The answer to this ...
We try and assist you , please feel free to browse through the blog of Apoorva Kumar , one of the members of Entrepreneurship cell at IIMC .
http://ir0cker.blogspot.com/2008/07/how-to-make-business-plan.html
Regards
E cell, IIM Calcutta
Sunday, November 30, 2008
i2I'08 winner Jaya Jha writes - Rambling of an Entrepreneur
Why do I write about entrepreneurship?
I am a first time entrepreneur. I have just started off. I am not a success story yet. Does it make sense for me to write about Entrepreneurship? Why do I even attempt to write? Who is going to benefit from my writings? Wouldn’t they be better off reading some successful entrepreneurs instead?
There is a reason I write. Success is not what drives people away from entrepreneurship, right? It is the fear of failure at the end. And this potential failure creates an uncertainty while you are an entrepreneur - not yet a success, not yet a failure. That uncertainty is the killing factor. So, my hope is that it would be relief for people to know that it is not too bad. The uncertainties, the fear of failure are all there. The fact is that you may fail with a high probability (give the statistics of start-up successes). Despite all of this, it is a fabulous experience to be an entrepreneur. If it came from a successful entrepreneur, after he/she has been a success, it may not sound that convincing. Past always looks sweet, especially if it has led to good things. But coming from a first time entrepreneur herself going through those uncertainties, I think it is a bit more convincing. That’s why I write.
Being an Entrepreneur - Leaving the luxuries
Here is what I had written in my blog after I had taken a trip to Delhi for my start-up work.
Gurgaon-Delhi metro is badly wanted. It is not funny that the only thing people rely on for the commute between Delhi and Gurgaon are Call Center Cabs. Uniform fare of Rs. 10, doesn’t matter where you are going - so long as it is on their route. Now, they aren’t supposed to be doing that. But there is a reason black-markets exist. It’s not always about lower prices. It’s about the availability itself - at any reasonable price.
Silly! It’s not the first time I have been to Delhi/Gurgaon and shuttled between them. But this time I was not on with corporate luxury. Travelling from Google meant this - get out of the airport, get into an air conditioned car. Get into an air conditioned, five-star hotel. If you have to go somewhere, there is the same air conditioned car at your disposal. Almost any places visited were air conditioned too. So, it was not unusual for me to not even realize what the weather was like in the city I travelled to. Now, obviously, many aspiring entrepreneurs would be curious to know as to how it felt to do without the luxuries. I won’t be a hypocrite and say it was all fun. No, it wasn’t all fun. Having a car at your disposal is certainly so much more convenient. But it isn’t too bad either. And that’s the point. It might have been a little more difficult in a place where I had language problems. But in Delhi/Gurgaon, with the good old principle of asking around, I managed fine with autos, buses and yeah - call centre cabs. Couple of things helped. One was that I hadn’t been in corporate world for so long that I had forgotten the old ways. And the second was the realization that I didn’t have to do it. I am not broke, not yet I can, personally, still afford to hire an air-conditioned car. It just didn’t make sense.
It isn’t that bad! And there are ways to survive and be happy.
Being an entrepreneur – Dealing with the system
Life changes as an entrepreneur. Getting a business card is no longer just a matter of writing an e-mail to an admin staff. Ensuring that everything is legally done is no longer just a call to the company lawyer. Suddenly all of these have prices attached to them and you are wondering if you are not overpaying the CA, the CS and the lawyers. And although things have certainly changed from pre-90s, they are still not easy for small guys. Payment Gateways may refuse to give you merchant accounts for all sorts of silly reasons.
And yet, there is a way to deal with it. Celebrate small successes (finding a lower price for printing business cards? First 100 visits to your site?), things which would have meant nothing in your corporate life and be happy!
When is the right time?
Right after the college? After a couple of years of industry experience? After a decade of industry experience?
The answer is a clichéd one. Whatever works for you! I can tell you what worked for me. I started off after couple of years of experience.
What I didn’t possess two years ago, fresh out of college were these
• Any savings to sustain myself for even few months. It is important to have some safety net that if revenues are delayed, if things just do not go as they should, or even just for that planned settling down period, you will have something to sustain yourself. VC money is not something one should rely upon to help business take off.
• The real experience of dealing with the professional world out there. Many people may be smarter than me, but I felt that those months in corporate life were important for me. I matured as a professional and it’s a big help as an entrepreneur
What could be the hindrances ten years down the line?
