What do investors look for in your business plan? – Start up financing

What do investors look for in your business plan? – Start up financing

A good business plan does not guarantee funding but definitely increases the chances for a start- up to get funded. Start-ups, which are getting a new momentum in our ecosystem, have a need to develop a strong business plan to catch the investor’s attention. Business Plan gives an insight into the past, present and future of the Start-up Funding. No two business plans are same, even if they cater to the same sector or offer similar products or services.

Here are some of the key highlights that investors look out for in a business plan:

Business Overview: Business plan must include the exact product or service start-up is planning to offer in their target market. A business Plan needs to explain the core features, the product on offer as well as the competitive edge the product has over other competitors’ products. Investors will be convinced to invest in an idea that can cater to a good market potential and have competitive advantage such as intellectual property protection, exclusive licenses, exclusive marketing and distribution, etc.

Team: Entrepreneur looks for investors that are the right fit for their business, and investors look for essentially the same thing in reverse. Investors don’t invest in a company but they invest in the people working in it. Competent teams are required to turn the ideas into reality. A business plan should explain about the founders, the key members and their relevant domain experience. The investors will invest only if they are convinced that the team is capable enough to execute the company’s business plan.

Industry Sizing: Sizing the market is a necessary task for all start ups, especially those that seek third-party financing such as venture capital (VC). Even though their investment philosophies may differ, but most VCs and angel investors would like to know that they are investing in a market with a large potential size. Estimating the size of the market, and then predicting how much revenue the start up can achieve and at what growth rate is indeed a tricky exercise but crucial.

Competition: Every start-up has certain competitors. A business plan should provide necessary information regarding potential competitors that exist in the target market and what unique features the entrepreneurs plan to offer in their products to get an edge over their competitors.

Revenue Model: The clarity of the revenue model and its unit economics are the key to a business. This is one of the most important aspects of a business plan as a company will start to display its strategic value as soon as it begins to generate profits. Different types of investors seek different attributes from a business plan.Investors are interested to know if a company can repeatedly acquire customers for $X and generate more than $X as gross profit from each customer.

Traction: Start-ups need to demonstrate impressive traction in order catch investors interest. Traction could be relating to business metrics (number of site visits, conversions, repeat orders, etc for an ecommerce company; number of app downloads, monthly or daily activity ratio, uninstalling app rate, etc for a mobile app company) or financial metrics (revenue, gross margins, EBITDA margins, etc). It is crucial to demonstrate right traction metrics and explain relevant trends.

Growth Potential: Extensive research should have been done to substantiate the business case. A business plan without proper research has no rationale. Adequate Industry research and competitor analysis must be a part of the business plan. Not only research but what degree of scalability the idea holds is also important. Investors will always look out for ventures which have the potential to achieve exponential growth in their target industry. It justifies the risk reward mechanism; a typical investor would be interested in.

Adequate amount of time and energy has to be invested while drafting a robust business plan, as a poorly drafted business plan can pull down an excellent plan while an excellently drafted business plan can pull up an average plan.

How to spend first million in your startups?

The first $1 million raised is critical to cement a Start up financing foundation and the basis on which future funding rounds will be built.
Even as RedBus was being sold to Ibibo for Rs 600 crore in July 2013, visitors could see batteries for an inverter lying beside a shabby staircase that led to a very basic office. “We had learnt to conserve cash early, learning from the crisis of Lehman Brothers. At the time of exit we still had a lot of unused cash in the company’s account,” Phanindra Sama, founder of India’s largest bus-ticketing platform, told ET after the sale.
The RedBus team had decided to work out of a basic office, take small salaries and conserve all cash in building a business that make for the largest exit in India’s startup history.
“A lot of Start up financing when they receive large funding, start spending on unproductive areas such as office upgrades, unnecessary technology tools… These should be avoided,” said Sanjay Parthasarathy, CEO of data analytics firm Indix that recently raised $15 million.
Parthasarathy said he did all he could to avoid having a workspace in the initial days. “I worked out of home, then at Starbucks and sometimes even Barnes and Noble,” he said.
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capital (VC) and/or HNIs, and acquiring new companies.
We are a sector and stage agnostic investment banking, specializing  in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.
Nucleus Partners is a financial advisory Firm based in New Delhi specialise in providing Fundraising, Venture Capital, Investment banking and Start up financing services

anies.

