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Showing posts from March, 2005

Nirma Labs: An incubator that advertises and charges fees

While the incubation programs at several of the country's business schools are figuring out their model, NirmaLabs, located in the Ahmedabad, Gujarat based Nirma University campus, has come up with an unique model that actively seeks out and markets itself aggressively to entrepreneurs. NirmaLabs is taking out prominent advertisements campaign in leading business magazines as part of its efforts to seek out "individuals (and) groom them to be a global player in select high tech fields, and incubate them to create viable high tech ventures by providing a nurturing environment and needed support."

More from the NirmaLabs web site:NirmaLabs is a not-for-profit Section 25 Company set up by Nirma Education and Research Foundation (NERF). NirmaLabs has been established with an objective to nurture talented individuals in their pursuit of high-tech, knowledge-based wealth generation. NirmaLabs has a corpus of over Rs. 5 crores earmarked to incubate promising individuals and pro…

Why VCs are jerks, according to Paul Graham

Paul Graham, co-founder of ViaWeb (acquired by Yahoo for $50 million), has figured out why (most) VCs are jerks. The problem with VC funds is that they're funds. Like the managers of mutual funds or hedge funds, VCs get paid a percentage of the money they manage. Usually about 2% a year. So they want the fund to be huge: hundreds of millions of dollars, if possible. But that means each partner ends up being responsible for investing a lot of money. And since one person can only manage so many deals, each deal has to be for multiple millions of dollars.

This turns out to explain nearly all the characteristics of VCs that founders hate.

It explains why VCs take so agonizingly long to make up their minds, and why their due diligence feels like a body cavity search. With so much at stake, they have to be paranoid.

It explains why they steal your ideas. Every founder knows that VCs will tell your secrets to your competitors if they end up investing in them. It's not unheard of for VCs…

John Doerr's presentation at Stanford University

A must see presentation from the famous KPCB partner behind Amazon.com and Google.

Just one extract:Entrepreneurs do more than anyone thought possible with less than anyone thought possible
UPDATE: The fact that Doerr celebrates entrepreneurs as the real heroes (and does not behave like a celebrity himself), earns him respect from even those folks who hate the VC breed in general. "I've met a few VCs I like. Mike Moritz seems a good guy. He even has a sense of humor, which is almost unheard of among VCs. From what I've read about John Doerr, he sounds like a good guy too, almost a hacker," allows Paul Graham, co-founder of ViaWeb (sold to Yahoo for $50 million), in his recent article attacking VCs titled "A Unified Theory of VC Suckage".


Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

Paul Graham on starting up

Paul Graham, co-founder of ViaWeb (acquired by Yahoo), has a nice article on starting a start-up. Some Extracts:

On Ideas
An idea for a startup, however, is only a beginning. A
lot of would-be startup founders think the key to the
whole process is the initial idea, and from that point
all you have to do is execute. Venture capitalists know
better. If you go to VC firms with a brilliant idea that
you'll tell them about if they sign a nondisclosure
agreement, most will tell you to get lost. That shows
how much a mere idea is worth. The market price is less
than the inconvenience of signing an NDA.

Another sign of how little the initial idea is worth is
the number of startups that change their plan en route.
Microsoft's original plan was to make money selling
programming languages, of all things. Their current
business model didn't occur to them until IBM dropped it
in their lap five years later.

Ideas for startups are worth something, certainly, but
the trouble is, they're n…

"It’s all about the long tail"

Joe Kraus, co-founder of search-engine firm Excite, has a nice post advising entrepreneurs to pay heed to The Long Tail phenomenon and "think about how to serve millions of markets of dozens instead of dozens of markets of millions".

"The most interesting, transformative businesses that have been built over the last decade and that will be built over the next one are going to operate in and make money from the long tail. Google, eBay, Amazon, Rhapsody, Netflix, iTunes. What do they all have in common? They all work the long tail and they’re all radically changing the dynamics of their more traditional businesses."

