Imagine that Arjun, the founder of a start-up, is looking to raise capital from
Private Equity funds and investors.
Below, we have mentioned four distinct profiles of Arjun:
He is an Engineer with an MBA degree, and has previous experience of
working in Information Technology.
He is an Economics graduate with an MBA degree, and has previous
experience of working in Management Consulting.
He is a Chartered Accountant, and has previous experience of working at a
financial advisory firm.
He is a Commerce graduate with no prior working experience but is extremely
passionate about his idea.
We will now be mentioning three distinct start-up ideas that Arjun could be
working on:
Arjun has been extremely passionate about Food and is hence working on a
health foods company. The company that he has formed has combines taste and
health and is into snack bars, cereals and juices. He has already launched his
product but is yet to find the correct product market fit for his offerings. He is
looking at various distribution channels through which he can push his products
to get to his consumers, and is conscious about the resources that this will take
up.
Arjun is an avid lover of street foods and has created a Zomato type application
that lets consumers order through safe and hygienic street food vendors.
Currently, the application is operative only in the city of Mumbai. Though he
knows that he is targeting a mass market, he knows how competition can be
massive. Other key challenges that Arjun is facing in this company are that of
onboarding more street food vendors, hiring more delivery executives; while
keeping costs low.
Arjun has built an international transfer remittance system that reduces the cost
and time to make an international transfer. A breakthrough software, Arjun’s
product needs to go over a lot of compliance requirements in order to be
launched commercially. Along with compliance, Arjun has to ensure safety and
security of the software as it would be dealing with payments.
As guidelines of your first project, you have to pick a profile of Arjun and the start-
up idea that he would be most successful with.
In about 400 – 500 words, you have to mention the reasons for picking such a
profile – idea combination. Your answer has to include the benefits that you
feel such a profile brings to the idea that you have picked. You can also include
previous examples of other real-life start up founders in India or outside, who
had similar profiles and were successful with similar (not necessarily same)
ideas.
Imagine that Arjun is looking to raise funds in the profile – idea combination
that you have picked. Given the conditions, please pick among which of the
four benefits; the stamp of quality, network driven benefits, advisory benefits or
financial benefits, would Arjun be emphasizing the most, while looking at
investors. (300 – 400 words)
Finlatics Investment Banking Experience Program - Project 1
A very idealistic and optimistic combination would be option B i.e. an Economics
graduate with an MBA degree, and has previous experience of working in
Management Consulting, and the start-up idea that would be beneficial for Arjun
is an health food company that provides healthy snack bars, cereals, juices etc
without compromising the taste. Considering the experience into management
consulting, he can turn this health food company into a successful business, and
reaching out there to the consumers with his healthy food option yet tasty.
Since his previous experience was management consulting, the skills and
experience that can be beneficial for his startup can be consider as follows:
Strategy and critical thinking: with management consulting, one knows how
to analyze and structure problem and compare with its upcoming all possible
scenarios, he will be able to get into the core of the problem and also
effectively find solutions for the same the strategic skills will definitely
competence in problem solving in future as an entrepreneur.
Networking skills: As Arjun’s business is already established and he is
more focused into scaling and reaching out to more and more consumers the
effective skills that can be a helping hand is networking skills.
Understanding the customer and communicating effectively is one of the
essential skills.
Leadership quality: For successful entrepreneurship, a good and refined
leader need to lead and motivate their team in order to deliver a certain
vision. A leader should be visionary which as a management consultant
Arjun possess this quality.
Sophisticated business knowledge. As Arjun startup is already established
and he is looking for his distribution channels so that he can push the
products with more consumers, he can take knowledge through books,
stories about various startups, also by making the most of the technology he
can take his business into another level.
A similar story:
A well known startup Calorie care started by Cyrus driver in September 2005, he is
an MBA graduate from IIM and took a job in a private equity firm. There he got to
know more about the working styles, management skills, thought process behind
the company. He was looking for something unique, where he could use his prior
knowledge of the sector could provide customer service. Of course, nowadays
urban consumers are becoming health conscious and then he started calorie care.
Calorie care: to make nutritionally balanced freshly cooked healthy meals by
sourcing finest ingredients and making it accessible to everyone.
This story will definitely spark the hope for Arjun for his distribution channel and
reaching out to more customers as he has management skills which will definity
going to boost his idea.
2. Private equity is an alternative form of financing, away from public markets in
which funds and investors directly invest in companies or engage in buyouts of
such companies. The advantages of private equity are easy to alternate forms of
capital for entrepreneurs and company founders are less stress of quarterly
performance.
The first aspect of PE is sourcing of financing. Companies need money to operate
and Arjun can raise money through various methods like loans, stock market. One
of the best methods Arjun can raise money is Private equity.
Considering the idea combination, Arjun should be emphasizing more on network
driven benefits while looking at the investors.
Strategic networking can create tremendous value, creating value in their
portfolio is a critical way for private equity funds to generate meaningful
return on their investments.
Due to the high value of transactions and varied industry segments that PE
firms and investors work and deal with, Arjun will be engrossed and will be
well connected in the business ecosystem, as his main focus is creating
distribution channels.
Therefore, if the investors are investing in the company, the company can
access to this ecosystem and create wide range of networking that can prove
pivotal for its future growth.
