The following is a guest post by our NUS MBA student, Neil Mehta, who was among the first runners-up team of NUS MBA students participating in the East Asia round of the Venture Capital Investment Competition (VCIC) organised by Nanyang Business School.
The first thing about any business case competition is a business plan. So when an email popped into our inbox asking us to evaluate business plans from real entrepreneurs instead, some of us began to scratch our heads. “Hmm…what’s it like to be on the other side of the table?” The uniqueness of this proposition coupled with a desire to get a taste of the world of venture capitalists(VCs), entrepreneurs and billion dollar start-ups drew some of us from the NUS MBA programme to form team “FuerteVentura”. Loosely translated, it means “promising ventures”, which captures the quintessence of our mission.
So Chenyin, Christian, and me, all aspiring entrepreneurs got together with our peers Ryoko (who wants to setup incubators in Japan) and Nilendra (our financial whiz). Our diverse backgrounds gave us a good mix of talents, but playing the part of a venture capitalist was not close to anything we’d done before. Therein lay the challenge, and the excitement.
While research helped us make sense of jargons like a VC “term sheet”, “lean startup” methodology, it couldn’t teach us how to evaluate an entrepreneur’s live pitch or the art of negotiating our way into getting a sizable stake in a promising start-up. So we Skyped in with a French founder of a Shanghai-based start-up who was gracious enough to run us through a mock term sheet negotiation.
With just two days to the East Asia Regional finals of the VCIC competition, we pondered over three business plans we received from three different start-ups. We tried to play ‘midas’, using our minds and hearts to see which one would rake in maximum moolah over the next 5-8 years.
Come D-day, we rubbed our eyes and shrugged off the drowsiness as we rushed to reach the venue by 8am, charged for a long day that lay ahead. We were competing with three schools from Thailand, namely Chulalongkorn, Thammasat & Sasin Universities and our neighbour Nanyang Technological University (NTU). What followed were entrepreneur pitches and incisive questions. “How will regulation impact your business? How many customers do you already have? Does your company have any IP or patents?” we fired away.
The rounds of pitches and due diligence questions gave way to the climax. We picked the company we found the most promising and presented the founder with a term sheet. We had just 15 minutes to agree on a valuation, funding amount, percentage ownership, other terms and clinch the deal! The presence of judges, who were VCs themselves and a big audience increased the excitement as well as the nervousness.
Well, our ‘midas touch’ did not give us the gold, but it did bring in the silver! We came in as the first runners-up and NTU came first. We now hope that team NUS 2015 will get the gold!
The networking session with other teams following the competition, and our interaction with judges were great. We now know who to go to for funding requirements for a start-up and are sure we’ll negotiate the terms well.
The competition is over but the story is not. What’d really be a happy ending is when the company we selected as a promising start-up really does bloom into a sustainable and scalable business.