How to Raise StartUp Funding

with No Product
CONTENTS

WHJ Seed Deck.......................................................................................................................................3

VC Outreach Message..........................................................................................................................24
Top Indian VCs who respond.................................................................................................................25
How to Raise StartUp Funding with no product....................................................................................26
 PURPOSE
IMMERSE KIDS IN THE “4TH R”
IN EARLY CHILDHOOD (4-10 YEARS 1)

3R’s:Reading, w Riting, a Rithmetic

+
4th R: algo Rithmic thinking
(coding: logic, structure, sequence creative expression )

Teaching a generation to CREATE vs. CONSUME 1

Note: MIT/HK Early Childhood Development Research ~ Significant improvement in “hard” (mathematics) and “soft” skills (creative expression) among children exposed
to coding.
 PROBLEM
Parents have a strong, latent desire for their kids to master computers at the earliest 1

in the computer age

HOWEVER, EARLY-CHILDHOOD (5-10 YEARS OLD) COMPUTATIONAL THINKING/

COMPUTER RESOURCES ARE NON-EXISTENT OR COMPLETELY FRAGMENTED

Current coding resources for kids less than 10 years old

VIRTUAL CODING
LOCAL CODING
SCHOOLS CLASSES
CLASSES
! <10% of US/India Schools ! Physical limitations 2 ! Very low student
have structured computer engagement 3
! No standard curriculum
courses in early childhood ! Complex for parents to follow
! Expensive
! Structured courses focused ! No H2H element - critical for
on computer literacy vs. early childhood
computational Thinking development

+ STRUCTURAL LONG-TERM ECOSYSTEM PROBLEM: INABILTY TO SYSTEMIZE ABSTRACT

THINIKING/
CREATIVE EXPRESSION RESULTING IN SIGNIFICANT KIDS CREATIVITY DECLINE FROM 5+ 4
(1) Source : Gallup Survey: 9/10 Parents want kids to learn computers; Google “Kids Coding Classes”15% > “Maths Coding Classes”; White Hat Survey Monkey: 90%+ Interest in Computational Thinking starting age 5 ((2) Pre-school coding class in Mumbai, 12km – 1.5
hours from City Center (3) pre-school kids observation session (4) George Land Head Start Study https://www.ideatovalue.com/crea/nickskillicorn/2016/08/evidence-children-become-less-creative-time-fix/
 SOLUTION: LIVE ONLINE for COMPUTATIONAL THINKING

FIRST H2H TECHNOLOGY PLATFORM CONNECTING 5-10 YEAR OLD KIDS TO QUALIFIED TUTORS
WITH STANDARDIZED COMPUTATIONAL THINKING CURRICULUM

Innovation in every layer of product ecosystem

DESIGNED BY EARLY CHILDHOOD CODING EXPERTS
• Curriculum based on Creative Computational Thinking Curriculum.
Focus on algorithmic thinking + creative expression.
CURRICULUM • Created by IIT/IIM Computer Science experts.

DELIVERED BY VETTED KIDS-ENGAGEMENT EXPERTS

• Top 10% of STEM & English Fluent Early Childhood Teachers
• Vetted by rigorous 3 step selection process-a) Interview b) Training b)
DELIVERY Demo

EXECUTED BY H2H PERSONALIZED TECHNOLOGY

• Mobile/ Desktop/ Tablet-enabled Real Time Video Stream
TECHNOLOGY
• Split Screen with Whiteboard/Coding App
• Uploading/Downloading provision for review and assessment
 STANDARD USE CASE

Demand Side WhiteHat Jr Supply Side

(parents) Platform (Tutors)
• Searches for tutors • Creates Curriculum. • Qualifies
• Books a slot • Qualifies Top 10% tutors via • Uploads schedule
• Reviews tutors at end of interview and demo class • Student assessment after
class and “Trains the Trainer”. class
• H2H technology connects
Avg. US price: $21 per class Avg. US pay: $14 per class
Avg. INR: Rs. 500 per class students to tutors Avg. INR: Rs 350 per class

(1) Prices pegged based on competitive analyses: Student pricing in line with alternatives; Teacher pay 40% higher than alternatives.
 WHY NOW?
STRUCTURAL CULTURAL TRANSFORMATIONS CAUSING UNPRECEDENTED DEMAND SURGE;
MASSIVELY UNDER-UTILIZED SUPPLY SIDE CAN BE TAPPED WITH TECHNOLOGY

