 This is Sonali. Thank you all for carving out some time for attending today's webinar on the episode 12 of the Business X Learning series, Invest, Scale and Value. Today's topic is on business valuation, how investors determine the value of your business. To all the attendees out there, please type in any questions you might have in the Q&A section and we'll try to answer as many as possible at the end of the session. I would now like to welcome our speaker Mr. Gaurav Maharyan, Chairman of the Franchise India Group. A very warm welcome to you, sir. Thank you Sonali and welcome friends and welcome to another edition. This is a series which we do, which we talk about Invest, Scale and Value. Today is the value series. You know, it's more and more important now that, you know, especially the early stage companies start understanding how they can build inherent value in their businesses. And we are seeing a big change, especially post-COVID. I think as the funding is changing and the markets are liquidity is becoming tighter. So it's even more important now that you carefully understand that how you really can project a value to the potential investors. While I can tell you, the market is still very, you know, ready to have a lot of new concepts. While the opportunities have to be well defined and groomed and presented, but the investors are out there. I think there was a bit of a pause time, which started happening in the months of April, May, because anxiety was very big. As the world has started living with the current circumstances, while, I mean, I think the changes in the times of investor groups, that has happened, but the investors are back. A lot of people are looking at, you know, good founders, the right kind of pedigree, right kind of businesses and how they can really, you know, go and back them up and take the businesses ahead. I also feel that both strategic investors, people who look at strategically investing in the businesses, which means that they have outside money, more value addition to do that to the business. That's a huge community out there and normally not be, as a, when you are a startup or a early stage company, you don't really look at strategic investors. You more go and financial investors because they are available, they are in VR, they are in news. So you go to this private equity firm, the agent funds and so forth, and pitch yourself. But also look at strategic investors, family offices. These are people who are looking at and they bring in much more. They bring in more than just the capital and they bring in much more strategic value in the businesses. So as whenever you're looking out for raising capital, I think that's a phase stage where you need to really start doing it. Now let's start with some kind of a, maybe I will divide my discussion into three parts. I will talk about, you know, various methods which we used in valuation, what is the right way to approach it, what are the ways we are approaching if we are businesses of quality at a certain stage, what is the kind of valuations, practice within them. And your business is largely at the early stage and especially BusinessX is a platform where we get a lot of early stage businesses, very early stage more startup businesses which need now the next round of funding for them to go to the next growth stage of their entire thing and then they probably get into a more sophisticated capital to get into their scale stage. So what is the kind of methods you can really see and use? Then we'll talk about really how do you maximize your valuation case? Whenever we go into valuation, we have something in mind. I always say you chase a valuation. You always chase the valuation you want for your business and you design and put it the whole structure in a manner that you are able to get that kind of a valuation. But how do you maximize that? And then we'll also talk about the term sheets, what is important in a term sheet? How do you really evaluate the term sheet? Important is contracts and I've seen more damage being done in market where the expectation of the investor and the entrepreneur was never aligned. More damage happens. Even the business would start looking good and promising but because expectation was not aligned and large part of that expectation was about the initial term sheet which comes in. Just because in the excitement of that money or the capital coming to your business, you end up signing up a wrong term sheet as a company and also it can be wrong for the investor because they wanted to protect a lot of things and sometimes the perception and the expected performance of the businesses don't match. And most of the time, especially in these times, there's a lot going on now because a lot of investors who have invested into early stage businesses and the last six, seven months has been very, very tough and the next rounds are not coming. The exits are becoming difficult. So there is a lot of anxiety and a lot of questions being asked on the performance of these businesses. Sometimes these performances are beyond the entrepreneur capability at this stage. So how do you really design your contracts and how do you design your term sheets are very important. So let's get into starting with the first part which is what I call the methods of valuation. If your business is seasoned and has some kind of a past history and some kind of cash flows and so forth, then you will go into the conventional valuation tools. The typical valuation tool which is very, very popular is the discounted cash flow mechanism. Now discounted cash flow mechanism is is putting a future valuation on certain numbers three years or five years from now and discounting those numbers. You need to have some kind of trends which come from your past background and experience. So you have certain model experience in your your past performances and you take those experiences. You