Business Models: Gautam Gupta

50 %
50 %
Information about Business Models: Gautam Gupta

Published on February 11, 2009

Author: lpnoonan

Source: slideshare.net

Financing 101 What an entrepreneur should know; a primer on VC.

Sources of Capital Friends and Family Angel Investors Venture Capital / Private Equity Customer Financing Debt (Credit cards / Mortgages)

Friends and Family

Angel Investors

Venture Capital / Private Equity

Customer Financing

Debt (Credit cards / Mortgages)

Why take VC? Venture capital is not for every business, some very successful businesses have never taken venture capital Some have: Ebay Google Yahoo Venture capital is largely for businesses requiring a great deal of capital (+5-10M) in a market sector that can support large exits

Venture capital is not for every business, some very successful businesses have never taken venture capital

Some have:

Ebay

Google

Yahoo

Venture capital is largely for businesses requiring a great deal of capital (+5-10M) in a market sector that can support large exits

What does a “VC” do? A VC obtains money from investors and finds high risk, high return investments that will “return the fund” Institutional Investors Fund of Funds PE vs. VC Hedge Fund vs. VC

A VC obtains money from investors and finds high risk, high return investments that will “return the fund”

Institutional Investors

Fund of Funds

PE vs. VC

Hedge Fund vs. VC

Gary Snoman http://www.blueprintventures.com/holiday06.html

http://www.blueprintventures.com/holiday06.html

What differentiates VCs Value-add Network Team expertise Reputation Historical Performance Geographical Location Fund size / Funds under management

Value-add

Network

Team expertise

Reputation

Historical Performance

Geographical Location

Fund size / Funds under management

What VCs look for Multiples on their money Not in the business of running companies, building teams, creating ideas An idea isn’t everything…team, market, financial performance, exit opportunities

Multiples on their money

Not in the business of running companies, building teams, creating ideas

An idea isn’t everything…team, market, financial performance, exit opportunities

As an entrepreneur, what should you keep in mind You never stop fundraising and fundraising process is long Don’t settle for just money (caveat, if you need to make payroll, you need money) Dilution is a concern, but not the main one Understand that not every business needs or should want VC

You never stop fundraising and fundraising process is long

Don’t settle for just money (caveat, if you need to make payroll, you need money)

Dilution is a concern, but not the main one

Understand that not every business needs or should want VC

Valuations / Price This can be a complicated concept, think of a pie – everyone wants a piece, it all depends on how big of a pie you have at the end of the day Pre-money valuation – how much is your company worth Pre + Investment = Post-money Pre (10M) + Investment (5m) / Post (15m) = 33% ownership

This can be a complicated concept, think of a pie – everyone wants a piece, it all depends on how big of a pie you have at the end of the day

Pre-money valuation – how much is your company worth

Pre + Investment = Post-money

Pre (10M) + Investment (5m) / Post (15m) = 33% ownership

Valuation Pre-Investment Post-Investment Investor $5M 33% Founders $10M 100% Founders $10M 66% Someday worth $30M… Someday worth $150M…

Exit When the company is sold or goes public, shareholders want the highest price possible Investors make money on the exit, so do you

When the company is sold or goes public, shareholders want the highest price possible

Investors make money on the exit, so do you

Questions

Case Study - #1 Founded to allow consumers to find and trade Pez dispensers Charging 5-25 cents per listing as an optional donation First item sold: Broken laser pointer for $14.83 Founder is a 28 year old computer programmer Founder didn’t have time to cash all the checks that were being mailed in!

Founded to allow consumers to find and trade Pez dispensers

Charging 5-25 cents per listing as an optional donation

First item sold: Broken laser pointer for $14.83

Founder is a 28 year old computer programmer

Founder didn’t have time to cash all the checks that were being mailed in!

AuctionWeb (AKA Ebay) Benchmark’s $6M investment turned into $5B Pierre proved to be an exceptional founder / visionary, but needed to be complemented with a manager (Meg Whitman) Today, Ebay has annual sales of $8B and worth $19B

Benchmark’s $6M investment turned into $5B

Pierre proved to be an exceptional founder / visionary, but needed to be complemented with a manager (Meg Whitman)

Today, Ebay has annual sales of $8B and worth $19B

Key Learnings Investing in people not ideas Seek out large markets / sea changes Focus on capital efficiency Customer traction is a strong indicator of success

Investing in people not ideas

Seek out large markets / sea changes

Focus on capital efficiency

Customer traction is a strong indicator of success

Case Study - #2 Cell phone service targeted to 18-35 year olds that allowed you to watch live TV on your phone, play games, listen to music Founder previously started a very successful cell phone carrier company

Cell phone service targeted to 18-35 year olds that allowed you to watch live TV on your phone, play games, listen to music

Founder previously started a very successful cell phone carrier company

Amp’d Mobile Investors put in $360M and lost ALL of it Business model depended on VZW’s network and was forced into bankruptcy Customers (18-35 yr olds) didn’t pay their bills! Almost half their customers were sent to collection agencies. CEO was spend-free

Investors put in $360M and lost ALL of it

Business model depended on VZW’s network and was forced into bankruptcy

Customers (18-35 yr olds) didn’t pay their bills! Almost half their customers were sent to collection agencies.

CEO was spend-free

Key Learnings Business Models matter Sell to customers that have strong ability and willingness to pay Prior success not necessarily an indicator of future success Control your own destiny

Business Models matter

Sell to customers that have strong ability and willingness to pay

Prior success not necessarily an indicator of future success

Control your own destiny

Add a comment

Related presentations

Related pages

Gautam Gupta | LinkedIn

View Gautam Gupta’s professional profile on LinkedIn. LinkedIn is the world's largest business network, helping professionals like Gautam Gupta discover ...
Read more

Gautam Gupta - Wikipedia, the free encyclopedia

Gautam Gupta is an Indian television actor and model. He is currently working on the Balaji Telefilms show Kuch Toh Hai Tere Mere Darmiyaan, airing on Star ...
Read more

Gautam Gupta - Quora - Quora - The best answer to any question

Gautam Gupta followed this • 22 Jun. ... A business model is part of a venture's business strategy. ... About Gautam View More ...
Read more

Gautam Gupta: Salaries Need to Be Sustainable - The ...

GUEST MENTOR Gautam Gupta, co-founder of NatureBox: Being a founder means that the buck stops with you. You decide who to hire and what to pay ...
Read more

NatureBox | Interview with its CEO & Co-Founder - Gautam Gupta

In San Carlos (CA), we meet CEO and Co-Founder of NatureBox, Gautam Gupta. Gautam talks about his founding story & provides advice for young entrepreneurs.
Read more

How Subscription Service NatureBox Aims to Make America ...

Gautam Gupta's NatureBox delivers nutritious snacks to ... Business Models; Personal ... Zoë Henry is a staff reporter at Inc. and a graduate ...
Read more

NatureBox Snack Delivery VC Gautam Gupta - Business Insider

Gautam Gupta, 26, was an overweight kid who struggled with obesity for years. So when he left his job as a VC at General Catalyst Partners last ...
Read more

Fashion Design Council of India ( FDCI )

Fashion Designer @ Gautam Gupta: ... Fashion Designers, FDCI, Indian Fashion, Business of Fashion, ... Fashion Design India, Ramp Shows, Indian Models, ...
Read more

nature box ceo gautam gupta on the future of subscription ...

... with a subscription business model. ... 102813-Nature-Box-CEO-Gautam-Gupta-on-the-Future-of-Subscription-Commerce ... Gautam Gupta, to join me for a ...
Read more