December 22, 2008

Investment Banking Handbook & Directory - Updated Version

Venture Intelligence has published an updated edition of its Investment Banking Handbook & Directory.

The handbook is as an authoritative and comprehensive guide for both entrepreneurs and Private Equity / Venture Capital firms to choose Investment Banking Partners.

The directory section consists of an alphabetical listing of all active India-focused Investment Banks including contact name, address, phone numbers, e-mail and website details.

To download the Handbook, please visit http://www.ventureintelligence.in/ibdirectory.htm

November 22, 2008

Startup Lessons from Obama - By Sanjay Anandaram

The world exploded in media fuelled hyperbole on November 4th when Senator Barack Obama became the 44th President elect of the United States. How a black man (actually he’s half white) finally got to the most powerful position in the world became fodder for myth-making and over-the-top expectations. But what got lost in the frenzy, as often happens in cult-building, are the details.

How did a young (Obama’s 47), inexperienced (he’s a first time Senator with less than 3 years experience as a US Senator), half-black man with no pedigree take an established political structure (both in his own party as well as in the opposition) manned by very experienced and canny people and finally deliver a resounding victory? There are lessons that can be learnt especially for entrepreneurs around the world:

1) Understand the opportunity and the need: In 2004, George Bush defeated John Kerry by harping on the theme of national security. Kerry helped by being a less than inspiring leader. By 2006, the mood in the US and around the world had changed. The war in Iraq was becoming more unpopular by the day, the shifting positions of the establishment on the war against terror and the worsening state of the economy started shifting popular opinion against the incumbent. Obama quickly grasped the unpopular mood and realized that there was huge momentum building against the policies of the government. He then went to work.

2) Focus: He kept the focus first, on the deteriorating state of the economy secondly, on the unpopular wars. His message didn’t change right till the end.

3) Broad-based, articulate, and calm Messaging: He came across as a thoughtful and articulate person who appealed to and energized a wide cross-section of voters. His personality and demeanour was calm and composed. He didn’t get upset or rattled.

4) Target Audience: Obama understood that the demographics of the US was changing with more secular, younger and multi-ethnic voters than ever before. He had to get access to this large group and then get this group to act cutting across political affiliations. His campaign had people physically reaching out to people, verifying their eligibility and making sure that they came out to vote.

5) Technology: To reach this spread out diverse group of young people, Obama’s campaign used technology extensively. Over 10million names were identified for email reach-outs, social networking sites like Facebook and MySpace were extensively used to reach out to over 4million people. Bloggers and sites like YouTube too played a big role

6) Funding: Obama raised over $700m for his campaign. Most of the money came from millions of people around the US making small donations. Technology was extensively used with his web-site allowing people to make contributions.

7) Team of Advisors, advocates and personal background: Realising that he needed to get top class advice on various policy matters, he built up a formidable array of experts and advocates. From Google’s Eric Schmidt to Lawrence Summers (former Harvard President, US Treasury Secretary and Chief Economist of the World Bank) and to legendary billionaire investor Warren Buffet to talk-show queen Oprah Winfrey (who it is said contributed to at least 1 million votes) to people from the entertainment world. He himself is from Columbia University and Harvard Law School.

8) Relentless execution: Over the past 2.5 years, Obama and his campaign team have relentlessly executed their game plan, travelling the length and breadth of the country including to the opposition strongholds and were almost flawless. Every detail was thought of and actions were swift.

9) “Luck”: is what happens when opportunity meets preparation. As the banking system, the home markets, the economy and finally people’s confidence started crumbling Obama was prepared. Bush’s 25% approval rating reflected the mood of the country for the past 2 years ever since Obama began his campaign. He was prepared to act and move when the opportunity arose. His opponent was still harping on the tired themes of 2004 when the battle was for 2008 and beyond. By the time, John McCain too started reacting to the terrible situation all around it was perhaps too late.

India’s has the world’s largest population of youngsters i.e. below the age of 35 estimated at about 500m+. Do our leaders represent the hopes and aspirations of this group? India needs several Obamas!

What do you think?

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.

November 16, 2008

"Time is the greatest enemy"

Chris Douvos, Co-Head of Private Equity Investing at The Investment Fund for Foundations, has an open letter to the CEOs of the portfolio companies of the funds he's invested in.
Indeed, the ingredients of any business are: ideas, people, capital, and time. And of those elements, time is the most immutable, the most obstinate, the most tyrannical. They’re just not making any more of it!