Source : http://retail.economictimes.indiatimes.com/news/industry/how-to-spend-first-million-in-your-startups/48353877

How Financial Advisory Firms Help In Start-Up Financing

Start-up Financing is not just about raising funds, it is a holistic process that involves proper business planning with thoughtful growth targets, deciding business valuation as per the current market standards, planning potential exit options for investors, calculating financial returns for investors, negotiations with investors, evaluating and deciding appropriate term-sheet clauses, and finalizing shareholder’s agreements.
Investors do not only invest in a particular business model based on a preferred sector theme, but they also judge various other critical aspects affiliated to the business, be it a team, revenue model, unit economics, promoters’ vision or competitiveness, growth plans, execution potential, exit options, or expected financial returns. Even minor areas like promoters clarity of thoughts, communication ethics, expressiveness, presentation, passion, and knowledge of the industry and competition, can set the investors off the process.
Knowing the complexity as well as the limited success possibility in start-up financing, financial advisory firms play a crucial role in managing the whole financing process efficiently.
The main role of financial advisor is to create a strategic roadmap for the start-up and help it in achieving its growth plans. Due to their regular nature of this work, financial advisors very well understand the expectations of investors. Financial advisory firms bring together a wide range of industry expertise and provide a hand-holding to start-up throughout the process. They help start-ups in summarizing their winning investor pitches for Venture Capital and Private Equity investors, and also guide them in various other financial matters such as developing financial model with right growth drivers, calculating the business value, effectively interacting with investors, soliciting term sheet from investors, support on finalizing shareholder’s agreement, support on transaction structuring, and finally a transaction closure.
At the inception stage of the financing process, financial advisory firms envision the whole process from the start to end in their mind and accordingly divide the whole process into multiple sets of actions. They start with basic steps and work up the flow, for e.g. they work on getting deal perspective from 6-7 funds, perform upfront analysis of the business, position the business rightly, and structure a business plan with a relevant pitch. Secondly, they work on connecting with investors beyond the usual suspects, also introduce domain specific reputed angels to add greater comfort to funds, bringing onboard strategic investors who can add value, and most importantly create a consortium of investors to mitigate rejection risk. Then, lastly financial advisors work on curating the funds, bringing the interested ones on board, create a bid process to achieve target valuation, create potential backups if lead investor backs out during due diligence, etc.
Financial advisors make sure that the whole process is executed within a reasonable time frame, as this is crucial, given the pace at which business environment changes and the limited cash runway promoters have for business.
The fundraising process is the real test for the start-up promoters and as well as for the financial advisors, as the amount of strategies, tactics, and psychological and factual work play they put in, can turn the whole dynamics of the deal into success.
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capital (VC) and/or HNIs, and acquiring new companies.
We are a sector and stage agnostic investment banking, specializing  in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.
Nucleus Partners is a financial advisory Firm based in New Delhi specialise in providing Fundraising, Venture Capital, Investment banking and Start up financing services

Internet user base in India reached 302 million in 2014: IAMAI

With the growth of the Internet, digital commerce, digital advertising, payments and social media have also seen steady growth over the past year.

The number of Internet users in India rose 32% last year, to reach 302 million, according to the Internet and Mobile Association of India, which includes members such as Google, Microsoft, eBay, IBM, Flipkart, Ola Cabs and LinkedIn.

