Strategy and Finance for Startups -Case studies and Typical Failures

Copyright© K Consulting All Rights Reserved.
Strategy and Finance for Startups
-Case studies and Typical Failures
Hokkaido University , 21 May (Fri), 2021
Kazuaki Oda

Copyright © K Consulting All Rights Reserved.
Hokkaido University
(Jan. 2019)

Hokkaido University(Jan. 2019)
Hokkaido University
(Nov. 2019)

#SerialEntrepreneur #Professor #Consultant
#Investor #Athlete #Mathematics #KeynoteSpeaker,,
-K Consulting Co., Ltd (CEO)
-Nagoya University (Visiting Professor)
-SLOGAN Inc.（Co-Founder & Executive Fellow）
-IIT Kharagpur, IISc, Indian Institutes of Management,
IIT Hyderabad, National University of Singapore,
Institut Teknologi Bandung, University of Indonesia,,,
（Guest Lecturer）
Kazuaki ODA (織田一彰)

1997 July ＠ACCENTURE (Chicago)

Lectures in ITB (2012)
DAY1 Personal Business Career in Uncertain Age
DAY2 Business Development Process
(Case study of Internet Business)

National University of Singapore

Tokyo University

University of Indonesia

Beijing University(China)

Indian Institute of Management
Bangalore (India)

Indian Institute of Technology
Kharagpur (India)

Indian Institute of Science
(IISc) Bangalore

Indian Institute of Science
Bangalore (India)

Headstart2019 @Hyderabad

NATCON2019 @Bangalore

資本政策・試算シート
（DLして使います）
Capsheet Download HERE!
(Simulation Spreadsheet)
https://drive.google.com/drive/folders/1PYYOQ9UMd9XBvzKeimPHBopH6Nen05jL

T-hub India
=India’s startup community@Hyderabad

Today’s keyword
Always talk with “Number”

Company’s Business Life Cycle
Company
Value
Time
（Ⅰ）（Ⅱ）（Ⅲ）（Ⅳ）

（Ⅱ）（Ⅲ）（Ⅳ）
創業期
Creation
成長期
Growth
成熟期
maturity
衰退期
Declining
（Ⅰ）
Market size
(マーケット
サイズ)
Time(時間)
企業は人間と同じく年齢がありそれに伴った成長をする
Every company has its own age and grows with age like a human

Time（時間）
(10-20 years)
$50M
$10M
$1B
$300M
Series A
Series C、D、、
IPO (Initial Public Offering )
（新規上場）
Secondary Public Offering
（市場での調達）
Series B
Road to IPO(Initial Public Offering) and after
（企業のIPO前後の道のり）
Company
Value（企業価値）

事業の成長と資金調達＆IPOのタイミングをリンクさせる
Business development is followed with fundraising and IPO schedule
$300M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series B
CompanyValue
（企業価値）
（Ⅱ）（Ⅲ）（Ⅳ）
創業期
Creation
成長期
Growth
成熟期
maturity
衰退期
Declining
（Ⅰ）
Market size
(マーケットサイズ)
Time(時間)

What is your TARGET market?

・Can You See the Market?
－Size Is Big Enough?
－Know How to Win?
－Qualified to Be A Winner?
・You Have A Good Team?
* Impossible to Have All Functions in YOU
Points!

・Can You See the Market?
－Size Is Big Enough?
－Know How to Win?
－Qualified to Be A Winner?
・You Have A Good Team?
* Impossible to Have All Functions in YOU
Important Points of STRATEGY

＜Work1＞
How Many McDonald's Are in India?
And How Much Is the Annual Revenue?

＜Work2＞
How Many “CHAI POINT’s” Are in India now?
And How Many “CHAI POINT’s” and
Its Revenue in 2030?

（Ⅰ）（Ⅱ）（Ⅲ）（Ⅳ）
Where Is It in Market Growth Curve?
（市場の成長曲線の意味すること）
Time（時間）
MarketSize
(市場規模)

MarketSize
(市場規模)
（Ⅰ）（Ⅱ）（Ⅲ）（Ⅳ）
Time（時間）
Potential Market Size
(潜在市場規模)
Present Market Size
(現在の市場規模)
Present Stage
（現在の位置）
Matured Point
(成熟期)

MarketSize
(市場規模)
（Ⅰ）（Ⅱ）（Ⅲ）（Ⅳ）
Time（時間）
Potential Market Size
(潜在市場規模)
Present Market Size
(現在の市場規模)
Present Stage
（現在の位置）
Matured Point
(成熟期)
<=Market Size * Company’s Share
市場規模×シェア

<=Market Size * Company’s Share
Potential (Company) Size
The important number is this!