can add a lot of value addition which can demonstrate that also can demonstrate from the industry trends or kind of what is changing in the market or how you will be able to improve your margins to get a better bottom line. So all these deviations one can really bring in but large part of the the system is a the large part of the concept is based on your past performance and in past performance kind of triggers you would do to improve your margins and improve your top line and get to a certain level and if you are able to demonstrate that and the investor buys into this then you go to a certain model position say if I was valuing now I might do it you know March 2023 my balance sheet and discount that. So on that basis companies would do the valuation. They would set a come come with some kind of a pre-money valuation and and then you know to also understand what is pre-money and post-money valuation structure but you will come down to a valuation and then you would be agreement to a certain investment. This is this is good for businesses normally which have a performance track record. Now if you are a business which is already at that stage then you can really obviously look at these kind of a valuation. This is very common this is can be done by average chart account and it can be done by a good business valuator. Now there is a you know there are the guidelines for a business valuator. You need to go to a business valuator who's authorized to do it. He will be able to put this kind of value. Now the problem happens with businesses which are not doing well don't have performances or they're loss making or early stage. They've not got a commercial success. Now how do you really value them? You know so and and sometimes you try to put the DCF structure while I mean you try to put some projected values investors don't buy it and you have no ability to demonstrate that how this is going to happen. So now this becomes a very challenging for especially for early stage companies because they are not able to really present a case to investors and say what is my business going to be valued at this level. So they need to do use what I call the two parameters of it. One is what I call the recent comparable financing which were done which means companies of your comparative structure in the same space. Say you are an adrutech space. Now these days adrutech, health tech, all these are becoming very very popular. So you will see a comparative company in the same space how they were valued at and it can be a data within domestic market. It can be international market and you can make multiple examples of that and depending on what is going on in that space that can become a competitive option for your valuation. So that's something which which most of the private equity and VCs would look at it and they would do a lot of comparison between different companies in the same stage, same kind of structure and see the kind of valuation you got. So e-commerce you saw same thing when one company got valuation at the similar companies at early stage got the similar kind of a valuation in the market not necessarily when you are a certain performance level then your valuation are based on certain performances or isn't but when you are on early stage normally industries would get preferences and certain model valuations would come in. Then the second way also look at this is the potential value at exit. A lot of people you know understand that at a certain level I mean if an investor is looking at investment they would look at if you are early stage investor they normally look at as I told in the past also they look at about 10 multiple or 15 multiple kind of exit value. So they they look at businesses from that perspective that if for today they are entering at this level what the business would be at three to four five years in the time they're parked in as investment in the business can they look at a 10x or a 15x kind of a valuation. At a little mature stage you will look at a five to six percent and even further in the mature state you look at a three to four kind of a valuation multiple. But in an early stage every investor keeps clearly a mind because it's a high-risk investments they would like to keep it about a 10 kind of multiple. So they would also discount the valuation in the same manner. If they see the potential exit can come at a certain level so you say I'm investing at next money and I'm looking at a 10x of that. I'm putting up a hundred thousand dollars and I'm looking at about a million dollar after say a certain stage. So if a million dollar that million dollar to the percentage of subscription I did in the business I need to see that the company at that level they have a potential valuation of this right. So that's how they would do your your valuations and structure. So a lot of companies would design between these two things. Either they would do a comparative structure or they would keep the exit in mind. Normally they would come with a range of valuation. Normally every every investor would put up a range and then and take a consultation they would talk internally externally a lot of that and investor would always like that he takes the lower part of the range the bottom part of the range say if I put value you say from a one million to say a two million kind of a one point five million kind of a bracket is not that wide but then I will like as an investor always to take the lower part and as an investor entrepreneur you like to take the top end of it and that's where you really start negotiation process and how do you really want to see that you get a top valuation at that stage. So if you want to really get into you know asking for a top valuation case then you need to really first obviously be ready to yourself. You know if you're not ready and I see a lot of decks come to us a lot of presentations come to Business X and most of