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Education has several possibilities

Monday, December 06, 2010

Q: What areas in the education sector can be explored for starting up an education venture? And how can I go about marketing and promotion of my venture?
Vinay Dhumale , Chembur

Education is an emerging sector and has several new possibilities. As per industry estimates, while 2009 saw just 2 million dollars of early-stage investments in the sector, 2010 has already witnessed 10 million dollars of investments in this sector. As per KPMG estimates, the sector offers a potential for investment of over 100 billion dollars over the next five years.

There are several emerging models within the sector which are gaining currency – including test-preparation platforms; admission-enablers; gaming and animation ventures; mobile applications; rural education programs and more.

It would be difficult to talk about all these sectors here, but I’m sure that you can find the relevant information from various sources.

You may also attend events investment summits to learn more about the existing opportunities and meet some successful entrepreneurs in this domain.

Q: I have been trying to reach several fund houses to invest in my business – but all of them seem to procrastinate about any decision. I have been just making the rounds with them for several months. Where am I going wrong?
Gargi Karnik, Mulund

Investing in a start-up is not an easy call and the ratio of success in raising capital is perhaps 1 in every 40 start-ups; at least in India so far.
But this should not dissuade you. Just keep the following in mind:

• Are you sure that you are approaching the right kind of funds? Do those guys make your level of investments or invest in your kind of domains. Remember, very few fund managers would clearly reject a deal – as they always want to hold onto them till the very last moment. So, chose your targets very well and do not pitch to everybody.

• Usually, if any fund is taking more than 3-4 months (yes, it normally takes 6-7 months for any deal to close) to give any clear answer, chances are that they will not be seriously interested. But still, do not close the doors – work on the feedback that you must have received from them so far, keep in the loop – but do not spend too much time and energies to follow up now.

• Ask the right questions. So, after first few rounds of presentation and revised presentation – do not shy away from asking what more will the idea now need to finally start talking term sheets with you. If you still get a non-committal response, take the cue and stay away from active follow-up.

• Are you asking for too much? Can you break your concept into benchmarks – which can be achieved by say less funding and then, on basis of same, you may seek higher funding later.

• Seek alternate funding resources: like crowd-funding, which is emerging as new funding mechanism for helping entrepreneurs.

Q: How should my business plan be structured in terms of attracting investments? Hitesh Shah, Malad

There are as many possible templates of business plans as there are business ideas; and even there; you have to adapt the template depending on who you are presenting the plan to, i.e. basis what he could be interested in.

But still largely speaking, the basis constituents of a business plan are:

• Summary: which should clearly highlight what makes your concept unique; the defined market that exists; your resources and team strength which will enable you to carry it; the financial summary and what investors/team members can gain from it

• Market details : How are you different from existing players, if any and how your concept will address a latent need

• Your Core Idea : This will include opportunity analysis and Strengths-Weaknesses-Opportunities-Threats analysis

• Team: A mediocre team with a good idea is not as good a team with a mediocre idea. This talks about what competencies your team members bring on board

• Marketing Plan : The pricing, promotion, distribution and basic product offerings

• Financial Analysis : This calls for number crunching – your projections, expense analysis; cost of capital being brought in; key ratios and rate of return on invested capital

The above is extremely basic listing of a business plan – as it actually is an elaborate exercise which defines your direction for the years to come.


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