The Internet in India took more than a decade to move from 10 million to 100 million and three years from 100 to 200 million. However, it took only a year to move from 200 to 300 million users, noted the Association.
Mobile Internet in India also grew significantly last year. The mobile Internet user base reached 213 million by June 2015. The country had 159 million mobile Internet users by October 2014, out of which 119 million users were from urban users and the rest 40 million were from rural India.
With the growth of the Internet, digital commerce, digital advertising, payments and social media have also seen steady growth over the past year.
IAMAI has also said that increase in local language content on the Internet will lead to a growth of 39% in the current Internet user base, with rural India being the primary driver of this growth (75 per cent) while in urban India will grow at 16 per cent.
The local language user base grew at 47 per cent to reach 127 million in June 2015. IAMAI believes that the next set of internet users will come from rural India and the availability of local language content on internet will be the key for the growth of Internet industry in India.
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capital (VC) and/or HNIs, and acquiring new companies.
We are a sector and stage agnostic investment banking , specializing  in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.
Source: http://retail.economictimes.indiatimes.com/news/industry/internet-user-base-in-india-reached-302-million-in-2014-iamai/48772932

Venture capital backers turn to investment banks for deals

Weak business models and a funding slowdown are forcing many Indian consumer Internet start-ups and their venture capital (VC) backers to seek help from investment bankers in order to secure fresh funds from new investors or find buyers.
Last year, several banks including Kotak Investment Banking, Motilal Oswal Financial Services Ltd, Morgan Stanley and others pitched to help fund start-ups as the number of deals and cheque sizes swelled.
Most investment banks, with the exception of Avendus Capital Pvt. Ltd, Citigroup and a handful of others, were unable to strike deals, partly as VC firms and other investors didn’t need much convincing to put money into start-ups.
Investors pumped in more than $9 billion into start-ups over the past two years.
This year, start-ups such as food-ordering app TinyOwl Technology Pvt. Ltd, logistics services provider Roadrunnr (Carthero Technologies Pvt. Ltd) and others that are fretful at not getting fresh funds are approaching investment banks to help them get cash, people familiar with the matter said.
Many VCs such as Sequoia Capital India, Accel Partners and even some early-stage investors such as Orios Venture Partners have sounded out investment banks about helping them find buyers for their portfolio companies that are struggling, the people cited above said on condition of anonymity.
Roadrunnr and TinyOwl didn’t respond to e-mails seeking comment.
Typically, a majority of Start up investment raise cash directly from VCs without the help of investment banks. In Silicon Valley, for instance, investment banks rarely get involved in deals before start-ups list their shares. But as investors are increasingly turning cautious about Indian start-ups, investment banks expect a busy year ahead, especially in assisting with mergers and acquisitions (M&A).
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capital (VC) and/or HNIs, and acquiring new companies.
We are a sector and stage agnostic investment banking, specializing  in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.
We have on board with us a team of accomplished professionals who have previous track record of working on landmark transactions (M&A and Private Equity) worldwide. We have a proven ability to build businesses, intermediate capital and provide value-added strategic advice.

How diluting minority stakes reap millions for startup founders

Bhavish Aggarwal’s 12% stake in the country’s largest taxi booking company Ola, which is valued at $1.4 billion, is worth $168 million.
For founders of high-growth Indian startups, less is more rewarding. A number of founders who diluted their stakes to a minority as a tradeoff for boosting valuations are now worth millions of dollars.
Sachin Bansal and Binny Bansal each hold a 7.5% stake in Flipkart, pegging their individual holdings at more than $800 million (nearly Rs 5,000 crore) based on the $11-billion valuation for India’s largest electronic marketplace.
Bhavish Aggarwal’s 12% stake in the country’s largest taxi booking company Ola, which is valued at $1.4 billion, is worth $168 million.
“Ultimately it is not the percentage ownership but absolute value of founder stake that matters,” said Avnish Bajaj, managing director at Matrix Partners India, an investor in Ola and online classifieds Quikr. “Beyond a point, the best founders are missionaries focused on creating large lasting businesses in addition to just wealth creation.”
Often, the founders have little choice. In startups that have to raise equity capital frequently to fuel growth, founders typically find their stakes diluted to a minority by the third round of fundraising.
“In a high-growth environment where growth cycles have compressed, companies end up burning more capital and have to raise more capital. That implies more dilution,” said Mukul Singhal, who leads early-stage investments for SAIF Partners, which has backed Paytm and Bookmyshow.
Fundraising cycles have shrunk significantly in the past 12 months as Indian startups race for market dominance.
This is particularly true in sectors such as ecommerce and consumer Internet businesses like cab-hailing services and classifieds.
Globally, it is not unusual for founders to own minority stakes in their startups. Travis Kalanick, founder of San Francisco-based Uber, owns an 8-10% stake in the cab aggregator valued at $40 billion.
Alibaba founder Jack Ma’s 7.4% stake in the Chinese ecommerce marketplace was valued at around $13 billion at the time of its public market debut in the United States. Some investors fear that Indian founders may be diluting their stakes at a faster rate than their global peers.
“Large ownerships are sustainable when valuations run up quickly in the early stages. In India, that growth is still gradual,” said Ashish Gupta, managing partner at Helion Venture Partners, an investor in Housing.com, whose chief executive Rahul Yadav owns about 5.5% in the online property search firm that’s valued at $250 million.
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capital (VC) and/or HNIs, and acquiring new companies.
We are a sector and stage agnostic investment bank, specializing in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.
  1. Structuring Business/Financial Plans relevant for VCs/Angel Investors
  2. Introductions with VCs or Angels
  3. Business Valuations Guidance
  4. Sector Insights
  5. Term Sheets or Transaction Structuring
  6. Setting-up Reporting Systems