the times almost about 70% of them is not even worth looking at. It's not that the worth business idea was not there or the founder was not good enough. They were not well presented. They didn't have a good case to present. They were not solving any problem. They were not clearly telling them that. Most of them were me too and and trying to do that like these days almost every second deck which is coming in called hyperlocal delivery concepts right. So almost everything you know from a pama to vegetables to you know anything which you're talking about people are getting super hyperlocal capabilities. Pretty much similar kind of this technology very clearly the same kind of structure as somebody is trying to create like the duck kitchen now duck stores. So a lot of that is going on in this stage. Now we are looking at the space. We understand the space is great. We are looking at the space very closely or maybe I kind of a direct to home that I could consumer kind of space is very very interesting in India. But where is the change? Where is the compelling reason why people would shift from wherever they're consuming to you? You know if I have to shift why I would shift from whatever is available if I grow for available or XY that is available. Why would I shift? So one of the areas which I feel that the most of the time entrepreneurs when they present they are not able to show the shift. They show their case that they are going to go in the market grab that share and so on but they don't give me compelling reasons that why would a customer shift and that reason is very important as a starting point unless you are able to once saw this whole gap and clearly demonstrate that your business has very strong compelling reason to shift that customer from wherever they are doing and that answer should not wait for you to become a certain size then you will be able to shift and a lot of answers I get is as a look I when I reach there my value would be so much my economies of scale would hit that much then I will be able to buy cheaper and pass the customer cheaper and then shift. I mean this is like a chicken and egg you know you not get there because you have to shift the customer right now so the what is a compelling reason right now that a customer would start moving in when you reach to a certain level you can pass even more advantage that's fine but why would it happen at this stage that's very important part for at least if I have to look at any business case apart from looking at the founder and looking at the capabilities or the team would have I would look at a very strong case on how would you shift the customer or whatever the customer because this is a mature market in most of the cases people are using something or another why would I shift to you to anything else and even the power of companies right if you look at you know the Airtel tying up with blue jeans which is one of the big video platform but people still using Zoom and and Geo started their own platform but people are still with Zoom or with Microsoft or Google because these platforms are much mature they go to market is much mature so even big companies large companies not able to shift the people they're not able to shift the customer because customer becomes used to and more we become used to on a platform we'll start only using that so so it's a very difficult answer to get it's just not that because you reach every home because the Airtel was in every phone or Geo was in every phone they can shift everybody to anything that's not easy that's not that's not going to be easily done because a customer doesn't want you to be coming off the two point where you are mature enough you know I'd like for me I also downloaded Geo's video platform to me it was not mature enough it was not ready to be doing a professional structure so I would never go there and I'll continue to be safe with Zoom because it's a mature platform it's been tested it done never gives you a disappointment so because a lot of people do business on that they want a robust system to be done rather than something in early while Geo is a large company so they would be able to really get answers and they would create some compelling reasons why customers at a certain stage would start shifting to them but I feel that when a startup comes in and startup has to give the answer they need to really have the strong answer why would people really shift to them next important is that even you reach out to the investor really make your good case maximize your potential of exit valuation you know what is what you can demonstrate to our investor and say there is a great exit valuation because that's where is the most striking point for a investor to really look at it if I can demonstrate to them that three to four years this is a value I can get you because you are driving the ship he's just investing with you and you can really demonstrate that look at this stage this is the kind of valuation I can bring in I can demonstrate that this is the kind of value you can get that's the striking point so stay between you know very honest about your problem solving and giving very clear compelling reason why customer would move means that you have a business case now established and then go out and clearly demonstrate what is the exit valuation you need to do that this all you can do with a lot of homework you need to do yourself in terms of you need to know what other industries people have got exit and what kind of valuation they need to do that and also don't go to one investor always try to go to multiple investors so that you also gauge yourself sometimes people go to only just one and focus on that but always advice is that go to multiple investors when you're in market you're in market you don't have to shy away it's not it has nobody's problem nobody even mind that you have taken your deck to 10 people and actually people