Demand Surge Under-utilized Supply

(parents) (qualified K5 STEM tutors with low wages)
• Curriculum: Unprecedented parental coding • Wide disparity in Teacher Income within India & US allowing
interest significant pool of STEM qualified, low-income teachers.
− Gallup 2015: 90% of parents want kids to learn − India Teacher Income in Non-metro($2.2/hr) 50% < than metro.
coding − US Teacher Income(25% below average: <$24/hr) in high school
− Surge in offline coding tuition start-ups in 2017/18 density markets: South Dakota ,Mississippi, Oklahoma, etc.
(limited by scale) - 24 Countries (Lego Research).
India: 10+.
•Additional India Significant Supply Pool: Under-employed
− 2m+ downloads of top early childhood coding
STEM College Grads, IT Moms(3MM+)
apps.

• Low Teacher wages in English-fluent, Top STEM Markets

− Teacher Salary(<$10/HR): Romania, South Africa, Malaysia.

(1) Source: TRAI (Feb’18) (2) Source: GSMA Intelligence (2017)

 CURRICULUM PACKAGING/PRICING

Per Level Coding Package

Typical Tangible Kid
Age Creative Class duration 21 mins/class
Level Group Concepts Outcomes
Total classes 50
Commands, Board Game,
Beginner 5-6years 2 classes/week
Loops, Conditions Pictures Structure
for 6 months
Algorithms,
Pattern Characters, INDIA US
Intermediate 7-8 years
Recognition, Animation Student Price per class 1 Rs. 500 $21
Abstraction

Variables, Events, Teacher Cost per class 1

Rs. 350 $14
Advanced 9-11 years Games, App
UI Design
(Per Hour) (Rs 700) ($28)

Gross Margin 30% 33%

(1) Prices pegged based on competitive analyses: Student pricing in line with alternatives; Teacher pay 40% higher than alternatives.
 Management Team
Karan Bajaj
(CEO, Founder)
• Discovery India CEO, bestselling
novelist
• 15-years P&L/ operational
experience across India & US:
P&G, BCG, Kraft-Mondelez,
Discovery.
• Selected Top 40 Under 40 (Fortune
US; Ad Age US); Top 35 Under 35
(India Today).
• #1 Bestselling Novelist
• Education: BIT, IIM
Anurag Shukla
(VP, Engineering)
• Lead Technology Team at various
startups and created
scalable systems.
• 10+ Years Technology Experience
• System Architecture and Product
User Flows
• Built more than 100 websites and
apps
• Hacking since age 7. Won
National Level Hackathons
Curriculum Team:
Computer Science +
Early Childhood Experts
• Josna Vaz (Mobile): B Sc.
Computer; American School of
Bombay Tech Integrator.
• Gauri Parulkar(Beginner): Computer
Engineer; Founder, Kids Science
Quotient
• Dr Farida Umrani (Intermediate): IIT
Computer Research Scientist; K8
Computer Curriculum Expert.
• Abhijeet Gawande(Advanced):
Engineer; K12 Robotics/ML Expert
 MARKET SIZING: Immediate $3 Billion+ Market

Global Roll-out: India/US/UK/China

India/US: Mobile Solution

India/US: Laptop,
Desktop , Tablet Solution
$12.1b
$8.0b
$3.1b

TAM SAM SOM

(Total Available Market) (Serviceable Available Market) (Serviceable Obtainable Market)

• Markets: US, UK, China, India
• Target Audience: 4-10 Year Olds;
Top 15% India/China, Top 30% US/
UK.
• Markets: US, India • Markets: US, India; Metro Cities
Only
• Target Audience: 4-10 Year Olds;
Top 15% India, Top 30% US. • Target Audience: 4-10 Year Olds;
Top 5% Households in India; Top
15% in the US.