(Source:http://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/how-diluting-minority-stakes-reap-millions-for-startup-founders/46670943)

Money-guzzling tech startups like Uber, Snapchat ripe for fall?

Hedge funds and mutual funds are flocking to the market’s hottest corner, paying 15 to 18 times projected sales in private-funding rounds » » , fuelling talks of dot-com like crash.
A flood of money from unconventional sources has sent valuations of late-stage technology startups, including Uber Technologies Inc. and Snapchat Inc., to levels that haven’t been seen since before the dot-com crash.
Hedge funds and mutual funds that once shunned venture- style deals are flocking to the market’s hottest corner, paying 15 to 18 times projected sales for the year ahead in recent private-funding rounds, according to three people with knowledge of the matter. That compares with 10 to 12 times five years ago for the priciest companies, one said.
While some of the startups may become profitable, others are consuming cash and could fail. The torrid action is spurring talk that 15 years after the collapse of the Internet bubble, the market may be setting itself up for another bruising fall.
“Some of the valuations are mindboggling,” said Sven Weber, investment manager » of the Menlo Park, California-based SharesPost 100 Fund, which backs late-stage tech startups. Companies now valued at 16 times future revenue could easily lose a third of their value in a market pullback that Weber and others say may occur in three years. The other people asked not to be named because they didn’t want to be seen criticizing competitors’ deals.
Such worries have done little to cool the market. Investors’ appetites have been stoked by jackpots won in initial public offerings. Among the biggest: an almost fourfold $3.2 billion paper profit earned by Silver Lake Management LLC in Chinese e-commerce giant Alibaba Group Holding Ltd.’s record- breaking, $21.8 billion September IPO. It was a quick kill for Silver Lake, coming three years after the private-equity firm’s investment » in the company.
Private values also are soaring. Online scrapbooking startup » Pinterest Inc. raised $367 million this month, valuing the company at $11 billion. Snapchat, the mobile application for sending disappearing photos, is valued at $15 billion, based on a planned investment by Alibaba, according to people with knowledge of the deal. Uber’s valuation climbed more than 10- fold since the middle of 2013, reaching $40 billion in December.
Mutual funds and hedge funds have elbowed into late rounds to boost returns and ensure they can buy blocks of shares in IPOs as competition » for tech offerings intensifies. Fidelity Investments, T Rowe Price and Wellington Management and hedge funds Coatue Management and Tiger Global Management took part in at least 37 pre-IPO funding rounds totaling $5.55 billion from 2012 to 2014.
Nucleus Partners® is a specialized financial advisory firm. We work closely with entrepreneurs in achieving their growth plans by arranging funds from Private Equity (PE) and/or Venture Capitalists (VC) and/or HNIs, and acquiring new companies.

Start  Up Financing

  • Structuring Business/Financial Plans relevant for VCs/Angel Investors
  • Introductions with VCs or Angels
  • Business Valuations Guidance
  • Sector Insights
  • Term Sheets or Transaction Structuring
  • Setting-up Reporting Systems
We are a sector and stage agnostic Investment banking, specializing  in preparing business and financial plans, conducting business valuations as per Indian / international practices, transaction due-diligence, and transaction structuring.