have got the kind of capital in the past last 10-12 years are people who have almost approach all market investors you never know who is looking for you and who really bought into you so don't really wait for just going to one investor and just wait for it distribute your concept distribute very very fast and and and and put some time commitment on that if you're in market you're in market so go out and and reach out to more and more people business ex also does that when we really promote some business we will go out and put it to everybody so that more and more people can really understand and know about that this is the opportunity which they can really do that and and these days it's much easier to do it people also respond very fast because we send them deck if they like something they or they and also investors have become smart and I just recently sent one of the pitch to another company and I reached out to them and and he clearly came in one minute he came and say this is not my interest area and I gave another opportunity which I was not too sure he will be interested and know but he has studied on that and he said look I I'm keen on looking at this I want to really more put some time and not to sure I will do it but I want to really look at it so investors are also becoming very clear what is the area which they want to really be in and they will not go and buy it they would like to be very very sharp and focused and I think it will become even more sharper now before covid especially about a year year and a half back the markets were going everywhere you know people had liquidity and then they were investing into almost everything coming through some of the investors didn't know but they were just wanted to jump into the whole investment space so they were started also investing a lot of family offices were just picking up something because they had reserves available but now all that has changed now people have become very focused while the investments would be strong enough they will be there but for only strong concepts a strong concept would get good investors market investors coming behind them because they know this is a good time to invest good time to look at an opportunity so please see through this whole model that how do you really want to do that now how do you really say that once you approach and somebody likes it and and says look there is an opportunity for work at what stage you need to really see that this is right investment and I should go now there are multiple options you can get one option is that you get a valuation and you get a valuation and and you feel that you can get higher there is never a problem to even have a another go out and create and voice your point and say I was looking at this expectation not not this much because of a reason because end of the day you're raising capital for something you're raising capital for the business and business has very clear demand why you need that capital right and if that capital requirement is sudden you cannot compromise on a lesser valuation because you also from our perspective one is the business valuation second is the demand of the business if the demand is very clearly demonstrated that this is what the business needs this is what the business need and this can this money can be spread out in this manner to get this kind of growth targets then a lot of investors like that situation so you really have to put that and never shy away for reaching out compromising valuation also sometimes can also have a problem that your liquidity crisis would continue to be there because you will not be able to raise the right value the capital raise would not also be right and and also the you know you can have issues on your own liquidity and and structure second if you think that a reasonable valuation is right and you feel that it serves your purpose then also don't hold too much don't spread yourself go out and lock it you know sometimes I have seen the deals gone out you know one of the deals which I have a particularly regret on was a term sheet I I over negotiated and and I over negotiated I lost the deal not for the reason that the deal and the buyer was changed but a lot of things change in your businesses the the buyer which was putting in the money I mean it was a partial investment partial M&A deal kind of thing so and the investor who was coming in was in three months itself because it dragged for negotiation that much had a lot of changes in their own businesses and so they went out and said all investments are old so sometimes you know you regret on that and you can give it to your your participation but I clearly saw that that transaction would have happened not that they they stopped investing but they put everything on hold for a year and and then they wanted to revisit then the business is changed by that time and and varieties change and so on so on so that's how sometimes it's very important to take the decision at that moment another thing always take a good advisor is wrong with you you should have a good advisor with you who can help you in doing that Business X is one but there are multiple other advising companies which are available in the market sometimes you would get a marquee investor like there is a company I'm advising these days and this company has gone is a franchise business so we only in franchise India work with a lot of franchise organization and this early investor is Ratan Dutta now when Ratan Dutta invested I like the business and I felt that this business can really scale because he invested at a very very low valuation case or he would have just token the company and I don't have the real number but he must have token but it's actually doesn't matter really if you really ask me if you would have not given a dollar although that's all right he would have given $1 to this guy and say look I'm behind you that's much