Submission BCS
Proposal for Fund Raising and provide a detailed overview of the Financial target, Product Mix & Expansion Plan for Next 5 Year.
Submission Date & Time: 2021-10-19 04:08:36
Event Name: NMO S4 Sprint One
Solution Submitted By: Sharad Kumar Agarwala
Assignment Taken
Proposal for Fund Raising. Provide a detailed overview of the Financial target, Product Mix & Expansion Plan for Next 5 Year.Case Understanding
For a thorough understanding, I followed the four steps approach – • Identification – The most crucial component of every fundraising campaign is identifying potential investors or modes of fund generation. It may seem apparent, but prospects are the lifeblood of the fundraising process; without them, there can be no solicitation. A qualification stage is also included in this step, which comprises extensive study and wealth screening of each prospect/donor to evaluate capacity and propensity. • Calculations – The second most crucial phase in the fundraising process is estimating and calculated the fund required and till what time period. Considering the various components needed to build our EV vehicles, we need first to segregate each piece and its prices. Then we can estimate the no. of parts required and forecast the demand for each component and quantity. We can then calculate the fund needed to manufacture the product, including the plant running costs and all other costs. • Targeting - The most challenging aspect of the fundraising process is finding the right investors and targeting them by presenting our value proposition. Based on our need for fund we decide, which level and stage of funding and investor we should target. • Proposal - Now finally we need to prepare the value proposition we are giving to the investor. Here we will make a proper portfolio of the various EV models that we are planning to manufacture In these we need to incorporate the future prospects of the business and what profits we are aimingBCS Solution Summary
The proposed solution is we will start with pre-seed funding of 46 lakh and raise further funds with seed funding. This will be for the initial times. Later after accomplishing a good and consistent sale, we aim for raising through series A funding, by proposing a fair and attractive value proposition in the fundraising proposal.Solution
- Pre-Seed Funding
The first round of investment for a new firm occurs so early in the process that it is not usually counted among the funding rounds.
This stage is also known as "pre-seed" funding, and it relates to the time when a company's founders are just getting their operations off the ground.
The founders, as well as close friends, supporters, and family, are the most prevalent "pre-seed" funders. This fundraising stage might happen quickly or take a long time, depending on the nature of the firm and the early costs associated with establishing the business idea. It's also possible that at this point, investors aren't investing in exchange for stock in the company.
Here in our venture, the pre-seed funding is the amount Rs. 46 lakh that we founders are going to invest as capital in the company.
- Seed funding –
The first recognised stage of equity fundraising is seed capital. It is usually the first official money raised by a commercial endeavour or enterprise. This initial financial support is ideally the "seed" that will enable the company to flourish. The company will hopefully grow into a "tree" with enough revenue and a successful business strategy, as well as the perseverance and dedication of investors. Seed investment enables a business to fund its initial steps, such as market research and product development. A company can acquire help deciding what its ultimate products will be and who its target population is with seed investment. To achieve these responsibilities, seed capital is used to hire a founding team. In a seed fundraising situation, there are many prospective investors: entrepreneurs, friends, family, incubators, venture capital firms, and more. A so-called "angel investor" is one of the most prevalent sorts of investors who participate in seed investment. Angel investors choose riskier initiatives (such as startups with a limited prior track record) and expect to receive an ownership stake in the company in return for their investment.
While seed funding rounds can range from $10,000 to $2 million in terms of capital raised for a new firm, it's not uncommon for these rounds to raise anywhere from $10,000 to $2 million for the startup in question. Some founders believe that a seed round of fundraising is all that is required to get their firm off the ground; these companies may never engage in a Series A round of funding. The majority of seed-stage enterprises are worth between $3 million and $6 million.
·Series A Funding -
After a company has established a track record (e.g., a large user base, consistent sales statistics, or another critical performance indicator), it may seek Series A capital to expand its user base and product offerings. There may be opportunities to scale the product across other markets. In this round, it's critical to have a strategy in place for creating a long-term profitable business model. Seed startups frequently have brilliant concepts that attract a large number of enthusiastic users, but they don't know how to monetize the business. Typically, Series A rounds raise between $2 million to $15 million. Traditional venture capital firms are among the investors in the Series A round. Sequoia Capital, Benchmark Capital, Greylock, and Accel Partners are among the well-known venture capital companies that participate in Series A fundraising.
