Be a
Venture Capital
for a Day!
-
Ice Breaker Session
Rules
Act as a Venture Capitalist: Invest in following 5 startups.
You have 100 Crores to invest
Start with 100 Crores
You have 100 Crores in virtual capital to invest
Flexible Investments
Invest the entire amount in one startup or split it into multiple investments of 5 Crores each
Invest 0 Option
If a startup doesn’t interest you, you can choose to invest 0
End Goal
Maximize returns
List of Startups
1
2
4
YumGo
Healthy Meal Subscription for Students(Low-cost, subscription-based healthy meals delivered daily to student hostels)
YumGo is a daily healthy-meal subscription service designed for college and PG/Hostel students who want affordable, nutritious food delivered reliably every day.
The company partners with cloud kitchens near campuses to produce meals at scale with consistent quality
YumGo is a daily healthy-meal subscription service designed for college and PG/Hostel students who want affordable, nutritious food delivered reliably every day.
The company partners with cloud kitchens near campuses to produce meals at scale with consistent quality
🍱 What They Offer
- Monthly subscription: ₹2,999–₹4,999
- 2–3 meal plans per day (breakfast/lunch/dinner)
- Balanced macro-friendly menu
- New menu weekly
- App to track calories & customize meals
- 30-minute guaranteed delivery
Angels Vs Venture Capital
Startup Funding Journey (Seed to Exit)
Understanding Venture Capital
Understanding Venture Capital
What do VCs See before Investing
1
Market Size(TAM/SAM/SOM)
- VCs want a market big enough to support a large, scalable company
- They check if the market is growing, underserved, or shifting in a way that creates opportunity
2
Founder Quality
- They look for founders who have clarity, resilience, and the ability to execute fast
- Industry knowledge & Past experience
3
Traction
- Early signs that customers actually want the product (revenue, users, retention).
- Consistent month-over-month progress shows the team can learn and iterate.
4
Business Model
- VCs check if the startup can make money sustainably at scale.
- They look for clear unit economics, repeatable revenue, and paths to long-term profitability.
5
How Easy to Scale Business?
Using technology
6
CAC vs LTV
LTV > 3
How do VCs Make Money?
1
IPO
2
Secondary Share Sales
3
M & A
4
Founders Buyback
How do VCs Make Money(Ex)
GROWW IPO
Meta acquired Scale AI(in 2025)
Key Insights
Venture Capital Looks so Fantastic!
There is a say, if the deal is so good -
Something is not right?
Why Venture Capital is so Complex
1
Power Law Returns
- Majority of investments fail
- 1 or 2 investments often generate 80–90% of the fund’s total returns. Predicting which startup will become that outlier is incredibly hard because most companies will never reach that scale.
2
Decade-Long Patience
- 7-10 years to see results
- A successful investment might take 8–12 years to fully mature. VCs need long-term conviction, emotional endurance, and the ability to stay calm through multiple cycles of market ups and downs
3
Illiquidity & Uncertainty
- Unlike public markets, VC investments can’t be sold quickly.
- Once you invest, your capital is locked in for years with no guarantee of outcomes. This makes every decision high-stakes
4
Requires Multi-Disciplinary Expertise
- VC must understand markets, product, technology, finance, unit economics, psychology, and deal-making. Very few jobs demand such a wide combination of skills simultaneously.
Case Studies ( PayTm)
Before UPI What was the Business Model(Pre 2019)
Domination of VISA/MasterCard
Debit Card fees ~1%
Credit Card Fees 2% to 3%
Using Debit/Credit Card
Using PayTm(Wallet)
Honeymoon Period for PayTm
- PayTm was literally minting money for 3 years
- Early Investors were ecstatic
What Happened to PayTM?
Any Guess?
UPI
Outcome
. Mesa School
Outcome: Solid growth → Becomes profitable in 5 years Return: 3×
The Whole Truth
Outcome: Acquired by a global FMCG brand Return: 5×
Zepto
Outcome: Faces margin pressure → Industry consolidation Return: 2×
YumGo
Outcome: Expansion fails due to high ops cost Return: 0× (complete loss)
AutoPilotX
Outcome: Moonshot → Gets Series B from Tesla-like fund Return: 10×
FeedBack
Loading...
Extra Slides
The 2 - 20 “Rule”
The "2-20 Rule" is a fundamental compensation structure in the venture capital world, outlining how VC firms earn money from the funds they manage. It's designed to align the interests of the venture capitalists (General Partners or GPs) with their investors (Limited Partners or LPs) by linking their primary compensation to successful fund performance.
Specifically, the rule breaks down into two main components:
2% Management Fee
A VC firm typically takes 2% of the total committed capital as a management fee per year. For a $100 Million, 10-year fund, this means the firm receives $2 Million annually to cover its operating expenses. Over the fund's life, this accumulates to $20 Million, reducing the total "investible" capital to $80 Million.
This fee is crucial for covering the firm's operational costs, including partner and employee salaries, office rent, legal and accounting fees, travel, due diligence expenses for potential investments, and administrative overhead. It ensures the firm can operate regardless of investment performance.