more investment to me than an idea and you will not believe in last about six or months in this lockdown the company has sold about 75 franchises why because everybody sees the investor behind the company so there is a there is an opportunity if you have a very strong investor profile with you even at a much lower valuation pick it up because I feel that when you get a marquee investor sitting in your in that in any marquee investor and all these marquee investors are also clever you know let me be honest they're very clever people they understand that they bring a lot of value outside money so they all want to really be this one source of flip card and things of that way they all join early stages businesses and whenever they are where they know the promoter an entrepreneur is going to do a good PR and say I have these investors with me and the business goes to the next level now let's go to the last part of the discussion and then I start taking a few questions when you're doing a term sheet a term sheet should have a three different components they normally would define funding what is the funding requirement at what valuation it is coming what kind of structure it needs to be done is it coming one shot it is coming in tranches these tranches linked with certain performances all that pieces are need to be done what kind of instrument has been used it is a convertible preferred stock or a debt what it's very very careful to understand what they need to do that and a lot of other things which come in the in the funding side of it corporate governance which is most ignored part of it actually is the most complex especially the early stage in the companies don't understand corporate governance how the distribution of powers would happen what is the board composition what you have a voting rights what kind of revision of bylaws you can do information rights information on on functioning of the businesses and so on so a lot of corporate governance structure and third is a liquidation you know at what happens on the liquidation of the company what is the exit strategy it is defined what is the drag along or tag along rights to the investor so if you get a new investor they can they can drag along with that or there are multiple other and I think there are a lot of restriction rights participation rights and they participate into another round so a lot of these are available in the term sheet so there are three large component of it funding corporate governance and liquidation all these three are very clearly defined in the in the term sheet so you need to really have very careful look at the term sheet very very very particular a lot of legal concerns are also rising in term sheets because sometimes investor the entrepreneur gets taken driven even to make some claims which are not there in the business and the term sheet he gets a term sheet he gets very excited but he doesn't understand after the DD process when you do this happens if they find a major deviation they can come back to you and say you need to cover all the cost of DD and a legal fee and that can be a very big number for a startup right because a lot of startups put some presumptions and some some claims which sometimes don't come in and it can be as small as you think and saying I have a registered trademark right and you didn't have a registered trademark you just applied for it so things of that nature can create much of problems you can have an objection on your trademark you can have issues with your proprietary software or whatever that is there so any kind of a deviation can come in and which can which can create a problem your past history you might be in another company and you had some problem in that company because they will do all the directors duellions in terms of what they have done in past and so on so on so a lot of these areas really come in so you need to also stop your exposure even if you have done that if you made some claims and you feel that it's all right still try to put some kind of restrictions for not to claim they don't have to claim the entire thing ideally it should not be there because investors should come in their own cost of doing a DD and after the DD even if they don't want to pursue they cannot go and claim legal fees from you so all that is very important so purpose largely is for an investor clearly is the purpose is that he wants to really look at when is the exit what time he can get to the exit second thing he always looks at is that if the business for reasons don't perform you know look at the investor mindset investor mindset on one side is very clearly that he looks at the business would perform it would reach to this number and I will have my exit second side he looks at equally with the same thought rather the early stage companies they would always look at the 20 percent of companies would really do what is an ideal situation 80 percent would not do that so when he looks at 80 percent then he starts mindset is very clearly that if for reasons he doesn't perform what kind of provisions I can have provisions can be one I can because you've not reached your agreed benchmark of this number on 20 23 March and you underperformed by certain valuation the valuation can change and your holding in the company can also change so they normally would have pegged on the certain amount of performance number this can also mean that they can take controlling stake in the business a lot of companies actually if you really see the investors have taken a controlling stake and had made the original founder go out of the business so this happens purely because there was this 80 percent which was non-performance they created a lot of provisions in the structure but they were able to really take control of the company and they can even participate into the ownership change and structure they can also force the company the founders to sell the company