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8/14/2019 Entrepreneurship: Food for Thought - Jayan Ramankutty
1/17
Jayan Ramankutty (1975 80 :75F04480)
Founding CEO YuMe Networks
BITSAA.org, Jan 20th 2007
EntrepreneurshipA dialog and food for
thought
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What is Entrepreneurship
en tre pre neur ( n tr-pr-nr , -n r )n. A person who organizes, operates, and
assumes the risk for a business venture
Identifies pain-points as opportunities
Takes calculated risks and leadspositively
Passionate, Unconventional and OpenCreates jobs Enhances peoples lives
And reaps the rewards
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First Step: Exploration
BITS, Pilani teaches you HOW to learn Compete but yet Collaborate in a social
environment Rules, Ethics, Morality etc
Gain real world experience people andmoney
Be open and inclusive while team buildingTrust-worthy, Fearless, Respectful, LackingGreed
Get to the bottom of everything but dontget stuck
Analysis Paralysis
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Pain Points -Opportunities
Life Sciences
$1.5B$5.6B, 716 deals in Q1 06
Software
$1.2B
Internet
$0.8B
Telecom
$0.6B
Media & Entt
$0.4B
$1.3B, 215 first-time financing deals
Source: PWC NVCA ReportQ1 06
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RISK
Chance of injury or loss
Survival
Brain - Primordial
Analysis Tools complex
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Funding Sources
Angel Investors Self, family sold on the idea!
Wealthy individuals with industry background or individualfunds
Small investment (~ $1M) in a very early-stagecompany (demo, 2-3 employees)
Financial VCs sophisticated money lenders Venture Capital, Private Equity and Hedge Funds
Fund sizes: ~$25M to 10s of billions
Main goal ROI through IPOs, Mergers and Acquisitions(M&A), Dividends
Strategic VCs Typically a division of a large company.
Examples: Intel, Cisco, Siemens, AT&T,
Strategic investment for Corporate expansion of product
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Funding Stages
Financing is provided for a company expected to "go
public within six months to a year.
Later
Funds are provided for the major expansion of acompany which has increasing sales volume.
C
Working capital is provided for the expansion of acompany to support growing accounts receivableand inventories.
B
Growth & Expansion Funding Stages
Financing is provided to companies that require fundsto initiate commercial-scale manufacturing andsales.
A
Financing is provided to newly formed companies foruse in completing product development and in initialmarketing.
Seed
A small amount of capital to prove a concept for apotentially profitable business opportunity.
Pre-Seed
Initial Funding Stages
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Funding Criteria
Expected rate of return
Track record of the entrepreneur
Quality of product
Investor liked entrepreneur (s) upon meetingPerceived financial rewards
Growth potential of the market
Sales potential of the product
Expertise of the entrepreneur (s)
Enthusiasm of the entrepreneur (s)
Trustworthiness of the entrepreneur (s)
Criteria
710
89
107
9548
66
53
24
31
12
Ranking byVCs
RankingbyAngels
Source: Ten3 Coach
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Funding a timeline
perspective
Source: Ten3 Coach
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Angel (Seed) Valuation
Historically seed stage funding is limitedto $1M+
higher risk lower fundingSeed valuations tend to be subjective
Quality of the leadershipTrust, enthusiasm etc
Strength of intellectual propertyTime-to-market expectations
Cap-ex and burn rates expectations
Sector volatility
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VC( Series A) Evaluation
6 in 1000 business plans get funded on an average5% of business plans are read beyond the executivesummary10% of proposals pass initial screening
10% of pre-screened proposals pass due diligence &receive fundin
2. Initial Screen1.
OpportunityIntroduction
Start
3. Due Diligence
ManagementTeam
Business Plan
ValuationOwnershipControlMgmtLegalContract
4. Negotiation
PresentationExecSummaryMilestones
CF forecast
FUNDING
Mgmt,PersonnelMarketingProductionFinancialsReferences
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State of the VC Industry
Source: PWC NVCA ReportQ1 06
$0
$100
$80
$60
$40
$20
Total
InvestmentinBillions
Investment # of Deals
1999-
8000
6000
4000
2000
Q1 2006 Investment of $5.6B for 761 deals
2000 2001 2002 2003 2004 2005
Investment reaches a state of equilibrium
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Chronology
Lara TechnologyJune 1, 1997
3 Founders$50K each4 engineers
$0.01/sh
Oct 24, 1997
Cisco signson to useTCAM for
catalystproductsFirst timeswitches willcross 100MX/s
March 12, 98
Series A
$4.4MM
F&F - $2MMInvestar$0.55/sh
June Dec 1998
First working samplesof TCAM1 delivered toCisco
Hit $1MM revenue byDec 98
Jan March 99
Series B$13MMBattery - $7MM
TelesoftVC - $3MM$1.30/sh
Y 2000
Splits into
Lara NetworksempowerTel Networks
$20MM annual rev
June 2, 2001
Cypress AcquiresLara Networks $300MM
A- $5.41/shB- $12.91/shC- $4.91/sh$20MM options
Total Investment - US$17.4MM
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Financial Chronology of
Amazon.com
Source: Ten3 Coach
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Reward
What is this?
Why does this matter?
Is that the end goal?
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Q & A
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BIO80-83: ORG Systems, Baroda, Bangalore84-86: Tata Elxsi, Singapore87 : CSU, Chico, Summer job Elxsi87-89 : Full time Elxsi, Part-time CSU, San Jose90 : MS Computer Engineering
89-91 : Via Technology91-93 : co-Founder Nimbus Technology93-97 : Alliance Semiconductor acquires Nimbus, built PCImultimedia chips97- 01: Co-founded Lara Networks, EmpowerTel Networks
June 01: Lara pioneer in TCAM Acquired by Cypress
June 02: EmpowerTel pioneer in VoIP Acquired by IpunitySept 03: Founded YuMe Networks New Media Company pioneer ininserting RT video Ads
July 06: Closed $7.2MM Series A funding for YuMeDec 06: Stepped down from active duty at YuMeMentoring Duke Graduates on entrepreneurship
TiE Charter Member and Co-Chair of Media and EntertainmentFive patents to date in routing VoIP Have applied for video over IP