Friday, April 3, 2009

New Venture Competition in Chicago Booth

Boy, VCs (Venture Capitalists) are a mean, tough bunch of people to please. I had a taste of the days to come in the New Venture Challenge in Chicago Booth this week, and witnessed a total massacre of the first 4 teams (BTW, whom I personally thought were brilliant) by the 6 VC judges in the audience. My team presents in the next couple of weeks..I think that I now understand how a goat getting ready to be slaughtered feels..

Ok, so these guys know to ask insightful questions, that no one else had thought of and without pause or mercy. At the same time, it seems like there are some common themes that unite all of them. As part of a team that made its way into the 2nd phase of the New Venture Challenge, I sat in the first round of presentations. 4 teams comprising some extremely talented people presented their ideas for a venture and were promptly ripped into shreds by the 6 or so VCs present in the audience. Although everything was in good taste and the teams understood the points that the VC made, it was still an enlightening experience..

Some sample questions raised by the judges..


W - LOUD! What does the company do? (after the presentation that lasted about 20 minutes..!!) J - Can you raise more money and do it faster?
D - You are requiring 48 M in input money and will take 8 years to return 2M. This is too long.
L - What are the pain points that this service is addressing?
A - You need a lot of people running the show, call centers etc. But the cost you estimate is quite low. Are you confident about this?
W - You are showing EBITDA of 50% or more - is this realistic? You are not estimating the costs correctly.
S T - Talk about the networks you have, you need specific information on who these contacts are and what is the market size
S K - Your salaries are very low ! No one will want to work for you at those salaries..
S K: Specifics, specifics, specifics. Get down into the weeds and tell us how things are going to work.
B: This is a magical company as there is no cost associated with having an office, advertising, marketing etc.
W: LOUD. Technology is not present and "imaginary" proprietary software. Changing behavior is going to be very hard. You are just "Waving your hand on the technology"!!
J: What is the lifetime value to the customer?
B: What is your unique selling proposition?
A: How many suppliers are you talking about?

hmm..this is going to be an interesting quarter..

No comments:

Post a Comment