Submitted by: Hrishikesh Gulkotwar (160102036)

Indian Startup Co. (ISC)

Answer 1. From the angel investors point of view, I will be looking into the following points-
a. Financials
I. EBITDA margin at 50%, whereas the industry standard is around 27%
II. assuming tax @ 30%, we can safely say profit is around 30% of Rs. 10 Lakhs.
b. Weather of Delhi NCR is favorable to product offering
c. Juice, basically food industry is ever growing and that peoples outlook towards healthy living
will make the juice industry grow even further
Thus, I wouldnt invest because the deal includes issuance of common stock, even though owners do
have the same kind.
Valuation of the deal-
a. Market Share: captured complete market
b. Competitive edge: none as common drink and anyone can replicate easily
c. Team: ambitious and aspiring
d. Financials as discussed above
From UFO point of view, the valuation of the business being Rs. 10 Cr post money valuation seems a
bit steep, as they are yet to obtain legal contracts to set up in other places. However, as UFO knew
much about the business, he can help in scaling up the business. The financials look good; thus, the
deal is good if the UFO can digest the common stock pill.
Answer 2. I would look towards the following things in a VC firm
Relationships: the contacts, their investments that can be leveraged to scale up my startup
Knowledge: knowledge about current trends etc. the worst combo of arrogance and stupidity
is the one to stay away from
Professional Integrity: the ethics standard and the integrity of work approach of a VC.
Answer 3. A. Evaluation on the basis of preferred return, protection of valuation and position re:
future money, management of investment and lastly exit strategy.
Protection of valuation and position re: future money
Anti-dilution preference not provided
Approval rights- not provided directly, however, is part of the board so does have a say.
Approval of investors- position on board offered
Pre-emptive rights- not provided
Right of First refusal (ROFR)- not provided
Management of Investment
Board seat- provided
Exit Strategy
IPO & registration rights- not mentioned and registration rights not provided
B. I would use the DCF to arrive at valuation because the current juice industry is dominated by
unorganized sector (75%) v/s the organized (25%). The rational would be to project the revenues from
operations at various colleges that have allowed ISC to set up shop, and estimating a market share it
would achieve (there could be existing players nearby where students have accounts, long
relationships, memories, thus making it a tad bit difficult to gain complete market share as in case at
IMTG).
C. Deal-
5 Cr investment to get
 Submitted by: Hrishikesh Gulkotwar (160102036)

I. 30% equity stake (negotiable)

II. 1x liquidation preference, 3x participating cap (negotiable)
III. seat on the board (non-negotiable)
IV. Redemption will be at purchase price plus 10% p.a. cumulative guaranteed return
Answer 4. I would certainly structure the deal differently as angel investor, with inclusion of
liquidation preference, convertible preferred stock, pre-emptive rights and redemption of stock. This
is because, the juice industry in India is expected to grow at a steady CAGR of 15%
As an angel investor, I would prefer to look into deals that give me convertible preferred stock options
as equity and not common stock. This would prevent the entrepreneur from exiting at a very good
(economical) position at the expense of the investors investment.