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Aspiring entrepreneurs and students wanting to learn about the funding aspects of starting up can find a useful overview in the compact book, Venture Capital Investments, by Raj Kumar and Manu Sharma.

The eight chapters, spread across 165 pages, provide a starting point to the world of venture dynamics. Raj Kumar is Vice-Chancellor of Panjab University, Chandigarh. Manu Sharma is Assistant Professor at the University Institute of Applied Management Sciences, Panjab University.

Here are my takeaways from the book, summarised as well in Table 1. See also my reviews of the related books Angel Investing, The Manual for Indian Startups, Straight Talk for Startups, and Startup Boards.

T1

The World of Venture Capital (Table 1 image courtesy YourStory)

Foundations

Venture capital is based on the model of high-risk high-return of investments, the authors begin. VCs bring in not just finance but also management expertise, industry connections, and mentorship support.

This is important in cases where the business idea is new and risky, or the founding team is not experienced or balanced. Early-stage VCs target startups are regarded as too small or risky by traditional financers; as the startup matures, risk decreases but return factors on new investments decrease.

Founders can raise funds through debt (highly leveraged; stakeholder value maximisation) or equity (less leveraged). The choice depends on factors like market conditions and type of industry and company.

Factors like liquidity, information asymmetry, and cyclicality define VC engagement, which can last for around 7-10 years in a startup’s lifecycle. “Venture capitalists follow the Pareto principle – 80 percent of the wins come from 20 percent of the deals,” the authors explain.

Deal structures vary in formative, mid-life, and expansion stages of the startup. “VC firms get rewarded for making accurate predictions and identifying a pattern before it becomes a trend,” the authors observe.

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Market growth

Two chapters trace the rise of the VC industry in the US and India, and map portfolios of VCs in India. The IT industry in the 1970s marked the growth of VC as an asset class in the US. In India, early venture financing was done by the government before formal recognition to private investors was given in the 1980s, the authors explain.

Tech and business clusters in China and India grew as investment destinations for many Internet-sector investors from the 1990s onwards. VC-funded startups have helped increase the “absorptive capacity” of business for new innovations.

The authors track some of the deals of VCs in India, such as Inventus Capital Partners (PolicyBazaar), Accel Partners (Flipkart), Nexus Venture Partners (Snapdeal), IDG Ventures (Yatra), and Sequoia Capital India (JustDial).

The journey is not always smooth, particularly when multiple investors are involved in a startup’s evolution. For example, discussions in 2016-2017 for a proposed merger of Snapdeal and Flipkart failed to get an approval of all investors.

Deal evaluation

VCs tend to look for industries where lower investments can lead to large exponential returns with enormous margins, the authors explain. They examine the size of the overall market, and what percentage can be dominated by the invested startup. VCs avoid saturated markets with large competitors (e.g. Coca-Cola, Pepsi for carbonated drinks).

The startup should have a balanced team capable of creating uniquely differentiated offerings, pick profitable price points, develop deep customer relationships, and create entry barriers to future competitors.

In the long run, brand equity and external advisors or partners help in growing the market as well. Other factors in keeping with the times are environmental sustainability and eco-friendliness, the authors add.

Based on these factors, agreements specify the amount and purpose of funds, working and runway capital, burn rate, and monthly cash flow.

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Valuation methodologies

One chapter packed with equations and tables shows valuation techniques in action. The market-based approach is based on multiples and ratios of enterprise value, earnings, revenue, price, earnings, tax, depreciation, and amortisation.

Based on this, VCs calculate required rates of return, fund performance, and shareholding patterns. This applies to pre-money and post-money stages in multiple rounds.

Discounted cash flow-based valuation determines the present value of free cash flows to the firm (FCFF), the authors explain. Factors like the nature (equity/debt) and the amount of capital raised come into play here.

Common equity and preferred equity have different implications for voting rights and dividends of shareholders. VC portfolio parameters include amount invested, amount returned, exit status, and exit multiples. Based on the performance, success can be “normal, grand or super”, the authors describe (in addition to failure, of course).

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Fund structure and economics

Two chapters describe VC fund structure and economics. Limited partners (LPs) are usually institutional investors such as endowments, insurance companies, pension funds, foundations, family-owned offices, or investors with very high net worth.

LPs do not make decisions on how exactly VC firms manage the funds raised for startups. General partners (GPs) raise and manage the VC’s funds, and extend services for startups. Portfolios are business strategies to attract investors, the authors explain.

