Saurabh Mehta from Indavest Partners talks about his experience at i2I Finals

IIM Calcutta's B-Plan Competition Results OUT

The grand finale of i2I ’09 (ideas to Implementation), organized by the Entrepreneurship Cell of IIM-Calcutta jointly with Intaglio was conducted with the 9 best business plans being presented to a jury panel. Last year, i2I’ 08 became a springboard for 4 finalists to launch their own firms successfully. This year the event featured business plans across various sectors including IT/ITES, manufacturing, social initiatives, healthcare, alternate technologies, and media. Jury members found all the plans to have good growth opportunities and market potential. At the end, however, 2 business plans – Aksharit (Dhariwal Bros. from Jodhpur) in the field of Toys & Games Industry, and HelloDoctor24X7 (7 doctors, 5 engineers and 5 MBAs from Orissa) in the field of E-health and Telemedicine - were identified that were fundable and VCs have indicated they wish to follow up with them in the future.
The jury panel consisted of eminent personalities like Sharon Bamford, CEO of UK India Business Council; Saurabh Mehta from Indavest Partners; Prof Trevor Newsom from Queens University Belfast; Shoummo Accharya, President TiE Kolkata; Bikram Dasgupta, Founder & CEO of Globsyn Group of Industries; Prof Anjan Raichaudhari; Shradha Sharma, Founder & CEO of Yourstory.in; Vasant Subramanyan, Founder & CEO of Last Peak Data. All the jury members agreed that the quality of preparation of the teams was unparalleled and their plans were very well presented and well researched.
Both Sharon and Saurabh felt that although all the 9 plans were good, these two plans Aksharit and HelloDoctor24x7 are fundable and they would initiate mentoring and the process of negotiations with these two teams.
Canaan Partners, an Investment Partner offered all the 9 teams a chance to further interact and meet them in their office for discussions.
All the teams were extremely pleased with the arrangements and had a special mention for the extremely constructive feedback given by the jury. The comment by one of the teams “we have been to other IIMs but the professionalism with which the event has been handled, it has been truly memorable” really summarized succinctly the whole event.

Regards,
Entrepreneurship Cell

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.

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.

One thing to remember, there is nothing wrong with being an employee and working for someone else. There are a lot of advantages in terms of job security, steady income, standard hours and other benefits. It is just a question of looking at your total situation and making the right choice. On the other hand, if you do possess the qualities of an entrepreneur and really have a good idea backed by adequate capital and expertise, then starting your own business may be the best thing you will ever do.


"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

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”

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.

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”