• The lifestyle will be substantially more expensive. It would not be possible to go back to living the way we used to do as a student. Going back to buses and autos would be much more difficult than it is today. That means even if there are lots of savings, they may not be enough to last for long.
• Uncertainty is my life won’t be just my own. There would be family and kids and their education and aspirations.
But there are people in both these categories, who have done well. So, ultimately it boils down to what works for you!
About the writer: Jaya Jha is the Co-Founder of Pothi.com, a company that provides tools and marketplace for self-published books. An IIT Kanpur and IIM Lucknow graduate, she was a Product Manager with Google India prior to starting Pothi.com. Her hobbies include reading, writing and traveling. She blogs at http://jayajha.wordpress.com/
I am a first time entrepreneur. I have just started off. I am not a success story yet. Does it make sense for me to write about Entrepreneurship? Why do I even attempt to write? Who is going to benefit from my writings? Wouldn’t they be better off reading some successful entrepreneurs instead?
There is a reason I write. Success is not what drives people away from entrepreneurship, right? It is the fear of failure at the end. And this potential failure creates an uncertainty while you are an entrepreneur - not yet a success, not yet a failure. That uncertainty is the killing factor. So, my hope is that it would be relief for people to know that it is not too bad. The uncertainties, the fear of failure are all there. The fact is that you may fail with a high probability (give the statistics of start-up successes). Despite all of this, it is a fabulous experience to be an entrepreneur. If it came from a successful entrepreneur, after he/she has been a success, it may not sound that convincing. Past always looks sweet, especially if it has led to good things. But coming from a first time entrepreneur herself going through those uncertainties, I think it is a bit more convincing. That’s why I write.
Being an Entrepreneur - Leaving the luxuries
Here is what I had written in my blog after I had taken a trip to Delhi for my start-up work.
Gurgaon-Delhi metro is badly wanted. It is not funny that the only thing people rely on for the commute between Delhi and Gurgaon are Call Center Cabs. Uniform fare of Rs. 10, doesn’t matter where you are going - so long as it is on their route. Now, they aren’t supposed to be doing that. But there is a reason black-markets exist. It’s not always about lower prices. It’s about the availability itself - at any reasonable price.
Silly! It’s not the first time I have been to Delhi/Gurgaon and shuttled between them. But this time I was not on with corporate luxury. Travelling from Google meant this - get out of the airport, get into an air conditioned car. Get into an air conditioned, five-star hotel. If you have to go somewhere, there is the same air conditioned car at your disposal. Almost any places visited were air conditioned too. So, it was not unusual for me to not even realize what the weather was like in the city I travelled to. Now, obviously, many aspiring entrepreneurs would be curious to know as to how it felt to do without the luxuries. I won’t be a hypocrite and say it was all fun. No, it wasn’t all fun. Having a car at your disposal is certainly so much more convenient. But it isn’t too bad either. And that’s the point. It might have been a little more difficult in a place where I had language problems. But in Delhi/Gurgaon, with the good old principle of asking around, I managed fine with autos, buses and yeah - call centre cabs. Couple of things helped. One was that I hadn’t been in corporate world for so long that I had forgotten the old ways. And the second was the realization that I didn’t have to do it. I am not broke, not yet I can, personally, still afford to hire an air-conditioned car. It just didn’t make sense.
It isn’t that bad! And there are ways to survive and be happy.
Being an entrepreneur – Dealing with the system
Life changes as an entrepreneur. Getting a business card is no longer just a matter of writing an e-mail to an admin staff. Ensuring that everything is legally done is no longer just a call to the company lawyer. Suddenly all of these have prices attached to them and you are wondering if you are not overpaying the CA, the CS and the lawyers. And although things have certainly changed from pre-90s, they are still not easy for small guys. Payment Gateways may refuse to give you merchant accounts for all sorts of silly reasons.
And yet, there is a way to deal with it. Celebrate small successes (finding a lower price for printing business cards? First 100 visits to your site?), things which would have meant nothing in your corporate life and be happy!
When is the right time?
Right after the college? After a couple of years of industry experience? After a decade of industry experience?
The answer is a clichéd one. Whatever works for you! I can tell you what worked for me. I started off after couple of years of experience.