The authors describe investment steps like business plan submission, meetings, due diligence, and term sheets. Some founder tips on negotiation and dispute resolution would have been a welcome addition to these chapters. An actual or hypothetical case study of fundraising activities of a startup through its journey would have also helped.

Exit routes of an investment are usually an IPO, acquisition, management buyout, or sale of shares to another investor. The authors show illustrative tables of payout models for multiple LPs and GPs, along with an analysis of management fees.

The last chapter of the book describes how a VC raises funds via a prospectus presented to LPs. The prospectus describes the track record of the GPs, performances of its earlier funds, fee percentages, number of startups targeted, and anticipated returns.

Overall returns and riskiness of past performance are assessed by LPs. For example, there may have been too much dependence on the success of only one startup instead of a few startups.

The book ends abruptly with this chapter. It would have been great to end with some suggestions or advice for founders and aspiring investors, or with some analysis on emerging trends and developments.

Edited by Saheli Sen Gupta

Want to make your startup journey smooth? YS Education brings a comprehensive Funding Course, where you also get a chance to pitch your business plan to top investors. Click here to know more.

Original Source: yourstory.com

A few days back, India overtook Italy as the sixth wors- hit nation by the coronavirus pandemic, recording over 2.69 lakh positive cases. 

With social distancing and lockdown rules in place, services provided by several healthtech platforms have allowed people to avail online consultations, treatments, diagnostic tests, and have medicines delivered at their doorstep.HealthtechAlso ReadHealthtech startup Niramai launches home screening service for breast health

Moreover, the government of India has been leveraging the potential of digital healthcare, introducing the Aarogya Setu app for Indians to self-assess themselves for the deadly virus, and determine if they are in a risk zone.

In fact, an estimated 4,800 healthtech startups are leveraging cutting-edge technologies to help fight the pandemic in India.

Even during such bleak times, a few of these startups have managed to grab investors' eyes to raise funding, in order to operate smoothly. YourStory lists a few. 

HealthPlix

Bengaluru-based healthtech startup HealthPlix recently raised $6 million in a round led by JSW Ventures. Existing investors Chiratae Ventures and Kalaari Capital also participated in the round. 

Founded in 2016 by Raghuraj Sunder Raju, Prasad Basavaraj, and Sandeep Gudibanda, HealthPlix provides clinical software for doctors.It has developed an Electronic Medical Record (EMR) software, and provides Clinical Decision Support (CDS) to doctors and helps them generate e-prescriptions under 30 seconds.Healthplix

The Co-Founders of Healthplix: Prasad Basavraj, Sandeep Gudibanda, and Raghuraj Sunder Raju.

Since its inception, the healthtech startup has raised a total of $10 million in funding.

IVF Access

IVF Access, a Bengaluru-based healthcare startup focused on providing In Vitro Fertilisation (IVF) treatments in India, raised $5 million in Series A funding in June.

The funds raised will be deployed to set up IVF clinics across India that provide assisted reproductive treatments, with its operations enabled by a proprietary IT platform, the startup said in a statement.

Naresh Rao, Co-founder and CEO, IVF Access, said, 

“When it comes to IVF, access is everything. IVF Access will increase the reach of such fertility treatments through a chain of clinics in India, where couples trying to conceive will have access to both technology and medical expertise.”IVF Access Founders

IVF Access Founders (L-R): Pravin Kumar Sethuraman, Harinath Chakravarthy, Naresh Rao, and Nikhil Rajmohan

The investment was made by Vertex Ventures Southeast Asia and India, and will see its Managing Partner Ben Mathias joining the board of the startup.

Phable

In May, healthtech startup Phable raised $1 million in its ongoing pre-Series A round from Inflection Point Ventures and other investors.

The startup intends to use the funds to quickly expand in the country, and scale its technology.Phable

Phable founder Sumit Sinha

Co-founded by Sumit Sinha and Mukesh Bansal in 2018, Phable operates by creating an ecosystem of patients, doctors, hospitals, health devices, insurance, and patient-care service providers.

Remedo

Remedo, a Delhi-based healthtech startup in the telemedicine vertical, raised an undisclosed amount in its pre-Series A round in May from River Rock Ventures. 

Inflection Point Ventures also participated in the round with other investors, including AngelList, Mohit Satyanand, Mitesh Daga (TPG Capital), and Aditya Vij (Kedara capital).

The startup, which runs a telemedicine platform connecting over a lakh patients with doctors on its platform, said it will be using the funds to expand to other specialities like cardiovascular, neuro, and respirators.