Crowdsourcing is not a numbers game

It may seem counterintuitive, but too much participation can ruin your crowdsourcing efforts. Focus on careful curation rather than a cattle call.
Even the best companies have blind spots. It may even be true that the bigger the company, the larger and more potentially damaging its blind spot. To offset this, firms are increasingly turning to crowdsourcing, in hopes that outsiders will pinpoint innovative solutions or ideas that are difficult to see from within the organisation. And since you never know where the next great idea will come from, it’s best to be as indiscriminate and open-ended as possible when soliciting suggestions from the crowd — or so many companies seem to think.
However, there are two serious problems that arise when crowdsourcing becomes an open invitation. The first is obvious: As the pool of crowdsourced content increases, it becomes harder to give each contribution the attention it may or may not deserve. You could end up overwhelmed, up to your neck in mostly-unusable ideas. But on top of that, my research uncovered a second factor that may cast doubt on the innovation potential of cattle-call crowdsourcing.
The Perils of Crowdsourcing
As crowdsourced contributions cram organisations’ finite attention spans, the ones most likely to contain kernels of innovation are also the most likely to be ultimately ignored. In other words, ideas that represent a departure from the organisation’s status quo are at a disadvantage in the free-for-all battle for company attention.
We arrived at this conclusion based on an unusually rich dataset from a leading provider of crowdsourcing software, tracking how 922 organisations — ranging from city governments to companies from across 14 industries — handled more than 105,000 crowdsourced suggestions from external contributors. Using various methods such as cutting-edge text and network analysis, we analysed how novel each suggestion was for the organisation. We found an inverse relationship between a crowdsourcing campaign’s success in drawing participation and its success in spurring the organisation to go in a new direction.
When their crowdsourcing efforts draw a strong response, organisations experience a condition we call “crowding”— resulting in a pressing need to filter the feedback in order to pave the way for action. But this condition, we argue, goes against the reasons companies adopt crowdsourcing in the first place. Instead of compensating for blind spots, crowding seems to act like a set of blinders, erasing outlying information so that organisations can’t help but move down well-trodden paths.
It’s easy to see why. Consider this example: Faced with a crowded email inbox upon return from a week’s holiday, many of us would tend to turn our attention to the easiest requests first, to get them off our plate. More demanding tasks must wait until we no longer feel pulled in quite so many directions. This effect is compounded in crowdsourcing situations because in many organisations there is pressure to act on a certain fixed percentage of suggestions received. When the pool of crowdsourced suggestions threatens to become unmanageable, employees may feel increased urgency to discharge the quota by taking on ideas that are easily actionable, meaning not exactly revolutionary. Chances are, these sorts of ideas will bring about changes that are, at best, merely incremental.
Crowdsource Smarter
Is it possible to have crowdsourcing without crowding? Yes, if organisations shift their primary focus from achieving the highest possible volume of suggestions to extracting the highest possible value from crowdsourcing. Instead of aiming to gather 10,000 ideas from the crowd, it may make more sense to shoot for 100 ideas from an extremely diverse range of contributors. This goal may require a change in tools: For example, an email sent to a select group may work better than an online platform open to the general public or a suggestion box on a company website.
Organisations may also want to consider more transparent prompts. If innovative ideas are what they’re after, they should encourage the crowd to think big, not incremental. Otherwise, it’s a potential waste of everyone’s time.
Finally, organisations should make relevant employees aware of the possible innovation-killing effects of crowding. This may help them keep their eyes on the goal as they sift through suggestions. On the management side, awareness of the dangers may cause them to reconsider imposing arbitrary quotas on the crowdsourcing process that trigger premature action.
Overall, being more selective about crowdsourcing makes it more likely that you’ll find the diamond in the rough — the unexpectedly brilliant idea—that makes the whole endeavor worthwhile.
(Source : http://www.vccircle.com/news/others/2015/07/24/crowdsourcing-not-numbers-game)