What I didn’t possess two years ago, fresh out of college were these
• Any savings to sustain myself for even few months. It is important to have some safety net that if revenues are delayed, if things just do not go as they should, or even just for that planned settling down period, you will have something to sustain yourself. VC money is not something one should rely upon to help business take off.
• The real experience of dealing with the professional world out there. Many people may be smarter than me, but I felt that those months in corporate life were important for me. I matured as a professional and it’s a big help as an entrepreneur
What could be the hindrances ten years down the line?
• The lifestyle will be substantially more expensive. It would not be possible to go back to living the way we used to do as a student. Going back to buses and autos would be much more difficult than it is today. That means even if there are lots of savings, they may not be enough to last for long.
• Uncertainty is my life won’t be just my own. There would be family and kids and their education and aspirations.
But there are people in both these categories, who have done well. So, ultimately it boils down to what works for you!
About the writer: Jaya Jha is the Co-Founder of Pothi.com, a company that provides tools and marketplace for self-published books. An IIT Kanpur and IIM Lucknow graduate, she was a Product Manager with Google India prior to starting Pothi.com. Her hobbies include reading, writing and traveling. She blogs at http://jayajha.wordpress.com/
Markets are low - a new business ..
Our Jury panelist , Abhishek Rungta answers this for you .
please feel free to browse through his blog http://www.abhishekrungta.com/avoid-starting-your-business-during-high-tide/48/
Regards
E cell , IIM Calcutta
please feel free to browse through his blog http://www.abhishekrungta.com/avoid-starting-your-business-during-high-tide/48/
Regards
E cell , IIM Calcutta
Just about time..
Hi all ,
Entrepreneurship cell at IIM Calcutta is gearing up for the 2nd round ;to be held across India. We have been getting compliments by our Jury Panel on the kind of entries we have received this year . Its been phenomenal . We have gone ahead and are giving a chance to over 50 teams in India to do a VC pitch . This is probably going to be first time in the history of the Entrepreneurship eco system in India that in short span of 5 days 50 VC pitches will happen .
As it is also time to be a part of history , its also time to get ready for the pitch.
We recommend that all participants should approach their buddies now , get resources and improve their plans .
Please feel free to buzz your buddies , they ll help you out .
Regards
E Cell , IIM Calcutta
Entrepreneurship cell at IIM Calcutta is gearing up for the 2nd round ;to be held across India. We have been getting compliments by our Jury Panel on the kind of entries we have received this year . Its been phenomenal . We have gone ahead and are giving a chance to over 50 teams in India to do a VC pitch . This is probably going to be first time in the history of the Entrepreneurship eco system in India that in short span of 5 days 50 VC pitches will happen .
As it is also time to be a part of history , its also time to get ready for the pitch.
We recommend that all participants should approach their buddies now , get resources and improve their plans .
Please feel free to buzz your buddies , they ll help you out .
Regards
E Cell , IIM Calcutta
The Smartest Unknown Indian Entrepreneur
Entrepreneur Marc Benioff is afraid of him. Venture king Mike Moritz wants to invest in him.
You have never heard of Sridhar Vembu, founder and CEO of AdventNet, the company behind newly launched productivity suite Zoho.
Vembu is a low-profile guy if there ever was one. He is also cheap as hell. Yet, of course, you know that among entrepreneurs, frugality is a virtue. A tremendous virtue.
Vembu has stretched this virtue to extreme limits, and added layers and layers of creativity upon it. The result? A 100%, bootstrapped, $40-million-a-year revenue business that sends $1 million to the bank every month in profits.
Doing what? you might wonder.
Selling network management tools, to be precise. But with a unique twist. Vembu employs 600 people in Chennai, India, and a mere eight in Silicon Valley. Imagine what that does to his cost structure!
Not only that, in India Vembu's operation does not hire engineers with highflying degrees from one of the prestigious India Institutes of Technology, thereby squeezing his cost advantage.
"We hire young professionals whom others disregard," Vembu says. "We don't look at colleges, degrees or grades. Not everyone in India comes from a socio-economic background to get the opportunity to go to a top-ranking engineering school, but many are really smart regardless.
"We even go to poor high schools, and hire those kids who are bright but are not going to college due to pressure to start making money right away," Vembu continues. "They need to support their families. We train them, and in nine months, they produce at the level of college grads. Their resumes are not as marketable, but I tell you, these kids can code just as well as the rest. Often, better.???
