October 28, 2006

Canaan Partners launched "Entrepreneurial Challenge"

Canaan Partners has launched "Entrepreneurial Challenge", a value-added Business Plan contest, in partnership with TiE.

"The objective is to identify entrepreneurs who have made a start and can now scale fast with a little bit of help," says Alok Mittal of Canaan. "It has been my experience that most business plan events end on the day the competition ends. By bringing the right partners in place, we will attempt to provide mentorship and capital support to businesses, and try and make the event finals a starting point rather than a culmination."

Click Here for more information.

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

October 21, 2006

The 18 mistakes that kill start-ups - by Paul Graham

Paul Graham has an article on common mistakes that are often fatal to start-ups.

Guess what's No. 1 on the list?: Having a Single Founder (Ouch!)

What's wrong with having one founder? To start with, it's a vote of no confidence. It probably means the founder couldn't talk any of his friends into starting the company with him. That's pretty alarming, because his friends are the ones who know him best.

But even if the founder's friends were all wrong and the company is a good bet, he's still at a disadvantage. Starting a startup is too hard for one person. Even if you could do all the work yourself, you need colleagues to brainstorm with, to talk you out of stupid decisions, and to cheer you up when things go wrong.

The last one might be the most important. The low points in a startup are so low that few could bear them alone. When you have multiple founders, esprit de corps binds them together in a way that seems to violate conservation laws. Each thinks "I can't let my friends down." This is one of the most powerful forces in human nature, and it's missing when there's just one founder.


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.

The Right CEO? - by Sanjay Anandaram

Extract from the Indipreneur column (No. 4) by Sanjay Anandaram in the Financial Express:
Most entrepreneurs (especially wannabees) believe that they should naturally be the CEO of their venture because “hey, its my idea and my company!” Really? are you indeed the right CEO to steer your entrepreneurial dreams to success?

...You have to decide, and early on at that, who ought to be the CEO. Usually, good friends get together and do a startup. The chemistry is great, there is shared vision and commitment and there is no real decision making process or hierarchy. This works well initially but there needs to be someone who is more equal than the others. This is not as easy as it sounds as equity holdings in the company are a direct function of responsibility. So, another set of questions to ask yourself and of the (potential) team members: Are you willing to be replaced by more professional management if need be to help the business grow? Will you move aside if proven to be less than able? Are you open to hiring your own replacements? After all, your commitment must be to creating a successful business and you should be willing to do the right thing for the business. What is good for you need not be good for the company while what’s good for the company will always be good for you!

Click Here to read the full article.

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.

Is Entrepreneurship for You? - by Sanjay Anandaram

Here is the draft of the third installment of Sanjay's Indipreneur column for the Financial Express.

Is Entrepreneurship for You?

by Sanjay Anandaram

September 18th, 2006

Lets face it: all the talk about entrepreneurship and of being in charge of one’s own destiny can be heady stuff. There’s the hype, glamour, cool-factor, and even sex-appeal associated with announcing “I’m an entrepreneur and on my own” when everyone else around you is dishing out their corporate cards. But is a startup for everyone? Here are some pointers to help you decide if a startup is for you. Or, if you are better off wherever you currently are.

First, you don’t decide to “become an entrepreneur”, it happens; It’s not a job; It’s not a switch you can switch on and say, “I think I’ll become an entrepreneur; I have reached financial security”. The passion and desire to accomplish a goal are the key drivers. Lets look at some of the traits.

Passion: This is the key requirement. You must feel the burning need to be a successful entrepreneur deep in your bones and believe in yourself, the team and the opportunity. You must be willing to be consumed by the business especially in the formative years. Passion will help cope with the excitement and glamour of a startup as distinct from the reality. Why should people leave their jobs and join you? Remember, passion can be infectious!

Resource constraints: Are you willing to give up a cushy corporate lifestyle and the accompanying trappings and luxuries? Are you willing to deal with situations where your new business card no longer gets you appointments in a hurry? Are you willing to manage with limited resources, handle the immense pressures on your time and yet “give it all you have” performances? Are you willing to have your quality of life negatively affected? Are you physically and mentally healthy to handle the stress and long hours? What are you willing to give up to achieve your dreams?

Self-confidence: Do you have the self-confidence to realistically believe in your capabilities and harness the opportunity in the market? Can you communicate this self-confidence to your team mates? To your customers? Do you have the self-confidence to convince hard-nosed investors that they’re looking at the opportunity of a life time? Can you deal with rejection?

Humility: Are you humble enough to learn from others? Even if they are much younger? Are you willing to listen to others? Are you humble enough to go knocking on doors asking for help and advice? Are you willing to suspend your ego and contribute to the building of the company? Or do you think, “Taking out the garbage is not my job; I’m the CEO? Or, I was the CEO of this big company?”