Fund managers hiring consultancies to run background checks on startup promoters

Early stage investors such as Sequoia Capital, Kalaari Capital, Helion Venture Partners, Nexus Venture Partners and Accel Partners, among others, are increasingly running checks on the personal lives of entrepreneurs, wary of extravagant, reckless, raucous, even promiscuous behaviour, before funding them.
They have approached a bunch of consultancies in the past one year to launch a personal due diligence on promoters of companies in which they were about to invest. Such exercises involve an element of stealth, but sources in these funds confirmed that such checks were carried out for most of the investments this past year and red flags were raised in a number of deals. The funds, however, declined official comment.
Consultancies such as Deloitte, KPMG, Kroll and Alvarez & Marsal, among others, which offer behavioural due diligence and forensic diligence, have seen a 20% rise in this business.
Evaluating Qualitative Risks
“Today, funds are backing the promoters rather than the companies, as new-age businesses have limited operating history. In such a scenario, evaluation of the qualitative risks becomes much more important,” said Nikhil Bedi, senior director, Deloitte India. Bedi heads the business intelligence vertical in his company.
Last month, Rahul Yadav, the cofounder and chief executive of Housing.com, a real estate search portal, was fired by the board for repeated instances of rude behaviour with various stakeholders. “The board believed that his behaviour is not befitting of a CEO and is detrimental to the company,” Housing.com said in statement then. The difficulty investors face is that promoters of most startups have no financial background that can be scrutinised.
Bedi said due diligences were even earlier carried out on promoters. With a change in the type of companies being funded and the average age of the entrepreneur, old-school checks have mostly become irrelevant. The number of such diligences by Bedi’s team has doubled to seven a month.
Going Beyond Antecedents
Checks now extend beyond the antecedents of promoters. The experience of seed investors, financialcommitments of promoters and their relationship with the team all come under the gaze of consultants. Dinesh Anand, partner and head of forensic services at PricewaterhouseCoopers India, said in addition to financial records, his team relies on public information. “We talk to professional and social acquaintances of the promoters for such checks.
These are done with the consent of the promoter,” he said. Recently, a global venture fund decided against investing in a company when it found the promoter led a lavish lifestyle disproportionate to the business’ state.
“We realised the promoter was taking home a fat pay package despite the business still being in an early stage and far from being profitable,” the managing director of the fund said. “Such businesses often risk siphoning of money or financial frauds by promoters.” An India-based early stage fund withdrew from investing in an IT services distribution company because the promoter forced his sales team to be unduly aggressive.
“We have observed cases where investment has been withdrawn due to promoters demonstrating certain behavioral concerns at the senior management level. This can potentially impact employee morale as well as the dynamics within the company, eventually affecting the business going forward,” said Bedi of Deloitte. Investors are also checking if promoters are promiscuous.
“Certain aspects of a promoters’ personal life may have an impact on the business in which case funds may ask us to focus on that as part of the due diligence process such as if the promoter has a serious health issue or has a lavish lifestyle which is not commensurate with his position in the company or issues of promiscuity which may impact the reputation of the target business,” said Reshmi Khurana, India head of global consulting firm Kroll.
There For The Money
Anirudh Suri, founding partner at India Internet Fund, an early stage investor, justified the extreme caution in investments. “A lot of people are there just because of the money,” he said, adding that his firm watches entrepreneurs for months and conducts thorough reference checks.
In India, most private equity and venture capital funds own minority stakes in companies. Ergo, enforcing shareholder rights is difficult. The prudence of funds thus isn’t surprising.
In at least one company, difference of opinion between two cofounders was cited as a red flag. Infighting and severe disagreements among promoters involving business plans and strategy can adversely impact the target’s future operations. Investing in such a target without being aware of promoter conflicts can put an investor’s capital at significant risk, said Dhruv Phophalia, managing director, Alvarez & Marsal.
Khurana of Kroll said funds also want to know whether a promoter respects the opinion of board members before taking a decision. “The entrepreneur’s attitude or behaviour with the board is important and often potential investors want to understand how the board functions and whether the promoter consults the board in the manner that would be considered desirable by the potential investor.”
Source : http://retail.economictimes.indiatimes.com/news/industry/fund-managers-hiring-consultancies-to-run-background-checks-on-startup-promoters/48399299