20% Carried Interest (Carry)
This represents the VC firm's share of the profits generated by the fund's investments. The firm can earn a "carry" of 20% if, and ONLY if, they exceed a predetermined minimum return threshold demanded by the LPs, known as the "hurdle rate." A typical hurdle rate demanded by LPs is about 12% per annum. Carry is essentially a performance bonus; if the fund performs exceptionally well, the VCs partake in that success.
How the Math Works: A Concrete Example
Let's consider a $100 Million fund with a 10-year lifespan:
Committed Capital & Fees
- Committed Capital: $100,000,000
- Management Fees (2% annually x 10 years): $20,000,000
- Investible Capital: $100M (committed) - $20M (fees) = $80,000,000
Fund Performance & Proceeds
Suppose the fund invests the $80 Million and, over 10 years, the portfolio companies are sold, generating $200 Million in total proceeds.
LP Capital & Preferred Return (Hurdle)
First, LPs receive their original invested capital back ($100 Million). Then, they must meet their 12% hurdle rate on their initial investment. This means they need to receive an additional $12 Million per year for 10 years on their $100 Million committed capital, totaling $120 Million in profit from the initial capital ($100 Million x 12% x 10 years). However, the hurdle rate is typically calculated on the cash returned to LPs before any carry is paid. The actual calculation is complex and defined in the Limited Partnership Agreement (LPA).
A simpler way to view the hurdle: LPs typically want to receive back their initial capital plus a preferred return (e.g., 8-12% IRR) before GPs earn any carry. Let's assume for simplicity, the fund must return $150 Million to LPs (original $100M + $50M profit) before carry kicks in.
Profit Distribution
- Total Fund Proceeds: $200,000,000
- LP Capital & Preferred Return: $150,000,000 (hypothetical threshold for carry to kick in, covering capital + preferred return)
- Profit above Hurdle: $200,000,000 - $150,000,000 = $50,000,000
- VC Carried Interest (20% of $50M): $10,000,000
- Remaining Profit to LPs: $40,000,000
In this scenario, LPs would receive their $100M back, plus $40M in additional profit, while the VCs earn $10M in carry on top of their management fees.
The Hurdle Rate and Fund Lifecycle
The Hurdle Rate Explained
The hurdle rate (e.g., 12% PA) acts as a minimum performance benchmark. LPs, which often include pension funds, endowments, and high-net-worth individuals, invest in VC funds seeking high returns to compensate for the significant risk involved in early-stage investing.
A 12% hurdle reflects their expectation for a return that significantly outperforms less risky investments, accounting for the illiquidity and high failure rate inherent in venture capital.
Fund Lifecycle & Compensation Timing
Throughout the fund's lifecycle, management fees are collected annually, providing consistent revenue for the VC firm.
Carried interest, however, is only paid out later in the fund's life, typically after LPs have received back their entire initial capital contribution and achieved the hurdle rate. This payout usually occurs as portfolio companies are exited (e.g., acquired or go public), and cash is distributed back to investors.
This deferred compensation structure strongly aligns the VC's long-term success with the fund's investment performance, ensuring they are incentivized to make profitable investments that truly benefit their Limited Partners.
Different Stages of Funding: Angel to Series C & D
Understanding the progression of startup funding is crucial for founders and investors alike. Each stage represents a significant milestone in a company's journey, from a nascent idea to a market-leading enterprise, attracting different types of investors and requiring varying levels of capital.
Angel Funding
- Stage: Idea validation, pre-product, pre-revenue.
- Investors: Friends, family, individual angel investors, sometimes strategic advisors.
- Typical Amount: $25,000 - $250,000 (can go higher for super angels).
- Focus: Building a prototype, market research, initial team formation.
Seed Round
- Stage: Early product development, initial user acquisition, proof of concept.
- Investors: Seed VCs, angel groups, accelerators.
- Typical Amount: $500,000 - $2,000,000 (can range up to $5M for competitive rounds).
- Focus: Proving a viable business model, achieving early traction, building out core features.
Series A
- Stage: Established product-market fit, growing user base/revenue, ready for significant scaling.
- Investors: Institutional venture capital firms.
- Typical Amount: $2,000,000 - $15,000,000 (median often $5M-$10M).
- Focus: Optimizing customer acquisition, expanding operations, hiring key talent, market expansion.
Series B
- Stage: Significant growth, expanding market reach, scaling teams and infrastructure. Proven business model.
- Investors: Larger venture capital firms, growth equity funds.
- Typical Amount: $15,000,000 - $50,000,000 (median often $20M-$30M).
- Focus: Scaling sales and marketing, entering new markets, strategic acquisitions, improving unit economics.
Series C & D (and Beyond)
- Stage: Market leader, rapid expansion, potential for IPO or acquisition. Focus on profitability.
- Investors: Late-stage VCs, growth equity, private equity, corporate venture.
- Typical Amount: $50,000,000 - $250,000,000+ (can be much larger).
- Focus: Global expansion, product diversification, optimizing for exit, further market consolidation.
Each funding round brings new capital and strategic guidance, enabling startups to evolve and tackle increasingly ambitious goals while navigating the complexities of scaling a business.