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The Venture Capital Guide

What is a startup?

A startup is a company designed to grow fast. Being newly founded does not in itself make the company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit". The only essential thing is growth. Everything else we associate with startups follows from growth

What is Venture Capital?

Venture Capital is the funding investors provide to the high-growth potential start-ups in exchange for equity in the company.
In a simple context, venture capital is provided to start-ups (not any new company) which are growing at a remarkable rate and are in need of money to sustain that growth. The investor, in return, demands equity or an ownership stake in the company.

What is a Venture Capitalist?

A venture capitalist is a professional investor or firm who funds early-stage startups in exchange for an equity stake.
Venture capitalists are usually formed as limited partnerships where the partners invest in the VC funds. These partners are usually categorized into two types – the Limited Partners (LPs) and General Partners (GPs).

Key Performance Indicators

Sales Oriented

1. No. of New Contracts Signed Per Period
2. Value for New Contracts Signed Per Period
3. No. of Engaged Qualified Leads in Sales Funnel
4. Hours of Resources Spent on Sales Follow Up
5. Average Time for Conversion Net Sales – Value or Percentage Growth

Financial KPIs

1. Growth in Revenue
2. Net Profit Margin
3. Gross Profit Margin
4. Operational Cash Flow
5. Current Accounts Receivables
6. Inventory Turnover
7. EBITDA Margins

Customer Oriented

1. No. of Customers Retained
2. Percentage of Market Share
3. Net Promoter Score
4. Average Ticket / Support Resolution Time

Operational KPIs

1. Order Fulfillment Time
2. Time to Market
3. Employee Satisfaction Rate
4. Employee Churn Rate

Marketing KPIs

1. Website Traffic
2. Qualified Leads
3. Customer Conversion Rate
4. Customer Acquisition Cost

What makes a business investible?

Strong Promoter BackgroundHeavy CAPEX Business
Clarity in Returns / ExitsLimited Exit Options for Investors
Scalability of the CompanyLow Promoter Share Holding
Good Product ValidationUnstable Business Economics
Good Values of KPIsSlow Business Growth
Good Order Book & Market FitLong Return on Investment Timeframe

Valuation Methodologies

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Share Capitalization

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