to somebody else to recover that money so all these are rights available for this and that so whenever investor is looking at investor is always looking at a good case scenario which is 20 percent if the company does well then I will find my exit here but in 80 percent if this happens then this is a kind of thing now absolutely a similar way the entrepreneur has to think through you know if you have a good situation then what level you would like to give exit and if you are giving a big number if it is an optimistic level or what I call the top performing and the valuation goes up you want to keep upside to you you don't want to give too much of upside that's your perspective which you need to do because you're working hard and you took the business while you want to give the returns what is expected for my investor you want the 10 percent but he doesn't want 100 percent 100 times of the return so you need to really see that how do you really cap the upside and after a certain structure you keep the upside with you and on the diversity if things don't go off on at least you don't lose the control over the company so there has to be some protection in terms of how far they can convert their equity into the company and then there should be lock in equity and there should be some kind of a structure where it can safeguard at least your performance now these are very debatable things why would somebody agree on these conditions and why you would agree as a as an entrepreneur do that but I want to really highlight things which are perspective so what we covered today was three parts we talked about the methods of valuation we talked about how do you maximize your valuation case how do you go into term sheet and how do you understand the what is the mindset of an investor and also how the entrepreneur really have to do that so this is a today's session on valuation so if you have any I think there are some few questions I can take few questions from discussion and so over to you so Nali if you want to have take up some questions from the audience let me let me once open up so thank you so much for another wonderful session Gaurav sir and for sharing your insights we have quite a few questions lined up with us so the first question is what advice would you give an education startup looking for an investor which has achieved proof of concept and now has a positive cash flow but is not a tech product so you know the good question you know this time getting a lot of questions and actually historically I we used to get non-tech companies coming more to us and then tech companies because tech companies by nature had a huge ecosystem being developed and non-tech companies normally find not find the ecosystem you know if you're a tech company then there are a lot of ecosystem if you really go out and do that so the difference I would need to approach this answer in a different manner you know if you're non-tech platform and doing well obviously you can get investor but your valuation case would be much lower and I'll tell you why because when you're a non-tech company your scalability becomes a question mark it takes much longer to scale a non-tech product today than a tech product that's honest answer I mean NIT is a good education example great valued company but started in 1985 from 85 to now 35 years they are a certain level but I can tell you five names you know which are you know companies like byjuice a six seven year story the kind of audience they address the kind of subscriber they address is much much larger than NIT would have done in 35 years so so tech obviously gives you reach reach means more scalability more scalability means more valuation but if you are profitable you're doing that tech adoptability can anytime be done that's not a problem but and focus on business we love to talk to about this I have a particular liking about the sector so you can talk to us and I would like to see little more in detail okay so the next question we have is from Mr Shantanu Saha he says excellent session what about succession plan if a company does not have a succession plan but is dependent only on the founder yeah sure so every company is based back when dependent on a founder I mean Amazon is still back on a founder Apple was historically backed on some founders so Microsoft is still looking around founders so everybody is doing it yes you need to really create a good second line management capabilities or I would say process leaders in the system founder is very critical in any business and I there should be no problem in in that business every good business has a very good founder but you should have a good process leaders that re-risk the business you know if it looks too much tuned to the founder itself then it is a problem but if you also have a good you know departmental leadership very clearly defined and very clearly empowered then answers can be easily done right so the next question is from Mr Daljeet Salooja he says we want to exit our automobile private limited 12 years old business last two years lost meeting and have immovable assets can we get investors or buyers sure sure Baljiji absolutely can do that if you have a business which you want to exit every business has a value there is a value and we call the SaaS principle three things value in any business which we call SaaS principle in business x one is subscriber value who is the subscriber who is it who do we take second is asset value what is the asset sitting in the business and third is strategic value what is the strategic value like your automobile which deals with anyone or something else whatever is its strategic value there is a location where there is no location today so three values in any business I would look at it subscriber value what is the customer base asset value and third is the strategic value depending on these three it can be only two out of these