1© John Mullins 2013 Indo US Venture Partners: John Mullins London Business School

2© John Mullins 2013 The Fund Invested in All Three MobileSpice (real name mGinger) in 2007 Belle femme (Zivame) in 2012 Verde (Attero) in 2007 But the outcomes differed

3© John Mullins 2013 mGinger Won 3 million subscribers first 3 years But little success in monetising its user base Tech prowess and business prowess are not the same thing! No growth, little revenue, no exit: the “living dead” Eventually sold at a loss

4© John Mullins 2013 Zivame E-commerce is dominated by horizontal players: FlipKart in India Key question for investors: Can vertical players succeed, if they are really good at their niche? If you think so, then bet on the best horse: compare, try to pick the winner Zivame is doing well, but the jury is still out

5© John Mullins 2013 Attero Has exposed some myths –Myth 1: Pre-revenue companies cannot get funded in India –Reality: Exceptions are made if the opportunity and team are right

6© John Mullins 2013 Attero Has exposed some myths –Myth 2: Indian companies lack strength in innovation and technology –Reality: Attero one of only five companies worldwide managing e-waste at commercial scale

7© John Mullins 2013 Attero Has exposed some myths –Myth 3: Don’t invest in industries regulated by the Indian government –Reality: Attero’s team won pro-active policies and speedy approvals Attero is looking like a big winner!

8© John Mullins 2013 Research Question How do entrepreneurs (and investors, too) best assess market opportunities?

9© John Mullins 2013 The Conventional Wisdom Three crucial factors for entrepreneurial success –Management… –Management!

10© John Mullins 2013 In the Words of Warren Buffett… “When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance… it’s the reputation of the former that remains intact.”

11© John Mullins 2013 Point of Confusion #1: The Market / Industry Distinction What’s a market? What’s an industry? These are frequently confused!

12© John Mullins 2013 The Seven Domains of Attractive Opportunities Market DomainsIndustry Domains Market AttractivenessIndustry Attractiveness

13© John Mullins 2013 Point of Confusion #2: The Macro / Micro Distinction Large and growing markets are important, but… Structurally attractive industries (in a five forces sense) are also important, but…

14© John Mullins 2013 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

15© John Mullins 2013 Point of Confusion #3: What’s Crucial about Entrepreneurs and Their Teams… It’s not found on their CVs Not simply about “chemistry” or “character” or “entrepreneurial drive”

16© John Mullins 2013 The Seven Domains of Attractive Opportunities Macro Level Micro Level Market DomainsIndustry Domains Mission, Ability to Aspirations, Execute Propensity on CSFs for Risk Connectedness up and down Value Chain Team Domains Market Attractiveness Target Segment Benefits and Attractiveness Industry Attractiveness Sustainable Advantage

17© John Mullins 2013 In Summary, for the Seven Domains… A systematic approach Scores are not additive: summing the scores across the seven domains is meaningless Strong scores at the micro level can mitigate poor macro-level scores

18© John Mullins 2013 Why Consider the Seven Domains? Identify key weaknesses –Questions to be answered Suggest avenues for reshaping the opportunity if not mitigated by other domains Identify key strengths –Crucial in telling your story to suppliers, investors or investment committees

19© John Mullins 2013 Why Else? At first glance, fatally flawed opportunities can appear attractive –Observers’ views will diverge Thus, evidence is required –VCs conduct rigorous due diligence on the opportunities they consider –You should, too!

20© John Mullins 2013 Remember Warren Buffett’s Words “When a business with a reputation for poor fundamentals meets a management team with a reputation for brilliance, it’s the reputation of the former that remains intact.”

To assess your opportunities… The New Business Road Test 21© John Mullins 2013