In order to raise funds as part of a Series A funding round, companies are increasingly turning to equity crowdfunding. Part of the reason for this is that many companies, even those that have successfully raised seed funding, struggle to garner investor interest in their Series A funding efforts. In fact, only around half of seed-stage companies will go on to secure Series A funding.
We aim to reach to Series A funding stage after establishing a good demand for our product. We aim to raise 8 million in series A after 2 years of establishment.
·Series B funding -
Series B rounds are all about pushing businesses past the development stage and into the next phase. Investors assist startups in reaching their goals by expanding their market reach. Companies that have gone through seed and Series A investment rounds have previously built significant user bases and demonstrated to investors that they are ready for larger-scale success. The company will need Series B capital to expand in order to satisfy these levels of demand. In terms of methods and important actors, Series B appears to be comparable to Series A. Many of the same characters from the previous round generally lead Series B, including a major anchor investor who helps to attract other investors. The distinction between Series A and Series B is the addition of a fresh wave of later-stage venture capital firms.
- Series C funding -
Businesses that make it to the Series C round of fundraising are already doing well. These businesses seek additional capital to help them develop new goods, grow into new markets, or even buy other businesses. Investors put money into the meat of successful businesses in Series C rounds in the hopes of getting more than double their money back. Series C finance is aimed at scaling the business and ensuring that it grows as swiftly and successfully as feasible.
The Electric Vehicles (EV) sector has created a paradigm shift in the global automotive market. India too is investing in the electric mobility shift.
The Indian automotive industry is set to become the 3rd largest in the world by the year 2030. The Union Government has set an ambitious target of achieving 100 per cent electrification by the year 2030. If India achieves the set target, the EV market in India would be valued at $206 billion. To achieve these targets, the EV market is set to grow by 36 per cent CAGR till 2026 and by 30 per cent thereon.
The Indian EV markets are at a nascent stage especially the two-wheeler segment. A 100% FDI allowed under the automatic route, would provide the right impetus to the growth of this sector. The Union Government’s policy of Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme is a step in the right direction for aiding the two-wheeler segment. State government’s such as Tamil Nadu and Karnataka governments are not letting go of this opportunity by formulating favourable plans for the setting up of new factories.
The company in the initial years is driven by bike sales and for the initial 5 years with a growth rate of around 35 per cent. We have 2 models in the bike category and 1 model initially in the car category.
In Year 3 of the company, with new capital infusion, the bike sales would grow rapidly.
|
|
Year 1 (2022) |
Year 2 (2023) |
Year 3 (2024) |
Year 4 (2025) |
Year 5 (2026) |
|
Product Mix |
(in 000’s) |
|
|
|
|
|
Bike 1 – |
14 |
19 |
32 |
45 |
60 |
|
Bike 2 – |
6 |
8 |
15 |
20 |
28 |
|
Car 1 - |
1.3 |
1.8 |
2.5 |
3.2 |
3.6 |
|
|
Year 1 (2022) |
Year 2 (2023) |
Year 3 (2024) |
Year 4 (2025) |
Year 5 (2026) |
|
Financial Targets |
(in crores) |
|
|
|
|
|
Bike 1 – |
133 |
180.5 |
304 |
427.5 |
570 |
|
Bike 2 – |
67.2 |
89.6 |
168 |
224 |
313.6 |
|
Car 1 - |
104 |
144 |
200 |
256 |
288 |
Conclusion
Understanding the differences between these capital-raising rounds leads to deciphering startup news and assessing entrepreneurial potential. The various rounds of funding work in roughly the same way: investors provide cash in exchange for a share of the company's stock. Investors place slightly different criteria on the firm between rounds. Based on our company profile, we deem fir to start with seed funding, then slowly increasing our production with demand, then with establishmentAttached File Details
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