galatime.com - Kaushik Gala

Note: The views & opinions expressed in these essays are strictly my own, and not those of any entity I may be associated with as an employee, consultant, promoter, investor, etc.

ARCHIVES

 

Pune

› Technology Venture Investors in Pune

 

Technology Entrepreneurship in India - Teams

› Entrepreneurial traits

› Picking cofounders

 

Technology Entrepreneurship in India - Generating Revenue

› Is your business model well-defined?

› Your industry's value chain

› What is your value proposition?

› Which distribution channels will you use?

› Who will drive business development?

 

Technology Entrepreneurship in India - Raising Capital

› Venture capital & venture capitalists (VCs)

› Corporate venture capital

› Angels & angel networks in India

› Government support for Indian startups

› Proof-of-concept funding

› Do you need a business plan?

› How much money should you raise?

› Startup valuation

› Pitching to investors

› Figure out the term sheet

› Negotiating with investors

› Due diligence - A necessary evil

› Time to sign the investment agreements

 

Equities, ETFs, F&O

› Oct 2011: Equity Risk Premium for India

› Jun 2011: Investing in Indian equities

 

Technology Enterprises in India

› Nov 2010: Technology investment in India - WATER

› Aug 2010: Technology enterprises in India - 3 avatars

 

Risk Capital for MSMEs

› Mar 2010: Risk mitigation for investors in MSMEs

› Mar 2010: Why don't (Indian) MSMEs get risk capital?

› Feb 2010: Angel investing - Will it work for Indian MSMEs?

› Feb 2010: What's so special about innovative MSMEs?

› Feb 2010: Where do Indian/NRI (V)HNIs invest?

› Feb 2010: Funding options for innovative MSMEs in India

› Jan 2010: Innovative MSMEs in India

Figure out the Term Sheet

(Last revised Mar-2012, Send comments to galatime@gmail.com)

Technology entrepreneurs looking to raise risk capital in India should know their way around an investment term sheet. To get started, read A Guide to Venture Capital Term Sheets. There is no shortage of online content that illustrates how these terms work - it is a matter of taking the time to educate yourself. There is also a wealth of high-quality term sheets available for re-use, listed below.

It is good to understand the terms; but even more important to be aware of the many 'gotchas':

  • Unnecessarily complex equity structures/terms when compared with typical seed/Series A term sheets
  • Investors' lawyers tell you that a (not-so-favorable-to-you) term is 'standard' in the industry
  • Negotiation fatigue causes you to start compromising - first on minor matters, and slowly on major ones
  • Terms suddenly become unfavorable because the investor finds out that he's the only one left in play
  • Unfriendly terms suddenly become favorable because you've a much better term sheet from elsewhere
  • Unfavorable terms creep in as the term sheet gets longer and longer by the nth version

Find a mentor, an advisor, or an entrepreneur who has been there, done that - there is no substitute for experience when it comes to avoiding the above traps.

Sample Term Sheets

Perspectives