Finding a venture capitalist for startups in India

The young minds of India are multi talented, not only are they intelligent but also very good at planning and execution of sponsored projects. There are many success stories across that exhibit the inbuilt ability of entrepreneurship of the Indian youth. Web based and e-commerce business like redbus, flipkart and foodpanda are just a few examples.

Most of the youngsters who are self driven want to start up at an early age but the lack of funds for the startup is the main problem during the initial days.

As most of the investors look for an existing business to invest in it is difficult to get an appropriate investment. But, we know that where there is a will, there is a way! There are many people who do invest in the fresh start ups as well.

All you need is to have a proper business proposal and the will to carry out the business honestly.

What is a good proposal like?

A good project proposal is the one that summaries the complete business idea with transparency. Clearly marking the important aspects and highlighting the pros and cons helps the investors to have a better insight into the vision of the applicant.

Defining the positive triggers and negative factors evidently also help the investor to get a clearer idea about the business, the applicant and his intentions.

The following can useful to define the purpose and scope of business with clarity and the expected returns.

1. Capital required – Including fixed assets, working capital and standby/ reserve
   capital.
2. Nature of business – What is the nature of business and how would it be
   carried out.
3. Scope of business – What all will the business cater to and what should be the demographic factors.
4. Target segment/Niche Market
5. Expected returns – This should be defined through a quantitative approach.
6. Defining a Break Even Point. When shall the returns start in form of profits.
7. Defining Risks- What all will be the risks involved and how shall they affect the
   investors ?
8. Payback Norms – How will the loan component be paid back. And what shall be the investors’ pure profit.

*A project proposal clearly highlighting the key indicators is better than a simple summarized proposal which is just an application or outline of the business.

Once the project proposal is ready the actual search begins. Searching for a right investor!

Who is the right investor?

1. A person asking for the details and calling for a personal meeting.
2. A person who asks for reference and guarantors.
3. A person who is well aware of the market and not too keen in shelling out the money.
4. A person who has hard earned money.
5. A person who asks for a little time to decide before promising anything.

All the above are a good signs because only serious and calculative people usually invest into a startup business.

How to find a right investor?

Investors are certainly not present on the roadside drinking beverages. The investors are mostly the hard working people who believe in putting efforts. Also it is important that the funds coming in for a startup should be ‘Clean Money’. Applicants should avoid the easy money or laundering to prevent themselves from any atrocities in future.

How can you figure out who can be a perspective investor?

1. You can make a list of people known to you who can serve as potential
   investors and discuss a close ended business plan to see if they are ready to invest.
2. You can approach the private financial advisers.
3. You can approach the Chartered Accountants , who have a good
   clientele.
4. You can Involve friends willing to pool in some money to invest on something or the other or grouping up with like-minded people.

When you find an appropriate investor, you should not look at short term gains and returns. One should aim for a success in the long run. And to achieve a long term gain and a feeling of accomplishment we should always keep in mind the following things:

1. One should remain honest and be willing to pay back.
2. If there is anything that is proving the weak link for the business, should be immediately eliminated, and the project should be reworked well in time.
3. The startups’ expected returns should not be hypothetical.
4. The team that carries out the key tasks should remain focused and not get disheartened if initially the pace is slow.
5. Always remember to keep the trust of the investors as he/ they helped you to become someone from no one.
6. And lastly and most importantly, be strong on paperwork even if the funds come from the closest friend.

Image Courtesy : https://inquim.com/wp-content/uploads/2014/09/VentureCapital02.jpg