(1) Assumes 45% Churn Rate from Classes; 30-40% lower pricing for Middle Market Solution; 50% Addressability from city targeting

Phase 1: Prototype Test
TIMING Jun 1-June 30 2018
OBJECTIVE Product Market Fit Gut-Check
BUSINESS • Reach: 91 Students
KPIs • Paid Conversion: 57%
• Qualitative: Excellent
ALL KPIs EXCEEDED SIGNIFICANTLY
PRODUCT • External solution: Skype +
Kodable
ROADMAP
• Manual Scheduling/Payment
FUNDING <$10k: Self-Funded
NEXT STEPS
Phase 2: India/US Top 4 City Scaled
Phase 3: India/US Top 20 City Phase 4: Deep India/US with
Launch with External Solutions
Expansion with Owned Product Mobile Solution
25,000 Students , 2500 Teachers
Nov 5-Mar 1 st 2019 Mar 1’2019+ Jul 1’2019+
Full PMF and Financial Validation Scale with owned IP/Build Data Critical Escape Velocity with Mass
Solution
• CAC: $110(US); $27.5(INDIA) • 2019 RUN RATE: $100MM • TBD
• LTV: $329(US);$105(INDIA). • EBITDA: 25%
• Churn: 56%
• GMV: $1.2MM/Month
• Breakeven: India(M5), US(M5)
• External Solution: Zoom + • Bespoke Whitehat VC + Coding • Mobile Enabled Platform
Code.Org Platform •
Deep Learning Algorithms to
• Student and Teacher Portals with • Deep Learning Algorithms to auto-suggest engagement
scheduling & payment auto-suggest engagement improvement
improvement
$1.3MM: External Funding TBD TBD
 COMPETITION
WHITEHAT JR WILL FILL WHITESPACE IN H2H STEM

Competitive Advantage
Human-to-Human

H2H First-mover: Platform Network Effects

BLUE OCEAN
Strong IP at every stage: Curriculum(Phase
2); 1 st Ever VC + Coding Product(Phase
3);Mobile Solution+ Deep Learning/
Data(Phase 4).
Machine-to-Human

Proven CEO with global expansion

experience

Non-STEM STEM/Coding
Jun Prototype Results: Blockbuster Interest & Conversion

Test Results
Test: Mumbai/Bay Area Plan Actual Index vs Plan
www.whitehatjunior.com/betaus Demand
7-Day Paid FB Significantly
6 Teachers, 90 Students Marketing
Campaign
1-day Organic FB Posts
Exceeds
Expectations
Sign-Ups 60 91 152
Paid Conversion
20% 51% 255
Rate

"Great initiative
but don't know Significantly
Qualitative "Kid loves it. This is what
how to measure Exceeds
Feedback he needs everyday."
kid progress and Expectations
outcomes"

User Reviews
“My kid is ahead of the curve. This is exactly what he/she needs.
School doesn’t cover this”
“I’ve seen a change in my kid in the last 3 days—he’s creating
steps even on simple things like eating a banana”
Test Learnings: Improvements for Phase 2

Issues Phase 2 Improvements

1. Manual Scheduling & Payment ✓ Automated Technology & Payment

2. Kids Engagement Highest in Creation ✓ Switch code.org/blockly; Prep Owned

vs Coding Platform with creation at center.

3. High Variance in Teacher Conversion ✓ Stringent Teacher Selection Criteria

• 20-75% • Only 10% Selection Rate

4. (Not in test) Tangible Outcomes ✓ Tangible Learning Outcomes

• Games, Animation, App Design
• +Create Test Pool: Kid-created
Physical Artefact(shipped to parents
at extra cost)
 PHASE 2: FUNDING FLOW
~ 85% of funding spent in core business metrics vs fixed assets to test/
Unit Economics
establish business model scale-ability
Monthly Cost % of Paid Conversion Rate 30%
Sep Oct Nov Dec Jan Feb Total
Phasing($) Total

Curriculum 12,955 10,955 10,955 10,955 10,955 10,955 67,731 5% CAC: India(Student+Teacher) $27.5

Technology 8,633 8,633 8,633 8,633 8,633 8,633 51,976 4% CAC: USA(Student+Teacher) $110
Salary/Office 16,915 16,915 16,915 16,915 16,915 23,134 107,711 8% Margin/Student/Class: India $3
Net Acquisition Margin/Student/Month: US $7
- - 63,835 229,470 512,883 271,916 1,078,103 83%
Working Capital
LTV: India $105
Total Costs 38,533 36,533 100,368 266,003 549,416 314,668 1,305,522 100%
LTV: US $329
# Students - - 1,000 4,000 10,000 10,000 25,000 -
Breakeven: India M5
# Teachers - - 100 400 1,000 1,000 2,500 -
Breakeven: US M5
Churn Rate - - 30% 15% 10% 10% 45% -