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

"Be wary how much you reveal to VCs"

Boston.com has an article warning entrepreneurs not to reveal too much about their business plans to VCs, who might wind up passing on your ideas to competing firms.

The article provides the example of Brian Barth, co-founder of online travel technology firm, SideStep, who had a series of meetings with partners at VC firm General Catalyst.

In 2003 and 2004, Barth had a series of more than 10 meetings and phone conversations with partners at General Catalyst, a Cambridge venture capital firm. (Barth remembers three meetings with Joel Cutler, a founder of General Catalyst, and three with Terry Jones, a partner at the firm who was formerly the chief executive of Travelocity.com.)

Barth says that Cutler and Jones never told him they were working on a travel idea of their own, even when he asked them directly about a rumor he'd heard through the grapevine. (In their version of the story, Cutler and Jones were simply meeting with Barth to explore the possibility of investing in SideStep,…

Profile of Jet Airways founder Naresh Goyal

Times of India has a profile of Naresh Goyal, Founder of privte airline Jet Airways, which recently pulled off a successful IPO.
This is undoubtedly a great achievement for a man who first stepped into the aviation industry when he joined the Delhi-based Continental Travel — an agency floated by his mother's uncle. After a short stint there, Goyal established his own airline agency, Jetair.

Nursing greater ambitions, Goyal then went on to set up a domestic airline in India when the government opened up the skies to private players. Having staved tough competition from the state-owned behemoth Indian Airlines and rival private carriers such as East West Airlines, Jet today has established itself as one of the most profitable and successful airlines in India.

"Goyal never ran his airline," says Kapil Kaul, senior V-P, Centre for Asia Pacific Aviation. "I see him as a man who possessed a vision. Back in 1993, when other start-ups were inducting Boeing 737-200 aircroreaft,…

Indiagames and its investors

Business Standard has an interesting article which touches upon the relationship between Vishal Gondal, the founder of Indiagames (now 80% owned by China's Tom Online), and the company's VC backers, Infinity Ventures and IL&FS.

Some extracts:

How Gondal met with the VCs:Hollywood is a long way from Chembur and might have remained so had Gondal not “bumped into some suits” from PricewaterhouseCoopers, the management consultancy, in 2000. The consultants offered to introduce him to new investors, and the result was seed funding of $750,000 from IL&FS Investment Managers and Infinity Ventures, both Mumbai-based private equity funds.

How the investment changed Gondal:“For me, the arrival of investors was the most valuable MBA education anyone could have,” he said.

The clashes:The investors were keen to develop Indiagames as a source of “advertorial” games, a business model that relied on online games designed around consumer brands. But that model did not survive the dotcom c…

Policy Nonsense

Terry Gold has a great post on how "Company Policy" is something that ends up irritating customers and employees rather than provide order to the business...There are other meanings to the word "policy." It can be used to mean "I don't want to hear your problems or your opinion." It can mean "I'm not even going to tell you who made up this rule. It wasn't me, and if I did know who to talk to about it, I'm not in a position to try to get it changed." At its worst, it can mean "tough, go away if you don't like it."...

...We don't have a lot of policy at Gold Systems because I think most issues are best handled with the latest facts and the best judgment. To try to create Policy in advance of a situation is very difficult. I'm all for process, guidelines, plans, principles, but for me Policy is too limiting in most situations.
Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity …

Welcome move to free start-ups from service tax

The proposal in the latest Indian Union Budget to exempt service providers with up to Rs 4 lakh gross turnover from charging service tax, is a highly welcome move from two aspects:

1. It frees start-ups from the need to bother about service tax registration and payments until they figure out their business model (and hence viability).

2. Service tax is, on paper, supposed to be born by customers. However, start-ups - which typically do not enjoy pricing power - are often forced to "swallow" the service tax component in their pricing, in the process killing whatever profit margins they might enjoy.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.