Team Player: Are you individualistic or are you a team player? Do you share or hoard information? Do you help others on your team with their jobs? Is there trust between team members? Is there a single minded focus and belief on the objectives and goals in the team or are you there for your personal agenda? Can you delegate with confidence?

Knowledge: Do you have the required functional and business knowledge and expertise? Are you capable of spending time with customers and others to learn? Are you aware of the market, business and technology dynamics and trends? Can you command the respect of the board, investors, and others with your knowledge and awareness?

Time Sensitivity: Are you sensitive to the most valuable resource, namely time? Can you make quick decisions with less than perfect and inadequate information? Are you willing to change all 4 wheels of a moving car?

Communication: Are you an effective verbal and oral communicator? Can you communicate with your team, motivate and charge them? Can you communicate with the board and investors effectively? Can you convince customers, partners, and others of the value proposition of your company?


So, do you have it in you? What do you think?
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Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.
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"Who Wants to be an Entrepreneur?" - by Sanjay Anandaram

Extract from the Indipreneur column that appeared in the Financial Express dated September 8, 2006:
With India in the throes of historic changes, there are opportunities all around for the entrepreneur willing to take the chances. With so much money waiting in the wings to be deployed into Indian entrepreneurs, the financial risk too is minimal.

In addition, the current and projected job market offers a safety net to those did-not-succeed-the-1st-time entrepreneurs who want to temporarily park their ambitions; Socio-cultural barriers to entrepreneurship too are definitely fading away as role models abound in various domains and entrepreneurship becomes the chosen path for many. The only remaining risk therefore is the one in the mind—of fear, uncertainty, and doubt (FUD).

Entrepreneurs know that the FUD factor in their minds can be addressed through knowledge, teamwork, and a can-do attitude. As the tired cliché goes, in today’s India, the biggest risk is in not taking one.

Click Here to read the full article.

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.

October 20, 2006

"The Indiapreneur" column by Sanjay Anandaram

Sanjay Anandaram, one of the earliest entrepreneur-turned-VCs in India, writes a regular column for The Financial Express. I will be linking Sanjay's columns on the FE web site (whenever I can find the links) here. Else, with the author's permission, I will post the entire draft.

- Arun

Here is the first installment of the column (First published August 25th, 2006 The Financial Express).

The Indiapreneur by Sanjay Anandaram

As India’s enters its 60th year as an independent nation, it faces perhaps one of its most interesting challenges. What should the vision and destiny of a 60 year old country be when half its population is less than 35 - the world’s largest population of young people? What should a country offer its young people as a role model in the year when, arguably, its most celebrated entrepreneur – not businessman! - chose to retire this year?

For the first time, India is emerging as a world scale market as well as a world class supplier to the world in a variety of goods and services. Reams have been written about the great possibilities ahead. Sound bites by hyperventilating anchors fill the air waves. Various reports and analyst comments are bandied about as proof of our impending arrival on the world stage. While, these are all still in the realm of potential and possibilities, there is an unmistakable all round sense of being able to compete with the world’s best especially among the educated young people.

For the first time, an entire generation of young people cutting across class lines is acutely aware of the opportunity ahead of them. They also recognize the inscription on the other side of the coin: RISK. And it’s not a four letter word anymore. While earlier generations were defensive and inward looking, this generation is aggressive, outward looking and not given to the self-doubts of the past. This is the “why not?” generation. This generation has the potential to lead India to heights that are greater than anything we have achieved till date.

For the first time, innovation has entered the lexicon of Indian companies and management. It has become almost fashionable to talk about innovative practices in companies. But, in an era when intellectual property creation holds the key to success in many fields of economic activity, we need to be sensitive to the need for innovation. However, real successful innovation requires an entrepreneurial mindset. And an entrepreneur is one who assumes risk and the management of it to drive a business.

And it is no surprise therefore that for the first time, we’re seeing educated first generation Indian entrepreneurs emerge on the scene to take advantage of the golden opportunity and parlay their vaunted technical and managerial skills into world-class businesses. The IT entrepreneurs showed that entrepreneurship can help India ethically create new businesses, many new jobs, and create wealth in society. Telecom has, similarly, demonstrated world class entrepreneurship. Other sectors of the economy too are responding to these changing winds. Industry associations, academia, and investors are responding to the possibilities and needs of entrepreneurship. International funds of various hues have arrived to commit over $2 billion of sophisticated capital to entrepreneurs.

But a lot, lot more needs to happen if entrepreneurship is to become broad-based and to generate wealth across the board. Wealth creation takes place through entrepreneurship, not through babudom. The 2nd independence (from license raj and gut wrenching bureaucracy) of India that occurred in 1991 allowed some intrepid entrepreneurs to create wealth and jobs. But where will the next jobs come from when 70 million more people will join the ranks of the workforce in the next 5 years if not from entrepreneurial activity?

