August 20, 2007

Why are VCs arrogant?

In a posting on the rising popularity of VC Rating site thefunded.com, Jeff Bussgang explains why.
Why are VCs often arrogant? Is that what they teach us at VC breeding schools? I think some of it is just the nature of the business. As I mentioned in my post “Dr. Seuss and The Land of No”, VCs have the job of saying “no” hundreds of times for every “yes” that they fund. To be efficient, they are trained to say “no” quickly and not waste time on projects they simply don’t like or don’t believe in. Whether you believe in a project or not is such a subjective standard, that it can always be open for debate and argument. But VCs can’t afford to have debates and arguments about projects they don’t like, they must quickly, unemotionally move on to the next one.

Entrepreneurs, on the other hand, are emotionally attached to their projects and wired to believe that what they are working on is the absolute best thing going on – after all, they chose to work on it at the expense of every other new start-up or job they could have pursued. Thus, it is hard for them to contain their natural enthusiasm over why what they’re doing absolutely deserves to get funded. And nothing is more frustrating for a “walk through walls” entrepreneur than to be dismissed by a VC, no matter how graciously.


His solution?
The trick, therefore, is for VCs to simply treat entrepreneurs with R-E-S-P-E-C-T. That’s all entrepreneurs are askin’ for. Just because a VC may not like the idea, or even the person hawking the idea, doesn’t mean they shouldn’t treat them with decency and respect. On the flip side, the entrepreneurs should remember that it’s the VCs job to sift through hundreds of opportunities and spend time only on very few. If it’s not a good fit for them, move on. That’s why TheFunded has struck a chord.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 18, 2007

TiE-ISB Business Plan competition

Extracts from the press release:

TiE-ISB Connect is back with its highly successful business plan competition. Entrepreneurs are invited to submit a maximum of 5 page abstract of their business idea to TiE-ISB Connect Committee to qualify for an elevator pitch with leading Venture Capitalists in November. Applications for the 2007 business plan competition are available at www.tie-isbconnect.com. The last date for submission of Business Plans is 31st August 2007.

The competition is designed to encourage entrepreneurs in the creation, start-up and early-growth stages of businesses. Participants have a chance to win face to face interaction with leading VCs and Business Leaders for finding capital and strike business alliances that will help them launch and grow their businesses. The TiE-ISB Connect '07 conference, organized by the TiE-Hyderabad Chapter and the Wadhwani Centre for Entrepreneurship Development at ISB, will be held at the ISB Campus on November 14-16, 2007.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

August 13, 2007

Interview with One97's Vijay Shekhar Sharma

Venture Intelligence featured an interview with Vijay Shekhar Sharma, Founder & Managing Director of One97 Communications as part of the July issue of the US-IVCA / Venture Intelligence India VC report. One97 is one of the pioneering start-ups in the Indian Mobile VAS space and recently raised its first round of funding led by SAIF Partners.

Some extracts from the interview:

VI: How were you funding the company until now?

VSS: We were the first company to put a revenue sharing model in place with operators. That gave us recurring revenue and made the company cash positive.

VI: What were your challenges in fund raising?
VSS: Two challenges: first, deciding on the network the fund could provide and second, the kind of size commitment they can make for future investments. A third factor was the comfort with the VC: what kind of team it was, the chemistry between team members, the kind of person who will come onto our board. The VC on the board becomes your everyday business partner.

VI: How does One97 compare with VAS providers in advanced markets?
VSS: The good part about being in India is that we are at curve of extreme innovation. There are all ranges of audience to serve - very high tech users to ultra low tech users. So our organisational DNA is built around serving such extreme requirements.

I am sure – similar to IT services – the “skilled Indian manpower” story applies to the VAS / mobile applications as well. Applications with high R&D and high efficiency requirement applications are definitely going to come out of India. Given (SAIF’s) support and general business guidance, we can come out with universal applications from India too.

VI: Can you talk about your expansion into China?
VSS: The mobile customer base in China is significantly large - four times more than what we have here (in India) today. We will be able to do long tail services…and we can have a scalable model. This along with our partner’s (SAIF) networks and capabilities, make China a preferred destination for us.

VI: How would you differentiate your firm vis-à-vis your competitors?
VSS: In the short to medium term, our investment in technology is our differentiating advantage. In the long term, our strength will be operational efficiency and lead-time/new use cases of technology and features in our application development.

VI: What do you think will be the key drivers impacting your sector over the next 3-5 years?
VSS: Right now, entertainment seems to be the primary area of VAS. In the future, utility services and every day applications will be the key drivers. SMS is already an integral part of life. This in turn opens up possibilities for applications in areas like microfinance and other parts of the value chain. Customer growth will be a driver too.

VI: When do you anticipate your next funding event?
VSS: There are two parts to it. One, we are specifically looking at taking over a small to medium sized firm for growth. That can happen tomorrow or next month, but whenever that happens that would call for a round of funding. Secondly, for funding our linear scalable growth.

VI: How did you become an entrepreneur?
VSS: In 1997, while still at college, we raised funding from a VC in the US for an India-focused search site Indiasite.net. It was ranked number one in 1996-97 at various places on web. We later sold the site to India Today and the company to Lotus Management LLC.

I then turned to telecom because the Internet was already being perceived as a “bubble” and was getting crowded. Also, there was money in telecom even for three lines of content, while in the Internet space, there was a monetization gap.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 11, 2007

Give your start-up the gift of time

Fred Wilson has a nice post, based on his experience with three of his investee companies, on how start-ups often take several years to fulfil their potential.

Time works for you if you have the patience to stay focused on the opportunity in front of you, if you have the tenacity to work through the inevitable hurdles you’ll face, and if you have the right kind of financial backers. Time allows you to recover from misteps, to build a team, to generate revenues, and even earnings. And when you've done all that, you'll have the wearwithal to choose when and how you want to exit from the business because you'll be selling a business instead of a team or a product or a feature.

So, if you are starting a company, prepare for a marathon, not a sprint. Take a deep breath. Commit yourself to the long haul. Let time work for you.



Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

August 10, 2007

Alternatives to Venture Capital

Businessfund.com has a post on the "Top 25 Alternatives To Venture Capital".
Venture capital is not for everybody. For starters, venture capitalists tend to be very picky about where they invest. They are looking for something to dump a lot of money into (usually no less than $1 million) that will pour even more money right back at them in a short amount of time (typically 3-7 years). You may be planning for a steady growth rate as opposed to the booming, overnight success that venture capitalists tend to gravitate toward. You may not be able to turn around as large of a profit as they are looking for in quick enough time. You may not need the amount of money that they offer or your business may simply not be big enough.

Simply put, venture capital is not the right fit for your business and there are plenty of other options available when it comes to finding capital.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.

August 01, 2007

Starting a private limited company

Deepak Shenoy has put up a very useful post on the process of starting a private limited company in India - with a specific focus on creating a company that plans to have external investors.

He also links to a World Bank resource - doingbusiness.org - that summarizes the procedures and costs associated with setting up a business in various parts of the world. Here are the Bangalore and Chennai pages.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the Private Equity and Venture Capital ecosystem in India. View sample issues of Venture Intelligence India newsletters and reports.