(Read my full interview with Vembu here.)
With that rather unique workforce of 600 engineers, Vembu has not only built an excellent, cash-cow, network tools business, but he recently launched Zoho, which is getting a lot of buzz in the Web 2.0 community.
Why?
Well, Zoho does everything that you would do with Microsoft Office. It also has a hosted customer relationship management service that is free for very small companies and only costs $10 per user per month for larger ones. It competes with Salesforce.com (nyse: CRM - news - people ), which charges $65 per user per month.
Marc Benioff, chief executive of Salesforce.com, has made an offer to buy Zoho for an undisclosed amount. Benioff seems appropriately nervous, since Salesforce.com's sales and administration costs are high, eating up most of his earnings. Can he afford to compete if Zoho undercuts him at such a dramatic scale?
Vembu has turned Benioff down.
Many venture capitalists want to invest. Vembu's situation is one that every entrepreneur dreams of. You don't need money. VCs are chasing you. Freedom is delicious, and Vembu knows it.
Vembu has a very exciting opportunity ahead of him. What the Chinese have done in manufacturing, he is showing that the Indians can do in software: undercut U.S. and European software makers dramatically. Not in information technology services. Not by body shopping. Vembu has done something few Indian entrepreneurs have been able to achieve--build a true "product" company out of India. This is not a head count-based business model.
A brief primer would perhaps help put things in perspective. "Product" companies build once and then market and sell the same thing multiple times to multiple customers. "Services" companies that do custom software development have to use "bodies" to do customer-specific development over and over again, with limited leverage. Theirs is a head count-based business model. Recently, popular software-as-a-service companies have come up with the model of "renting" software over the Web, thereby offering "products" as "services" while maintaining the scalability advantage of products.
Vembu has first done a network management product. Then he has done productivity suite Zoho as a software-as-a-service.
True, Vembu is a rare species in India these days. As far as I know, he's one of the very few entrepreneurs who has been able to execute on the premise of building software "products" and/or software-as-a-service out of India. He has a big vision, and so far, he has executed flawlessly.
Watch this guy!
Tuesday, November 25, 2008
Monday, November 24, 2008
Dates for the pitching stage
The timelines for i2I second round for different zones are as follows:
December 12th- Bangalore (South Zone)
December 13th- Delhi (North Zone)
December 14th- Mumbai (West Zone)
December 15th- Kolkata (East Zone)
The timing would be from 10 am onwards for all zones but are subject to change if the panelists request so. The venue for east zone is IIM Calcutta and the rest will be confirmed shortly. The participants are not being reimbursed any fare nor are we providing accommodation to any teams.
For people having accommodation issues in these cities, you can consider checking "Youth Hostel" which usually provide decent accommodation at cheap rates.
Regards,
E-Cell, IIM Calcutta
December 12th- Bangalore (South Zone)
December 13th- Delhi (North Zone)
December 14th- Mumbai (West Zone)
December 15th- Kolkata (East Zone)
The timing would be from 10 am onwards for all zones but are subject to change if the panelists request so. The venue for east zone is IIM Calcutta and the rest will be confirmed shortly. The participants are not being reimbursed any fare nor are we providing accommodation to any teams.
For people having accommodation issues in these cities, you can consider checking "Youth Hostel" which usually provide decent accommodation at cheap rates.
Regards,
E-Cell, IIM Calcutta
Sunday, November 23, 2008
Sample pitch
Teams are expected to prepare a 5 minute presentation for the second round i.e. the pitching stage of the event. Though there are no guidelines for the same and each team can choose to decide on their presentations/financial charts, we are uploading a few sample 5 minute pitch for guidance. We would like to reiterate that this is not a standard and the judges/panelists in the second round themselves are not aware of any such sample videos being uploaded. The idea is to help the teams understand what all aspects they might not have considered so far and get a realistic feel of what all is achievable within 5 minutes.
We would also like to remind the 15 minutes allowed during the pitching stage (5 minutes for presentation and 10 minutes for Questions and Answers) can be changed if the jury panelists decide so.
Regards,
E-Cell, IIM Calcutta
We would also like to remind the 15 minutes allowed during the pitching stage (5 minutes for presentation and 10 minutes for Questions and Answers) can be changed if the jury panelists decide so.
