Stating this while delivering a talk on financing of internet start-ups atthe India Internet World, Abhay Havaldar, prominent venture capitalist andpartner, Draper International, said that funds can be best utilised only ifthey are long-term and mature in nature.

Havaldar said that another important factor to be kept in mind is theexpected rate of return from the asset. "The RoR should be atleast equal tothe price of the source of finance," he asserted.

Elaborating on the manner in which a venture capitalist picks an investmentopportunity, Havaldar said, "a venture capitalist ranks growth potential asthe most important factor and looks at the future while making a decision."For securing capital, Havaldar outlined a comprehensive blueprint forpotential internet entrepreneurs. The four main points: Understand yourrequirement for funds, then define where you are in terms of the stage ofthe project, be creative in structuring your plan and focus on yourimmediate concerns.

While asking for funds, a start-up must focus on what he needs in terms offunding. "Be clear on what you want - don't come asking for amounts that arefantastic and not needed at the very start," he said.

"A start-up needs to be focussed and must be seen as big. As much as 80 percent of ideas are rejected due to the fact that the guy does not think big,"said Havaldar.

Emphasising the need to sell a business plan effectively, Havaldar said thatearly stage businesses have complex evolving plans. "Target the plan at aspecialist as first stage plans require more selling as against later stagebusiness plans which are less complex and can be evaluated easily," hesaid.

Other qualities that a venture capitalist looks for is the strength tocreate a team, track record and the amount of ambition/paranoia. "We use anassociation test, where we try to figure out whether one would like toassociate with a guy outside the business relationship," he said.

He said a venture capitalist funds an entrepreneur and not the business,adding that the internet gives vast opportunity to build companies which arenot hindered by geographical boundaries. But while doing so, theentrepreneur must remember that while the platform is global, so iscompetition.