GMV Total - - 113,851 535,099 1,525,031 2,267,395 -

Net Revenue - - 36,955 173,690 495,015 735,982 -

 Founding Team Structure

Identified/
In Place
CEO Hiring in
Progress

Senior Directors,
Curriculum (4)
-Beginner(Mobile) VP, Growth Hacker VP, Teacher Ops
VP, Product VP, Engineering (Teacher Recruiting,
-Beginner ( Student acquisition) Vetting & Training)
--Intermediate
-Advanced
APPENDIX
 Beginner Curriculum (4-6)|50 Classes

16 16 16
6 Commands
Sequence 6 Loops 5 Test, Debug

4 Pattern
Recognition 6 Animation 5 Conditions

5 Algorithm
Decomposition 2 Internet Safety 4 Functions

1 2 3
Rule book for
Draw a picture
a Game
2
Functions Song
1 using 2D shapes 2 - Algorithm (Snake &
with its algorithm
Ladder)
 Intermediate Curriculum (7-8)|50 Classes

16 16 16
5 Decomposition 4 Pattern
Recognition 2 Digital Footprint

4 Command
Sequence 8 Conditionals &
Loops 6 Abstraction

6 Algorithm
Debugging 2 Responsible
internet use 5 Events

1 2 3
Animation of
3
Create Picture
1 Create a Marvel
character
2 Story Book
Play Book for
Play Equipment
 Advanced Curriculum (9-11)|50 Classes

15 15 15
3 Sequences 5 Events 3 UI Design

3 Variables 6 Conditionals 7 Properties

9 Loops 4 Functions 5 Debugging

1 1 3

1 Game 1 1 Game 2 3 APP

 TECH DETAILS
Phase 1 Prototype
• Basic Landing Page
• Skype + Kodable
• Manual Scheduling & Payment

Phase 2 Phase 3 Phase 4

Early usable version Whitehat Jr video conferencing solution • Mobile Enabled H2H
• Homepage • Build bespoke solution using WebRTC and remove existing Deep learning makes better teachers
• Student and teacher off shelf provider to manage costs** and students
portals with scheduling, Whitehat Jr block-coding platform • AI/ML Models to recommend courses
and payment • Feature parity with Scratch Jr and Kodable • Automated Reports by the End of
• Curriculum Creator • Derive an outcome after taking the course course
• Feedback for Teachers • Allow children to build more detailed stories than Scratch • Performing Analytics on video, audio,
and Student Jr and monitor activity during
• Portal works on Web • Teacher-Student match algorithm. classes.Prompt suggestions (during a
Browsers • Build longer narratives class) to the teacher to increase
• One click from portal to • Create Games which eases out the learning curve of engagement/efficacy.
start class that Children • Providing Feedback to Parents about
integrates conferencing • Reports for Children after every course the course
and coding • Build Internal Process and Panels to solve operational • Add support for new curriculums
• Timer and Alert problems • Support syntax highlight for new
Mechanism • Seamless UX for Payments and Scheduler languages
• Data sourcing for ML/AI Models
 Phase 2 Top 4 City Roll-out: Detailed Plan

INDIA US/International
Phase 2 Student Markets # Premium Students(MM) Student Test Markets # Premium Students(MM)
Mumbai 0.36 New York 0.52
Bangalore 0.19 Bay Area 0.3
Total 0.549 Total 0.82

# English Fluent, STEM Expert Avg. Wage/30

Phase 2 Teacher Markets #STEM Qualified.
Teachers(MM) US Teachers mins
Premium Teachers
Mumbai 0.016 Teacher
Delhi 0.012 Mississippi 0.03 $10
Kolkata 0.001 Oklahoma 0.04 $10.5
Bengaluru 0.006 Bucharest, Romania 0.02 $1.5
Chennai 0.007 Cape Town, South
Hyderabad 0.005 0.02 $2.5
Africa
Pune 0.003 Kuala Lumpur,
Ahmedabad 0.001 0.05 $2.5
Malaysia
Surat 0.001
TOTAL 0.16
Vishakhapatnam 0.001
Total 0.054
VC Outreach Message
 Top Indian VCs who respond
1. Nexus (my founding investors-deep product thinkers and incredibly founder-friendly):
Anup Gupta and Pratik Poddar

2. Omidyar (my 2nd founding investors- deeply values-driven and respectful to entrepreneurs):
Siddharth Nautiyal, Sarvesh Kanodia, Namita Dalmia

3. Matrix (extremely responsive and rapid decision making):

Rajat Agarwal , Vikram Vaidyanathan

4. Blume (strong, clear investment thesis):

Sajith Pai

5. Sequoia (true believers of global category plays from India):

Rajan Anandan, Ravishankar GV
How to Raise StartUp Funding
with No Product
THE DETAILED BLOG
My 3rd novel, The Seeker, was rejected sixty-one times in the US. Eventually, Penguin Random House, published
it worldwide after 42 months of nearly daily revisions. Four years of life gone in publishing a novel!

