Entrepreneurship: Food for Thought - Jayan Ramankutty

8/14/2019 Entrepreneurship: Food for Thought - Jayan Ramankutty

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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

Entrepreneurship: Food for Thought - Jayan Ramankutty

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