three it can be only one but we will find a value on that and then we can go next sure so the next question is from Mr Manoj Patel he says what should be the valuation based on with investors if investors start with 50 lakhs or 1 cr or even small for example maybe range value of startups ranging from 20 lakhs to 1 cr what should the startup expect in terms of time cycle amount for a bootstrap company and what is good for both investors and the startups point of view so I'm not able to capture your question it says what should be the valuation based on with the investor if the investor starts with 50 lakhs or 1 cr or even small the range so if your question is that if the investor if the company is I mean if I'm understanding question right it says that your company is valued to an early stage business is about 1 cr and the investor comes at a 50 lakh or 1 cr and do that so which means obviously every investor when it comes to any early stage businesses as I said looks at about a idle situation is 10x multiple of valuation not the performance of the revenue of the company but valuation of the company and valuation can they hugely differ from your performance or turnover and so on valuation case they would like to look at at least 10x or higher in a 3 to 4 year life cycle early stage investors normally would not like to stick around and unless they continue to see the valuation going up otherwise they would like to have a life cycle anything which is two and a half to three years kind of a good cycle of investment at an early stage company not too early you will not get your valuation case the business will not be able to do that so which means that and now this would depend on a business itself if it is a very high technology based business maybe the commercialization itself would take some time for you the entire money would go into the development side itself and and as you hit the commercialization your valuation significantly goes up because now the product as a product itself tech product is ready if it's something else then maybe it is more driven from the market share you've already acquired or a certain proof of concept or a smaller market you know performance matrix have really come in so things of that nature so typically I would like to see from an ideation to commercialization this should be about two and a half to three year kind of a life cycle so the next question we have is how much does the valuation cost normally does it vary as per the requirement yeah it varies significantly and there are a lot of valuation it depends on which stage the company is what nature of company is how distributed assets are you know all that can be done I mean valuation for a very large distributed asset is very complex exercise to really pick up the numbers from everywhere and if it is a simple small business it's much faster by data itself and if it is a competitive company in the same space which is available then it is even easier but if it is is a unique business which needs a lot of search and data capturing from the market it takes a little longer more manners you put more the valuation this would be so the next question we have is from Tejaspini and the question is where do you see the opportunity for the travel industry in India given COVID-19 and the recent button that has been hit due to COVID non-tech but experiential and active travel my experiential travel is a very good industry very very good industry very underrated in India not done much in India a lot can happen in India I personally feel that from a you know the industry is not going anywhere that's for sure its industry is just on a pause stage but because people are not traveling or they're not making a priority it might stay like that first is pause stage and when second is you know you know liquidity in the market that also is discretionary spend would take his own time cycle to come in but if I would say that business has patience for seven, eight, nine months or one year then this is a very good business space to be investing on very good space to be investing on especially on the experiential side the speciality travel side the huge going to be done I mean India has not seen anything I mean if you see in US you will see through shops where you just go and book your cruise right so there are multiple other speciality travel opportunities available in India nothing is available so there is a there is a huge opportunity on that side right so we'll just take up the last question for the session and it's a rather long one so this question is from Mr. Vikas Rajapu he says I'm a professor who has launched a digital marketing course online in June 2020 I have a product priced at Rs. 15,000 sorry I have a product priced at Rs. 15,000 and I've got six admissions till now I have my course product ties and whoever takes admission gets recorded sessions as a product I think this is scalable I would however like financial support how should I proceed and what is the minimum number of sales I should start to make before looking for investment you know so this is very very very you know a hypothetical situation I obviously cannot do that I have no idea how the product is built and how it is conceived and what is the market competition looks like because suddenly digital marketing programs and courses have become too much available in the market and they are somewhat commoditized some are using them in the front end free program and then they want to sell you something else so it's a lot is going on in this space while I see clearly demand also gone up from post COVID because everything is pretty much now become digital so digital space for even a SME and players to really have that I think the great entrepreneurial programs would come in where people can really start their own digital firms and really help this MSME kind of a market which is I think still very unrepentanted because