Pre IPO Growth
Time（時間）
Company
$50M
$10M
$1B
$300M
Series A
Series C、D、、
（新規上場）
Series B
Fund Raising ( by Issuing Stocks)
（新株発行による資金調達）
Post IPO Growth

$50M
$10M
$1B
$300M
Series A
Series C、D、、
Series B
IRR(Internal Rate of Return, 内部収益率)>30-40%
Company
Time（時間）
（新規上場）

$50M
$10M
$1B
$300M
Series A
Series C、D、、
Series B
Pre IPO Growth Post IPO Growth
Company
Time（時間）
（新規上場）

<Scenario1> >
0.1M USD raise
Owner’s share(91%)
*=100/(100+10)
Valuation(1M USD)
Case study(Fundraising, Series A）
New stock
（10%）
New stock
（20%）
<Scenario2>
0.2M USD raise
*=100/(100+20)
<Scenario3>>
1M USD raise
*=100/(100+10)
Valuation(10M USD)
<Scenario4>>
2M USD raise
*=100/(100+20)
A company with 0.1M USD capital will
raise fund in Series A.
* Its value is 0.1M USD.
(Cap simulation sheet)

Finance
資金調達

Why Do Many Startups Fail?
The FACT is
ONLY Some Startups Can Succeed

Finance is most important
to survive for startups.
初期のスタートアップにとって
資金調達は死活問題！

Do NOT die!
（死ぬな！）

Only one KPI to survive is
(たった一つの生きているか知る指標は)
“CASH POSITION”(現預金残高)
≠Current Floating Asset(流動資産)

Time(時間)
Cash Position
(現預金残高)
“Cash Flow Management” is important!
(キャッシュフロー管理が大切！)
＜Key!(重要)＞
* Burn Rate(現金の減る速度)
Fundraising

Typical “Cash Position” of Growing Company
(典型的な成長企業の現預金残高)
Series A
Series B
Series C
Fundraising
Cash Position
(現預金残高)
Time(時間)

Institut Technologi Bandung, ITB
(Indonesia)

Loan
(Indirect
finance)
Equity
(Direct
finance)
Bond
(Direct
finance)
Repayment with
interest for some
years
Exit in IPO/M&A
Interest and
redemption
(convertible to
stock)
-Mostly banks
-Once repaid, no relation
-Personal debt
-VC, corporation, individuals
-IPO or exit scenario
-Some variations of stock
-Only interest in short-term
-Company credit is needed
-Convertible bond
-Low risk
-Facility investment
-Bridge finance
-High risk
-Venture investment
-R&D
-Big facility investment
-Project finance
-For public or big companies
Various Ways of Fund Raising
（資金調達の方法）
variation terms Advantage/disadvantage usage

Institutional
Investor
(機関投資家)
Angel Investor
（個人投資家）
Strategic
Investor
（提携企業）
VC, CVC
Individuals
（Biz owner,
Banker,,)
Corporation
(Trading company,
Big companies)
-New stock
-Management outsider
-IPO scenario
-Join in an early stage
-Management
insider/outsider
-IPO scenario
-Join in an early stage
-Management insider
-Joint venture
-IPO no obligation
-Abundant money
-Many VC’s
-Term sheet, contract period
-Accountability
-Flexible
-Min. documentation/report
-Depend on the person
-Accountability
-Strategic investors
(joint venture style)
-Big share for them
Variation Organization Content Points
Types of Investors
（投資家の種類）

Who are good investors for you?
-Socially trustful person?
-Fund size is big enough?
-When is the maturity of the fund?（duration 10 years）
-How is the investment contract?
-Matching to the target market
-Chemistry to a management team
-How much do they collaborate?

-Only two numbers should be decided,
“valuation” and “number of new stock(=share)”
-Timing and investors
-Plan the “Series of fundraising”
Points of Fundraising

-”Bad” shareholders are insiders
-No experience, no knowledge of fundraising
-In early stages, outsiders have big shares
-Targeting markets are too small
-Limited business partners
Typical Pitfalls(Creation)
（Ⅱ）（Ⅲ）（Ⅳ）
創業期
Creation
成長期
Growth
成熟期
maturity
衰退期
Declining
（Ⅰ）
Market size
(マーケット
サイズ)
Time(時間)

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 1)
Select new share holders
very carefully!

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 2)
Even in the worst scenario,
cash position must be positive.

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 3)
Company valuation will depend on
stock market and new investors.

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 4)
Do not overrate big company’s names.

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 5)
Create a “Big picture”
for the long future!(after IPO)

-Difficulties from bad condition of stock market
-Shortage of money to accelerate business
-Owner’s share is too small
-Complicated variation of stocks
-Growth is not enough
-Preparation for IPO
-No growth after IPO
-IR activities are too heavy
（Ⅱ）（Ⅲ）（Ⅳ）
創業期
Creation
成長期
Growth
成熟期
maturity
衰退期
Declining
（Ⅰ）
Market size
(マーケット
サイズ)
Time(時間)
Typical Pitfalls(Growth)

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 1)
Create a good plan to
Before “AND” after IPO!

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 2)
Have a good CFO!

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 3)
Raise money for next 2 years!

$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）
Tips(No. 4)
After raising fund,
concentrate on business and operation!

Tips(No. 5)
Stock option must be considered
in a series of fundraising.
$300
M
Time（時間）
(10-20 years)
$50M
$10M
$1B
Series A
Series C、D、、
（新規上場）
Series
B
CompanyValue
（企業価値）

Thank you!

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Kazuaki Oda（織田一彰）
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Strategy and Finance for Startups -Case studies and Typical Failures

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