Regards,
E-Cell, IIM Calcutta
Team Certificates
All the teams selected for the final round of i2I at IIM Calcutta would be given Certificates of Appreciation at the end of the event. Whereas teams which have qualified for the second round of the event but fails to make it to the finals would be given the Certificates of Participation. Certificates would only be given to those team members who were a part of the executive team at the time of the executive summary submission for the first round of the event. Special case of elimination of any member from the team has to be reported by the team leader to the organizers at the earliest. All the certificates for a team would be given to its team leader and team members are expected to collect their certificates from him/her.
Wishing all the shortlisted teams best of luck for the pitching stage.
Regards,
E-Cell, IIM Calcutta
Wishing all the shortlisted teams best of luck for the pitching stage.
Regards,
E-Cell, IIM Calcutta
Saturday, November 22, 2008
The results of i2I - first round
Hi all ,
the results of i2I first round are declared . The following teams have qualified in their respective zones for the second round of the competition .
North Zone
Leudus
Team Phoenix
ZENITH
EMPYREAL
Trio
Iconoclasts
Empezar Labs
TOVAC
Endeavour
RENAISSANCE
Team iDubba
Team CheckMate
South Zone
SecondInnings
Lighting Lives
Automax
Aarambh
Team Phoenix
Tecovate
Fourth Quarter
Sansaar
Netoscope
HBC
Aksharit
Innowin
Delta Climate
Udaan
HIFLIERS
SKULLS
East Zone
bioLit
LPG SAVING DEVICE UNIT
Revolution 361
Horizon
prerna
Team Enseigner
vNote
SavetoLive
Microfin
Stock Raja
Parichay
HELLODOCTOR24X7
StarQ*
West Zone
CarboFibre
Repowering
Drishti
Be-Positive
Aspirants
Arth
vertosys
Med-Central Kompassion
CDS-Saakshar
Online Tadka
Kideator
Crubarg
Karma
*Please note the fact that there is no Central Zone shortlist as the jury panelists did not find many entries from the zone worthy of a second round ,
StarQ was the only entry to qualify into the second round and has been shifted to East Zone
For any further clarifications please feel free to call Apoorva , 91-9831562689 .
Regards
E cell , IIM Calcutta
the results of i2I first round are declared . The following teams have qualified in their respective zones for the second round of the competition .
North Zone
Leudus
Team Phoenix
ZENITH
EMPYREAL
Trio
Iconoclasts
Empezar Labs
TOVAC
Endeavour
RENAISSANCE
Team iDubba
Team CheckMate
South Zone
SecondInnings
Lighting Lives
Automax
Aarambh
Team Phoenix
Tecovate
Fourth Quarter
Sansaar
Netoscope
HBC
Aksharit
Innowin
Delta Climate
Udaan
HIFLIERS
SKULLS
East Zone
bioLit
LPG SAVING DEVICE UNIT
Revolution 361
Horizon
prerna
Team Enseigner
vNote
SavetoLive
Microfin
Stock Raja
Parichay
HELLODOCTOR24X7
StarQ*
West Zone
CarboFibre
Repowering
Drishti
Be-Positive
Aspirants
Arth
vertosys
Med-Central Kompassion
CDS-Saakshar
Online Tadka
Kideator
Crubarg
Karma
*Please note the fact that there is no Central Zone shortlist as the jury panelists did not find many entries from the zone worthy of a second round ,
StarQ was the only entry to qualify into the second round and has been shifted to East Zone
For any further clarifications please feel free to call Apoorva , 91-9831562689 .
Regards
E cell , IIM Calcutta
Thursday, November 20, 2008
i2I - first round results
Hey all ,
The i2I results were expected to be out by today .
There have been certain operational issues which were unavoidable .
Thus the results stand delayed and now will be uploaded on 23rd November .
Individual mails have been sent to participating teams by their buddies.
For any query feel free to call Apoorva Kumar +91-9831562689
Regards
~E cell , IIM Calcutta
The i2I results were expected to be out by today .
There have been certain operational issues which were unavoidable .
Thus the results stand delayed and now will be uploaded on 23rd November .
Individual mails have been sent to participating teams by their buddies.
