearly laid out.
Start by asking yourself- Why are you building a financial model? If you’re looking to fundraise and are building it for potential investors focus on highlighting the profitability of the business to convince them that you are worth their time, effort and money. …
It’s been a very interesting start to the startup fundraising activity in 2019. Globally, deal volumes and sizes were expected to reduce, however, that hasn’t been the case.
A pitch-deck is an important element in your fundraising toolkit. It is a brief and compelling presentation giving an overview of the company.
All winning pitch decks seem to be simple, engaging, to the point and follow a basic structure and honestly, there is no need to re-invent the wheel.
An ideal pitch-deck should consist of 10–15 slides:
1) COVER: The most underrated slide that gets the most screen-time. Take the opportunity to introduce your company and brand in a unique way.
2) PROBLEM: Introduce the problem you are trying to solve and address important questions viz — How big is the problem? Why is it important? Who will benefit when the said problem is solved? Observe the ‘Problems’ slide of the Airbnb pitch-deck. …
40–50 is the average number of meetings it takes to raise a $1M+ round of capital.
No matter who you are or what round you’re raising, most people are going to pass on investing. That’s just how fund raising works.
There have been examples of billion dollar + companies that initially had to meet 200+ investors to close their initial round.
Inmobi — a Softbank backed unicorn which started in 2006, was initially passed by hundreds of investors before raising capital from KPCB and haven’t looked back since.
Here is a quick read on Inmobi Founder, Naveen Tiwari talking about how VCs weren’t excited about their space in the initial years, leading to a tonne of rejection. …
300+ companies. Is how many startups our team at Marquee Equity speaks to each week.
The top 3 questions we hear are:
How much should one be raising? The thumb rule is to raise an amount that fuels you for 18–24 months.
Chances of successfully raising? My firm belief is if a founder is determined enough, they will end up raising capital, eventually, from someone. The chances of raising are a 100% — if you’re committed to doing it, no matter what. Who you raise from and how much and at what terms will vary, but if you go at it with everything you have — you will end up raising. …
You’re looking to raise the early rounds of external capital for your startup.
Life is tough. You’ve got limited resources. A product to build. Talent to attract and hire. Product market fit to find. Early customers to convince. Negative cash flows to manage. Lack of sleep to deal with.
And capital to raise.
Finding someone who’d go out and do it for you seems so very compelling. You barely have bandwidth enough to run the company, never-mind finding and schmoozing investors..
If there were someone who’d build your deck, model your financials, research the right investors, get you into meetings with them and then help you follow up and close a deal — life would be simpler. …