BAAZI BUSINESS STRATEGY AND VENTURE CAPITAL CHALLENGE SHAILESH J. MEHTA SCHOOL OF MANAGEMENT IIT BOMBAY

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1 BAAZI BUSINESS STRATEGY AND VENTURE CAPITAL CHALLENGE SHAILESH J. MEHTA SCHOOL OF MANAGEMENT IIT BOMBAY

2 Page2 BAAZI BAAZI is the flagship event of NAVONMESH, the Entrepreneurship Convention of AVENUES 08. It is a unique concept which provides an opportunity for students to step into the roles of Entrepreneurs and Venture Capitalists and experience the challenges akin to the real world. The event is an amalgamation of two competitions: Business Strategy Challenge and Venture Capital Challenge. Business Strategy Challenge offers a unique proposition where the best brains from the leading business schools around the world will be invited to compete in formulating the growth strategies and expansion plans for an existing start up. Venture Capital Challenge will expose aspiring entrepreneurs and Venture Capitalists to the world of Venture Funding and the challenges involved. The participating teams of both these events compete in a highly challenging environment in multiple rounds of intensive competition where their business acumen, analytical skills, teamwork and negotiation skills will be tested. VENTURE CAPITAL CHALLENGE Investing in new ventures has a lot more to it than betting on winning horses. Venture Capital challenge provides a unique opportunity for students to get the first hand experience in evaluating the feasibility of LIVE business proposals, typically of a start up in need of venture funding. In doing so, the team must also keep the Venture Capitalist s profile in mind. Preliminary Round - Business-Plan Analysis Participating teams are required to analyze a Business-Plan and submit their analysis of the same in the preliminary round. This includes both quantitative and qualitative analyses (See Deliverables of the event). Based on their analysis, the teams will be shortlisted for the final stage that consists of two rounds culminating in a cross table deal negotiation. Submission of Term Sheet Each shortlisted team will be randomly assigned two Business-Plans developed by the finalist teams of Business Strategy Challenge. The Venture Capital teams must submit the term sheet for both the B Plans and related supporting documents (Detailed Fundamental Analysis, Valuation etc.).

3 Page3 Negotiation Round On the second day of the event, i.e., final stage, the VC Challenge team will attend the presentations of both the companies and can give the preference of BS team they want to negotiate with, In case, both the VC teams prefer the same BS team, the BS team has the option of selecting the VC team. The two teams later sit across the table and negotiate the deal emulating the real life scenario. The Venture Capital team will be evaluated based on their approach to the deal, negotiation skills and the ability to close the deal. Presentation Round On the second day of the event, the teams make a presentation before the judges about their analysis, feasibility study of funding the venture and their recommendations. The teams are evaluated based on their assessment of risk, knowledge of the VC process and overall analysis. The overall event structure is shown below

4 Page4 Preliminary Round VC PROFILE Creo Capital Partners, LLC is a venture capital founded in May 2007 in India. It is looking for investment opportunities in technology oriented product based companies, with special interested in Public utilities, Communications and Cleantech. It has raised US $ 5 million from investors for a period of 5-7 years. Until now it has invested in one company based western India that is into natural gas production & transmission. Creo Capital Partners, LLC wants to collaborate with businesses that have potential to grow big. The businesses should in the high growth stage that needs expertise and contacts of a VC to scale its operations. Creo Capital Partners, LLC prefers a company that have small employee base which is highly qualified and ready to adapt its outlook to grow as a global company. DELIVERABLES Creo Capital Partners has just received a proposal in the form of a B Plan from a startup in India (The Bplan is sent along with this document). As an employee at Creo Capital Partners, you must evaluate the start up on its attractiveness for funding and present an analysis. The analysis must cover the areas mentioned below and also conclusion. The Team- Appraisal of the team in terms of its strengths & weaknesses and capabilities to execute the plan. Market/Sector assessment- Macro view on performance of the sector in terms of growth rate, expected investment in the sector and major upcoming trends. VC is expected to cover any government regulations which affect the sector. Strategy: Analysis of the Teams execution plan to estimate the chances of success. Risk management and back up plans (if any). Whether the strategy is focused and comprehensive. Competition Analysis- Study of the close competitors to the entrepreneur and an objective comparison of respective strategies, strengths & weaknesses. Profitability & Financial Analysis- Break even time period for investment, Validity of financial forecasts, Expected ROI. Deviations (if any) VC expects from the stated Financials in the Business plans and reasons for this. Term Sheet (max. 3 pages) Participants are expected to prepare a term sheet which should cover the following details. Financials: Pre Money & Post Money Valuation

5 Page5 Control Provisions- This should cover the VC s plan to monitor the management performance and align the business objectives with VC goals. E.g. number of board seats the VC is proposing to take in the business. Liquidation Preferences- How VC aims to protect the investment from dilution or loss. E.g. Presence of Full Ratchet clause in the term sheet but this can act as a deterrent for the entrepreneur to accept the term sheet. Exit Strategy GENERAL RULES 1. The Competition is open for only management students in India. 2. A team can participate either in Venture Capital Challenge or Business Strategy Challenge, not both. 3. A team can consist of minimum of 2 and maximum of 3 members from the same B- School. 4. A person cannot be a part of more than one team for VC Challenge 5. Any number of entries is allowed from an institute. 6. All the entries should conform to the following specification: a. File Type - MS Word b. Font - Arial c. Font Size - 12 d. 1.5 Line spacing e. Analysis should not exceed 4000 words 7. The submission s should have the subject line VC Analysis Team Name 8. Each entry must have the following details (only on the cover): Name of the team Name of the team leader Team leader has to be one of the participants Name of the participants Name of the Institute Programme enrolled for, at the institute. addresses of the participants Phone numbers of the participants 9. The entries should be sent by to baazi.avenues08@gmail.com 10. The decision of the jury would be final and binding on all participant teams. 11. Participants are eligible for travel expenses to and from their institute. 12. Accommodation will be provided to the participants.

6 Page6 Event Timeline Start of registration 14 th September 2008 Last Date for Submission of VC Analysis 25 th September 2008 Declaration of Finalists and Release of Business Plans 5 th October 2008 Submission of Term Sheets for Second Round 15 th October 2008 Final Presentations to Judges and Negotiation Round 18 th 19 th October 2008 Prizes The best will deserve the best And hence BAAZI has mega prizes worth USD 2500 Contact Us: Anoop anoop.kulkarni@iitb.ac.in Ashutosh ashutosh.chausalkar@iitb.ac.in Visit us at Send in your queries to baazi.avenues08@gmail.com In association with