For any query feel free to call Apoorva Kumar +91-9831562689
Regards
~E cell , IIM Calcutta
Tuesday, November 18, 2008
Five things to consider before starting your own business
Getting free from dominating bosses and the possibility to make your own decisions is one of the lures of starting your own business. As attractive as it looks, not everyone is suited for self-employment. Before you go ahead with any plan to start a business it is important to take a close look at yourself and ask yourself some important questions.
"The entrepreneur in us sees opportunities everywhere we look, but many people see only problems everywhere they look. The entrepreneur in us is more concerned with discriminating between opportunities than he or she is with failing to see the opportunities." Michael Gerber Quote
1. Do you have enough start-up capital and a back-up income?
It takes money to make money, even if it is only a home business. Make sure that you have enough funds to equip yourself and begin marketing before taking the plunge. Also, don't expect to make a lot of money in the early stages of your business. You will need to set aside enough money to provide for you and your family during the initial start-up period for your business. Consult with other similar businesses and find out how long it took them to become viable.
2. Are you a self-moving person?
This is the key quality that separates an employee from and entrepreneur. If you need to wait around and be told what to do, then you would find it easier to get a job with a company rather than to launch your own business. On the other hand, if you are able to think of an idea and carry it out without prodding from someone else, then you may be able to succeed in your own business.
3. Are you willing to work more than a standard 9-5 day?
When you work for someone else you are contracted to work a certain schedule. At the end of the day, you can often able to just forget about the job, go home and relax. When you have your own business you carry a load of responsibility on your shoulders and you will often end up working longer hours than a normal salaried employee. If you like what you are doing and if your business is financially rewarding then you may not mind putting in a lot of extra hours and working when other people are resting. Once again, there is no "right" or "wrong" here. It is just a question of looking deeply at yourself and finding out what you are best cut out to do.
4. Is your family ready to back you up?
You may have a great idea for your own business, but before you begin you have to see if your family is ready to support your ideas. If you start your own business there may be an element of risk and an increased demand on your time. Owning your own business and having a lot of responsibility can also be very stressful. It is crucial that your closest loved one, the ones who share your life, also share your vision and will provide the emotional support and understanding that you need in order to be successful.
5. Are you passionate about the business that you want to set up?
In order to be successful in your own enterprise you will have to be self-moving and you may have to work harder than an employee in someone else's firm. If you do not really like what you are doing you will find it hard to get the inspiration and drive that is required for such a task. Choose an activity that you know something about and choose an activity that you enjoy doing. The ideal business would be one where you have some prior knowledge and something which you enjoy doing.
"The entrepreneur in us sees opportunities everywhere we look, but many people see only problems everywhere they look. The entrepreneur in us is more concerned with discriminating between opportunities than he or she is with failing to see the opportunities." Michael Gerber Quote
Dealing with a Venture Capitalist !
A Sample Memorandum of Understanding
Between Investee Pvt. Limited (Investee) and Seed Ventures (“Investor”)
Please note that the terms indicated in this draft are only indicative of the nature of agreement made between an entrepreneurial startup and an investor organization. Do not take it to be a legal document.
This is only for your reference and understanding of how deals with VC organizations are worked.
This summarises an offer made to Investee by “Investor”, and accepted by Investee. This document by itself is not the actual legal agreement, but is the framework on which legal agreements will be drawn up.
1. Investee seeks to build out a business based on XYZ
2. “Investor” would like to help Investee become the leading player in its space in India, through infusion of funding and advice.
3. Investee is represented by Promoter One and Promoter Two (“Promoters”). “Investor” is represented by Mr. X, Y and Z. (“Investor”).
4. “Investor” agrees to buy a stake of x% in Investee for a consideration of Rs. XX crores.
5. “Investor” believes that a key factor in retaining and motivating Investee employees will be their participation in the equity upside of the company. One condition to this agreement is that Investee will create a pool of ESOPs of up to 7% of the company’s stock, to be kept aside for distribution to non-promoter full-time employees of the company.
6. Investee will re-constitute its Board as follows: a three-member board, with one person a representative of the Promoters, one a “Investor” representative and a third will be an independent professional nominated by the Promoters and approved by “Investor”.
