Venturing into Venture Capital: Part 1
It all started
when Mondy (aka Subhajit Mandal, financial trader from Singapore and the
loudest in our team) and yours truly decided to contact the VCIC authorities
individually about our interest in participating in the competition. For the
uninitiated, VCIC allows Business School teams to play the role of a Venture
Capitalist, analysing real startups, complete with due diligence and partner
meetup rounds. The VCIC folks were slightly befuddled by two individual queries
from the same school and connected us together. Hence, both of us set out to
find the perfect team to enter the competition with. Long story short, we found
the team in Ricky Wong (IPO specialist from Hong Kong and a really heavy (pun
intended) drinker), Jose Antonio Borrero (Ecuadorian Project Financing
specialist and a hardcore party person), and Pornteera Pawijit (Biotech PHD and
Thai, enough said).
And so we
lumbered through January and February, meeting each other as much as the hectic
business school schedule allowed, preparing for a subject that we were all very
passionate about (Venture Capital) but knew very little of. After talking to a
bunch of seniors, we started to unravel the mystery clouds shrouding VCIC, and
ended up finding ourselves in a meeting room in Nanyang Business School,
waiting for the regional round to start.
In the regionals, we were analysing 3 startups: QSearch, EduMatters, and 3DPrinter. And so the due diligence round began, with us interviewing the 3 startups for 15 minutes each. While we may have been a bit aggressive, we got answers to most of the questions we were looking for. Although we liked none of the companies, we had to choose one nonetheless, and after much deliberation (involving some scuffling and tiny blue bruises), we chose QSearch, an automated marketing and analytics startup. The company was in popular demand since barring one, all the other teams had also chosen QSearch. This led us to the negotiation round where we were trying to bring down the valuation of the company to less than one-third of the founder’s valuation. Mondy and Ricky came up with a clever financial structure (not that the judges liked it so much in the end, but it gave us an edge for sure) for the term sheet and up we went against a very professional 9-times serial entrepreneur. 10 minutes into the session and I am proud to say we had the founder completely agreed to our logic of giving lower valuation and sealed the deal. We did miss a few points, which I’ll bring up in the next part.
Lastly, we entered the partner meetups with the judges. The judges in VCIC are top-notch Venture Capitalists and Angel Investors, who role play senior partners in your VC firm and judge you, among other things, based on the deal you present to them. We could answer most of the questions thrown at us by the partners, most of them revolving around the investment opportunity, our rationale for the investment decision, and the deal structure itself. We were berated for not diving deeper into the team aspect of the company and finding the real motivations of the founders. Taking this with a pinch of salt, we sat fingers-crossed for the final decision of the judges. Delighted to say, we won (!), and also got an award of $1500.
In the regionals, we were analysing 3 startups: QSearch, EduMatters, and 3DPrinter. And so the due diligence round began, with us interviewing the 3 startups for 15 minutes each. While we may have been a bit aggressive, we got answers to most of the questions we were looking for. Although we liked none of the companies, we had to choose one nonetheless, and after much deliberation (involving some scuffling and tiny blue bruises), we chose QSearch, an automated marketing and analytics startup. The company was in popular demand since barring one, all the other teams had also chosen QSearch. This led us to the negotiation round where we were trying to bring down the valuation of the company to less than one-third of the founder’s valuation. Mondy and Ricky came up with a clever financial structure (not that the judges liked it so much in the end, but it gave us an edge for sure) for the term sheet and up we went against a very professional 9-times serial entrepreneur. 10 minutes into the session and I am proud to say we had the founder completely agreed to our logic of giving lower valuation and sealed the deal. We did miss a few points, which I’ll bring up in the next part.
Lastly, we entered the partner meetups with the judges. The judges in VCIC are top-notch Venture Capitalists and Angel Investors, who role play senior partners in your VC firm and judge you, among other things, based on the deal you present to them. We could answer most of the questions thrown at us by the partners, most of them revolving around the investment opportunity, our rationale for the investment decision, and the deal structure itself. We were berated for not diving deeper into the team aspect of the company and finding the real motivations of the founders. Taking this with a pinch of salt, we sat fingers-crossed for the final decision of the judges. Delighted to say, we won (!), and also got an award of $1500.
Post the
competition, we had a networking session with some of the judges that turned
out to be a great way to interact with the investor community of Singapore.
Next Stop: University of North Carolina, US, for the global finals!
The blog post was originally contributed by me on the NUS MBA blog and is reposted here. Please drop in your comments below or get in touch with me on nikhilkapur at outlook dot com.
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