As India stands at the cusp of incredible opportunity, we must realise that this ethical wealth creation process across sectors of the economy needs whole hearted encouragement. Unleashing the energies of the young generation into productive economic activities is an imperative. Countries like the US, UK, China, Israel, Taiwan, Korea and Japan have demonstrated what entrepreneurship has done to their countries.

However, we must first learn to celebrate entrepreneurship and entrepreneurs. Role models and successes need to be highlighted. But, while doing this, we must also learn to celebrate failures. Setbacks are inevitable in the course of creating successful enterprises and navigating these successfully is the hall mark of great entrepreneurs. Creating such a celebratory mindset and a culture is imperative to fostering entrepreneurship.

This column is devoted to entrepreneurs, entrepreneurship, and in general to an entrepreneurial approach to problem solving. It is dedicated to the Indian entrepreneur – The Indipreneur.
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Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.
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Meet top Venture Capital investors at Mobile VAS Connect - Bangalore; Dec 12, 2006

The Mobile VAS sector has emerged as one of the favorite sectors among venture capitalists. However, there are several significant challenges facing the sector - including in the basic business models bring adopted, skewed relationships with operators, etc.

In this context, Venture Intelligence Mobile VAS Connect, scheduled for December 12 in Bangalore, presents an ideal platform for leading Venture Capital investors and top executives from Mobile VAS companies to network, discuss and share best practices.

Confirmed panelists include top executives from Sequoia Capital India, mportal, Nazara Technologies, Helion Ventures, Paymate, ACL Wireless, Phoneytunes, etc.

Who Should Attend?
• Venture Capital funds looking to invest in IT and Mobile Services companies
• IT and Mobile VAS companies planning to raise VC financing

For more information, click here

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

October 19, 2006

"Founding Member" versus Founder

Angel investor Ram Shriram is invariably referred to in the media as "Founding member of Google's Board". A search for "Founding Member Google" throws up even more strange ones like "A founding member of Google's UI team", "founding member of Google's product team", etc.

While I have great respect for Ram Shriram (he was among the few investors who stuck to the consumer internet thesis when everyone was trying to distance themselves from "dotbombs") - I dislike this "founding member" business.

Either you are a founder of a start-up or not. Please don't dilute the word with these attempts at proxies.

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.

October 18, 2006

Looking to raise Venture Capital for your product?


Looking to raise Venture Capital for developing / marketing your technology product? Then, apply to demo your product at


DEMO
@
Mobile VAS Connect
December 12, 2006
Bangalore

Apply to demo your product to an exclusive audience - consisting of leading Venture Capitalists, Investment Bankers and experienced entrepreneurs - as part of Mobile VAS Connect.

For more information, Click Here

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

October 12, 2006

Do you really need an investment banker?

Fabruce Grinda strongly recommends that an entrepreneur - even if he/she is a "former investment banker or someone with significant M&A experience" - to use a banker when selling a business. (I think this applies when raising Private Equity/Venture Capital as well.)
(Avoiding conflicts with the buyer) is the single most important reason to use bankers. Negotiating a sale of a company is one point in time at which your interests are not aligned with those of the buyer. It is very easy for the negotiation to turn acrimonious.

The sale of the company is not the end game, but only one step in its development. You will have to work with the buyer for the foreseeable future and must thus maintain a good relationship with him.

Whether negotiating the price or the details of the stock purchase agreement (SPA - representation and warranties, etc.), I always let my lawyer and bankers take the lead in the discussions. This way I can blame everything on them – they are greedy and difficult while I am the reasonable guy willing to make compromises.


Speaking from the context of a US-based VC, Brad Feld thinks entrepreneurs should use an agent if they raising late-stage capital, but go direct if they are raising funds for a start-up.
Many early stage VCs - especially those that are in saturated geographies and see a lot of deal flow – don’t pay much attention to deals that are promoted by an “investment agent.” I know a number of folks who simply “hit delete” on an email (the virtual equivalent to tossing the physical PPM – the document most agents insist on putting together – in the trash.) In the early stages, the entrepreneur is by far the best fundraiser for his company and there is a knee jerk negative reaction by many VCs against early stage deals that “require” an agent. At the early stage, an entrepreneur is much better served by finding an advisor (or set of advisors) or angel investor that has good VC connections and fundraising experience who can get actively involved in the company as advisor, board member, consultant, or even chairman.

Later stage companies and larger capital raises are a different story. The universe of later stage investors is very dynamic – consisting of corporate (strategic) investors, high net worth individuals, private equity firms, and hedge funds – in addition to later stage VC firms. Many firms enter and exit the market regularly for a variety of reasons (e.g. a number of hedge funds have recently started doing what traditionally look like late stage / mezzanine VC deals). An agent who is active at raising later stage capital will typically have some relationships with folks currently in the market, can run the drill of identifying the primary suspects for the entrepreneur, and can help manage what is typically a more complicated and less structured financing process (e.g. there often isn’t a clear lead investor in a later stage deal.)


Update: IDG Venture's Jeff Bussgang has more on this topic here

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.