they're not going to be having a lot of tools but if you I think if what I hear from you if you're already built a business which has got some kind of scale you've got some customers I think you need to get to a some critical size some critical size where you say you are having a thousand or two thousand kind of members and then probably reach out to good investors there is a new markets where you need to really reach out or put more money in marketing or create new content for your your space and on all that pieces another thing which I always advise is capital race should only be thought or you know done when you have a very clear clarity and you can tell people why you need money most of the people come to us and say I want to raise money I'm very profitable I'm doing well I want to raise I said if you're already profitable everything is going fine why do you raise money you know people you know need to really define the answer very very clear answer how how you want to do that so the investors like aggressive approach aggressive approach one very seasoned investor was with me and I asked him what is your philosophy of you know investment he says I if one person comes to me and say give me say five crores the next person comes to me and give me 500 crores and I asked a five crore guy how much time you take to spend this money and he says I will spend in five years and the next 500 guy a 500 crore guy says I will spend in three months I will give 500 crores that's the philosophy of investor investor wants you to ask more and and they also need to understand how you will burn that faster so that the business and money makes money for itself right so how do you make and burn I think not literally burn it right means that you need to sweat out the money so that your money can get into it so investors like a plan like that so they like a plan that okay I you give I put this money but what I how are you going to really use this money and how fast you want to use this money a lot of people I know who raised but put in a bank and they're not able to sweat it out and then businesses do not go to the next level hence the valuation will not go there the investor has not come for taking dividends he's come for the multiple of that valuation which he's entered on his instrument is very clearly that I have entered on an X value I have entered on a one million dollar value can you show me that you will take this business to a 5x or 10x kind of evaluation and how soon you can do that and what it takes to do that that's the that's the question we need to really answer and if you are able to answer then you have a case to be presented to an investor wonderful so I know we have already exceeded our time limit but there's just one more question that turned up which I think would be quite relevant the question is from Mr. Bridge Pajaj he says if two different investors dispute the valuation shown by the company how is it solved then if the two different investors are find the dispute in valuation shown in the company then obviously you need to really see who one who's giving you better valuation and who's more strategically aligned to your business that answer you need to really think unless until if it is two part then I think I would really have a concern because if the valuation is too rationally part normally it's not the case they're very close and but who's addressing and who's looking at from a perspective that would depend and so you need to call on the first quality of investor always go with the quality of investor who you really doing it sometimes drop higher valuation pick up a lower valuation because you're getting a better quality of investor better marquee investor coming in and second who's most strategically aligned to your business that's something which I would pick it up but don't distribute your time sheet don't distribute your time sheet another mistake a lot of people do is that they get time sheet and then keep telling everybody how I got time sheet from this company and that's where you do mistake you should not do that you don't use that term sheet to get somebody else putting bigger valuation this is small world this whole private equity is a very very small world and they all talk to each other and I've seen a lot of dropouts after term sheets because people start distributing their term sheet they go to everybody and show that look I am sitting on one term sheet already if you give me more valuation I can come with you and that doesn't happen you know this is not really selling bananas in the market so you have to respect the investors and only present you can go and present to a number of people and continue to discuss but don't put the card offer that you already sitting on one term sheet wonderful sir so we have quite a few thank you very much thanks for the time I'm sorry so I was just saying that we have quite a few queries from many people who are asking of the best way to get their company valued so anyone who has that question please reach out to me directly I'll make sure I know down your names anyone get reach out to you directly but yes please feel free to reach out to me and I'll let you know and connect you with the right people for doing the valuation I will also put my email id on the chat room if you have anything which I can help you with please reach me and keep coming back to our sessions of businessx this is around as I said invest scale and you know value and we're also starting a new addition to it exit so we'll now have four series we'll talk about invest scale value and exit and next session would be on exit which we will take it out thank you very much thank you very much Kaurav sir for your time and for sharing all the information thank you thank you we'll see you next time next saturday at three o'clock so please make sure you join us then until then thank you so much thank you thank you very much