7. “Investor” believes that early-stage businesses require regular advice and mentoring. “Investor” agrees to offer the following:
a. Appointment of a “lead partner” for Investee from among the fund’s partners, agreed to by both parties – who will be the primary point of contact with Investee
b. Best efforts for connectivity with business and referrals that could be useful to Investee.
c. Availability of lead partner on an on-going basis for meetings and other advisory sessions with the Investee team
d. The services of other “Investor” people on an if-available basis when requested by the Investee team
8. The above describe specific points in the agreement. We will now lay out other “Standard template” points that are likely to be present in the legal agreement.
a. The agreement, because of its variable, success-based nature, is likely to be in the form of a combination of equity and convertible debentures.
b. Promoters need to attest to “Investor” that all the shareholding by various people and entities in Investee is fully disclosed, along with the family and other relationships that exist between all shareholders.
c. Investee will need to execute employment, non-compete, confidentiality and other agreements with its promoters and key staff to the satisfaction of “Investor”
d. Promoters and other Investee people will need to execute agreements to the satisfaction of “Investor” that transfer all copyrights, trademarks, domain names or other rights relating to Investee’s business to the Investee company.
e. Investee will indemnify “Investor” against all losses and claims that can arise from any or all third parties in the course of Investee’s business
f. Investee will give “Investor” and its affiliates the right to maintain current level of stake holding in the next round too, by letting it subscribe to financial instruments at the price determined by the lead investor in that round.
g. Promoters will commit not to pledge, mortgage, sell or otherwise raise a lien on any or all of their stock in Investee without “Investor”’s permission
h. In case Investee is dissolved or wound up, the proceeds of this dissolution shall first go to clear the cost basis of “Investor”’s investment, and only then shall the remaining assets be divided between all investors in the ratio of their shareholdings
i. In case Investee is sold or merged into another business, the proceeds of the event shall be distributed as follows: the first sum worth a minimum of 2x of “Investor”’s investment shall be payable to “Investor”. In case the proceeds due to “Investor” are greater than 2x of its investment, then all proceeds shall be distributed in proportion to the shareholders’ stake in the company, in such a way that “Investor” always receives a sum which is the greater of the two options.
j. Both parties expect that Investee will be ready for an IPO within about 5 years of the date of investment. All shareholders may offer a percentage of their shares for sale in the same promotion, with “Investor” having a right to offer greater than the others’ proportion of shares. “Investor” shall not be considered a “promoter” in the company, and “Investor”’s shares shall not be subject to lock-up provisions.
k. Promoters shall have operational control of Investee – but the following will require the approval of “Investor”:
i. The creation of any new shares or class of security or financial instrument in the company
ii. Any amendment to the powers and rights of “Investor”
iii. Any issue of debt in the company of more than Rs. 10 lakhs
iv. Any change of control in the company
v. Any amendment to business plan or budget
vi. Any change in accounting / tax policies
vii. Any changes to the rights of common stock owners
viii. Any changes in the company by-laws or the articles of incorporation or memorandum and articles of association of the company
ix. Any changes in the board of directors
x. Any appointment / terminations of senior personnel in the company
xi. Terms of employment and changes in remuneration of the promoters
xii. Any change in the company’s line of business
xiii. Any restructuring, merger / acquisition / sale of whole or part of the company
xiv. Any creation of subsidiaries / entering into partnerships / alliances / joint ventures
xv. Any sale of assets greater than Rs. 15 lakhs
xvi. Any purchases greater than Rs. 10 lakhs
9. The agreement will close subject to accounting and legal due diligence, completion of legal documentation and no material or adverse change in situation and law.
l. “Investor” shall have the right of first refusal if Promoters want to create and sell new or existing shares in the company
m. “Investor” and Investee will agree to standard reporting frequency and data in reports
n. If the promoters wish to sell their shares to an outside party, “Investor” shall have tag-along / drag-along rights – i.e. the rights to also sell its stake at the same terms
o. Investee will obtain key person insurance for its Promoters at reasonable cost
p. Investee will obtain D&O insurance for its directors at reasonable cost
q. Investee will retain an auditing firm of repute, satisfactory to “Investor”
10. All terms of this agreement shall be kept in total confidence by Promoters and Investee
11. On the acceptance of this MoU, the promoters shall agree to cease all negotiations with any other investing parties for a period of 60 days, or till the legal agreement with “Investor” is completed, whichever comes later.
12. “Investor” hopes to use its resources to help make Investee a big success – and looks forward to a warm cordial working relationship with all Investee promoters and staff.
Signed,
For Investee For “Investor”
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