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Showing posts from November, 2005

"Make your VCs accountable"

Jeff Bussgang recommends entrepreneurs "not be shy about holding their VCs accountable". Just as the board of directors evaluates the CEO/entrepreneur every year for their performance against results, the CEO/entrepreneur should have the license to evaluate their VCs for their performance. Who did they help recruit? What business development introductions did they make? Were they proactive in giving critical strategic advice? Were they available and responsive when needed for emergency issues?

The article also points out how VCs apart from being answerable to investors in their funds (the "Limited Partners" or LPs), also have to answer to their partners. In a VC partnership, each VC is investing the money of their peers as well as theirs, and affecting the overall results of the fund. And so while an LP may not hold a VC accountable for periods shorter than 6-10 years (the period after which fund performance is well-known), VCs are accountable to their partne…

"One founder usually not enough"

Bangalore-based incubator/early-stage fund Erasmic has decided it will not invest in any company which has just a single founder. Subrata Mitra, Founder & CTO of Erasmic said at a recent presentation at a TiE-Chennai event that this decision was driven by the founders' past experience with their own start-ups plus, given their small fund size ($3 million), Erasmic's ability to take risks was that much lower.

Vineet Buch of BlueRun seconds this in his blog post:The best tech companies were founded by two people. Oracle, Cisco, Sun, Microsoft, Google, Yahoo ... the list goes on. One is usually not enough, three is acceptable, but having four founders can lead to committee-think - the antithesis of creativity. So, my entrepreneur friend, the first thing I recommend is finding a co-founder who has complementary skills and with whom you are comfortable spending your evenings and weekends. Munjal and I complemented each other perfectly while brainstorming on Ojos (a.k.a. Riya…

ICICI's unique loans for R&D

Businessworld has an article on ICICI Bank's "Sponsored Research and Development" (SPREAD) program that has "helped companies like Biocon, Shantha Biotech, Neuland Laboratories and Samtel lay their foundations".
Now SPREAD loans are being used for innovative products and processes only a few companies in the world have developed or, in some cases, are now developing. For example, Strand Genomics in Bangalore is using the loan to develop new methods of predicting the toxicity of drugs. Proalgen Biotech in Chennai is using the loan to manufacture natural beta-carotene in very large quantities. Electronica Mechatronic Systems in Pune is developing very precise magnetic tapes for measurement. And so on. These companies would definitely sell their products in the Indian market, but their technology would be contemporary enough for them to sell in the global market too.

It is not difficult to see the impact of these projects on the Indian industry, as early stage fun…

"VCs have the best PR machine in the world"

Jeff Cornwall has a nice post pointing out that Venture Capital gets much more attention that it deserves (from entrepreneurs seeking financing, that is):

I often think that venture capitalists must have the best public relations machine in the world.

Only a tiny fraction of a percent of entrepreneurial ventures ever get or need venture capital financing, and yet the two most common phrases that come out of most aspiring entrepreneurs mouths are "business plan" and "venture capital." It is as if the venture capitalists have done such a good job of branding that their product name has become common speech for financing a business (like Kleenex for tissues and Xerox for copying).
Arun Natarajan is the Founder of Venture Intelligence India, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Why your Business Plan should just be a PowerPoint

David Cowan of Bessemer Venture Partners has some great advice on why Business Plans – at least those presented to VCs – should be in PowerPoint format. He also has some nice tips on what the slides should talk about. There is also a nice discussion happening in the comments section of the post where David critiques a BP submitted by one of the readers.1. The cover slide should offer complete contact info, and a tagline if you've got it. One of the benefits of a powerpoint plan is that it forces you to perform the critical exercise of describing the business in very few words.

2. A mission statement is a good idea to present, unless it's rather obvious from the tagline (as in BlueNile.com: Education, Guidance, Diamonds and Fine Jewelry). Select a mission statement that is achievable, but not yet achieved....

A clear mission statement also includes a clear idea of what the startup will NOT do. Here are some nice ones...

"Prolexic will create and dominate a new network service…

Hiring in India; Tips from an "in the trenches" entrepreneur

Gaurav Bhatnagar has a great list of practical tips for hiring for a startup in India; especially hiring programmers.
Hring in a hot market like India is especially hard. And for startups, even more so. My experience has been quite in contradiction with common wisdom. And my experiences are probably more relevant for startups and small companies which do not have an army of recruiters and which do not need to hire by the 100s (if not 1000s).

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

US recruitment firm specializes in "angel employees"

With Internet-based services companies back in favor among US VC investors (a phenomenon aka "Web 2.0" or "Bubble 2.0"), can service providers and wannabee start-up executives be far behind?

Scripps Howard News Service has an article on PeopleConnect, an exectuive search firm that actually has a branded program called "Employees Without Paychecks" that focuses on placing executives and tech professionals who are willing to work at start-ups without pay until the clients' VC funding comes through.

PeopleConnect is the first search firm to market a program of recruiting employees who will work for equity. "A friend of mine calls them 'angel employees,'" (PeopleConnect CEO) Max Shapiro, said, comparing them to angel investors, who fund early-stage companies.

... Shapiro markets the Employees Without Paychecks program to early-stage companies that, like Commendo Software, are just a few months away from seeking venture funding. He selects …

Entrepreneur-turned-VC launches blog

Alok Mittal, the co-founder of JobsAhead.com (acquired by Monster.com in 2004) and now a venture capitalist with Barings India Private Equity, has launched a blog titled VentureWoods.

In one of his early posts, Mittal talks about "Band of Angels India", a group of successful entrepreneurs and executives (of which he is a member) with a passion to invest in and mentor early stage businesses.
The application process to BoA involves sending in an executive summary to any of the members (yes, investors themselves take decisions here, there are no “investment managers”) and convince them that what you have is a potentially successful business. The member than “sponsors” the proposal to the whole group. Members in the group make individual decisions on whether to invest in any particular opportunity — for example, 4 members may decide to fund a given venture. The members continue to be involved in the mentoring process.

Typical deal size at BoA is less than Rs 2 crores. We expect hi…