Remedo, co-founded by Dr Ruchir Mehra, Harsh Bansal, and Richeek Arya in 2017, connects doctors with patients, offering customised care plans, including consultation, follow-up visit reminders, tests, medicine reminders, and detailed answers to patient FAQs.

MediBuddy DocsApp

This month, Bengaluru-based online doctor consultation startup DocsApp announced a merger with MediBuddy, a digital consumer health business for enterprises. 

Combining their respective strengths, the joint entity, named ‘MediBuddy DocsApp,’ will continue to focus on enabling healthcare services like online specialist doctor consultations, lab tests, preventive health checks, delivery of medicines, etc., to customers across India. Satish Kannan, CEO of the merged entity

Satish Kannan, CEO of the merged entity

Also ReadDocsApp and MediBuddy announce merger, joint entity raises $20M in Series B funding

The joint entity raised $20 million (Rs 150 crore) in Series B round of funding led by Bessemer Venture Partners, Fusian Capital, Mitsui Sumitomo, and Beyond Next Ventures. Existing investors, including Milliways Ventures and Rebright Partners, also participated in this round. 

The joint entity said it would utilise the funding in further strengthening its doctor base, patient reach, product, and technology to move a step closer to its mission of providing high-quality healthcare to a billion people. 

Doceree

New Jersey-based Doceree, Inc. in May raised $1 million in seed funding from a group of angel investors from India and the US. The healthtech startup secured the funds despite the ongoing coronavirus crisis that is wreaking havoc on stocks worldwide.

The startup plans to utilise the funds towards customer acquisition, recruiting talent, scaling up operations in India and the US, and ramping up technology to further digitalise the physician engagement experience.DocereeAlso Read[Funding alert] Physician engagement startup Doceree raises a seed funding of $1M

The seed funding round was led by Kumar Gaurav, Founder and CEO of Beyond Codes. A few other investors from the advertising and the pharmaceutical industry also participated. The startup has also inducted serial investor Rahul Gupta to its management board.

Esperer Onco Nutrition

In April, healthtech startup Esperer Onco Nutrition (EON) raised funds from strategic investment and venture builder firm Zenfold Ventures. EON brings in a comprehensive nutritional portfolio to oncology.

With the freshly raised funds, EON plans to expand to the US and European markets, and build a world-class talent pool. The startup has already expanded its team of experts in scientific and R&D departments, and plans to add key people in finance, marketing, and supply chain teams.

EON is focused on addressing specific health conditions with special emphasis on onco nutrition, and intends to provide a 360-degree solution to the global cancer portfolio.

Zealthy

Bengaluru-based women's healthcare startup Zealthy in March raised an undisclosed seed funding led by KYT Ventures, First Cheque, AngelList, and few prominent angel investors. 

The startup plans to use the funding to further develop its product and tech, and add more Indian languages onto its platform. It is also looking to expand its base further in Tier II and III cities in India.

Anu Gupta, Co-founder of KYT Ventures, said, “Being a doctor and a woman, I could see how Zealthy’s women centricity, Tier II and III focus, and vernacular strategy have the potential to lead the next phase of digital health in India.” Zealthy

The Zealthy Team

Started in 2019 by Rishi Malhotra and Akhil Gupta, Zealthy is a women-only platform that aims to understand, share, and learn health issues specific to women in their local languages. It connects users to reliable healthcare providers for specialties like maternity, infertility, cosmetic interventions, etc., at affordable prices.

(Edited by Suman Singh)

Want to make your startup journey smooth? YS Education brings a comprehensive Funding and Startup Course. Learn from India's top investors and entrepreneurs. Click here to know more.

Original Source: yourstory.com

States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

The current real unemployment rate is 20.8%, the highest since the Great Depression.

Many states’ unemployment funds aren’t robust enough to meet growing demand.

Typically states can apply for help from the Federal Unemployment Account, but even that could run out, experts warn.

“No system is designed for [this] level of unemployment,” former North Carolina budget director Lee Roberts told Business Insider.
Roberts said it was “highly likely” states would begin limiting the duration and dollar amount of payouts to prevent the coffers from running dry.

Over the last five weeks, more than 26 million Americans have filed for unemployment. That’s in addition to the 7.1 million already out of work, according to the Bureau of Labor Statistics.

The result is a real unemployment rate of 20.6%, the highest since the Great Depression.See the rest of the story at Business Insider

 

Original Source: States are emptying their unemployment funds, and even the federal fund designed as a backstop is likely to run out of money

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