I found the startup fundraising process much more sane in comparison.

It took 60 days from idea to securing $1.3 Million seed funding for WhiteHat Jr. And this was in late 2018, well
before the incredible funding momentum we’re seeing now in India.

What a golden time to be an entrepreneur! For any would-be entrepreneur with an idea and energy but no
product or team yet, I hope this post can be of some value to go from idea-to-secured funding in rapid timing.

1. Create a Low Fidelity Prototype (14 Days)

I spoke to a friend the day I had come up with the idea of WhiteHat Jr, shortly after giving my notice to Discovery.

He said it was too small.

Coincidentally, I had a meeting with a large tech company CEO the next day for a project for Discovery, who I
was convinced would “get it”. The CEO said coding for kids was years ahead of its time for India and it would
never work.

So I did what I should’ve done the moment the idea had come to me.

I took it to users.
Startups always lie at the edges of systems, not at the center of it. So people’s opinions, even experts, are
seldom useful.

I hired a website designer on Upwork, the freelance platform, and created a demo version of the website
overnight. Soon after, I contacted a teacher, who ran her own Science classes, and created the first version of a
6-class coding curriculum with her, using Zoom and Scratch.

We were ready for our Beta!

WhiteHat Jr 1st Prototype

Our low fidelity product took 2 weeks to make from the day of the idea.
Your actual timing will vary based on your product. But I’d argue the simplest version of your product, often a
zero-code solution, will take a fraction of the time and resources you think it will. You just need to cut off all the
superfluous stuff.

“The sculpture is already complete within the marble block, before

I start my work. It is already there, I just have to chisel away the
superfluous material.”- Michaelangelo

2. Get Your 1st Paying Customer to create a category (14 Days)

With a live website, I posted about free trial coding classes for kids on my personal Facebook page. We filled up
our limit of 30 students and manually scheduled trial classes with the teacher (who later became my very valued
1st employee!). Soon after, we had our first paying customer. The customer paid the teacher the old-fashioned
way– with a bank transfer.
WhiteHat Jr 1st Paying Customer Email

I had a strong intuition then that we could create a category.

We just had to replicate the process of finding the one customer at scale.
Today, WhiteHat Jr operates in many countries and categories. But the basic framework of advertising for a trial
class, an engaging trial class with a live teacher, and a creation-oriented curriculum that kids love, has stuck.

If you have just one paying customer, you can likely create a global category with millions of users!

Just scale what worked for that one user. That’s all you need to go confidently to the next step.
3. Reach out Cold to Venture Capitalists and Close the Deal! (30 Days)
We grew the pilot to thirty paying customers over two weeks. Then, I approached venture capitalists completely
cold on LinkedIn.
Six out of ten VCs I reached out to responded to the cold outreach above.
My odds would’ve probably been higher had I used my IIM networks. But I’m poor at asking for help, a lingering
and I’d say rather foolhardy legacy of my extensive reading of Aristotle’s view of the Ideal Man in college (“He
takes joy in doing favors to other men, but he feels shame in having favors done to him by other men”- A)

You can–and should–increase your odds with your networks!

Contrary to public perception, I found almost all Indian venture capitalists extremely responsive and courteous,
both in their acceptance and rejection. I highly recommend the following exceptional early-stage investors. They
were incredibly quick to respond and deeply astute in their evaluation, even if some of them rejected my pitch:

Within a month of pitching (you can see WhiteHat Jr’s seed deck here), I had my first term sheet. Easier than
getting a novel published! But unlike a novel where a book deal is almost the end of the laborious process,
getting a funding deal is barely the start of building a company. I don’t remember celebrating either my Seed
or Series A funding rounds for even a day, there was almost so much more to get done! And funding was just
a small milestone indicating the next stage rather than a destination of any consequence. But early funding did
make the journey later less harder, so I hope this is useful for aspiring entrepreneurs debating whether to take a
plunge.

Do let me know if this was useful! Also, what stage of idea generation are you in? Is funding your biggest barrier
or is something else holding you back? Do drop me a note in the comments-I’d love to hear from you!