You have but one weapon against this cruel oppressor: focus. In good times, managers don’t have to focus as acutely because the creation of good stuff outstrips the slouching to disorder. The great all-weather managers, on the other hand, have to focus because they realize that time is really expensive and when the creation of good stuff slows, entropy lies in wait. Choose what to do and what not to do. Just choose quickly and be explicit about your choices.

We’re all in this together. Your success becomes my success (less, ahem, the GP carry) and I’m rooting for you. You guys are the beating heart of the entrepreneurial economy. You guys rock nonstop. Stay focused and be careful out there; you’re facing the greatest enemy of all: time.

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.

November 04, 2008

Sunil Mittal Interview to Knowledge@Wharton

Inspiring Stuff! Must see.

Couple of nuggets:

* It's a good idea to try and partner large cos.

* As a start-up, when there is a choice to be made between speed and perfection, always go for speed.



(Hat Tip: Pluggd.in)

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.

October 31, 2008

Underdog Advantages - By Sanjay Anandaram

The young CEO of the young company showed me an email from one of his senior team members. The email had a ring of anxiousness around it:
“ With so many big players now entering the market, I don’t know what we can do. All our customers will leave us. The bigger companies have more money, are far better known than us, have a national presence and have so much more experience. I think we should seriously look at an exit”
The company was a little less than two years old, had raised about Rs 2 crore about 18 months ago, the team had an average age of 26 and was one of the first companies in its market segment. I asked the CEO what he thought of the email and whether others in the company too felt the same way. He didn’t tell me what he thought but he was clearly perturbed. Others in the company too felt that it would be an uphill battle for them from now on and becoming martyrs in a battle with the incoming larger corporations didn’t appeal to them. The CEO was undoubtedly disappointed and upset at the loss of “fighting spirit”, “entrepreneurial fire” in his team. But he believed in what his company was doing, every experience in the last two years had convinced him that his company was rendering a much needed service to customers, existing players in the market had recognized his efforts and had approached his company for partnership and customers were writing in to say that they loved what his company was doing.

But he was also pragmatic, if nothing. He too didn’t want to become a casualty in any war with the bigger companies. But he wasn’t going to quickly fold up and go away at the mere possibility of the larger companies entering “his turf”. After all, there was a lot of emotional energy and belief that had been poured into the company in pursuit of a vision.

Lots of startups and companies are confronted by such moments of truth that determine their future course. It is the strength of leadership and the courage of conviction that is tested in such moments. Obviously, a healthy dose of pragmatism is mandatory – living to fight another day is a better strategy than foolishly dying on the battle field. Where pragmatism ends and irrational faith begins is a line that man has tried to fathom since time immemorial, but there indeed is such a line and the specific circumstances determine where and how it is drawn.

Was the startup therefore all just worth nothing now that the market landscape was changing with the entry of the larger players? Did the company really have no options or any weapon in its armour? Did the company really believe that it would never have any competition?

Every startup has its own set of cards to play with, though many just don’t realise they hold these cards! Here are some of these cards:
  • The startup has no legacy and heritage to lose. Therefore, the company can try radically new things without any fear.
  • A niche opportunity (e.g. a geography or a customer segment) may not be attractive for a large company to focus on but can be very attractive for a startup to conquer and build a beachhead on.
  • The entire top leadership team can be mobilized to attend to problems which cannot happen in large companies due to the bureaucracy involved.
  • Speed of decision making and execution are one the biggest advantages that a startup has and should use
  • Flexibility in operations again a function of speed and lack of bureaucracy. Doing whatever course-corrections are necessary to achieve the goals. There’re no policies and long meetings to decide on any changes
  • Lower costs of operation
What do you think? Can you come up with some more advantages that a startup enjoys vis-à-vis the larger companies?


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.

October 22, 2008

Interview with NEA-IndoUS' Vani Kola

NEA-IndoUS Ventures has had a busy 2008 announcing investments in eight companies across sectors such as publishing outsourcing (PreMedia Global and Pressmart Media), software for educational institutions (Idenizen), online services (Seventymm), Communications Tech (Connectiva Systems and Bay Talkitec), Financial Services outsourcing (Basiz Fund Services) and waste recycling (Attero). Venture Intelligence’s N. Sriram spoke recently to NEA Indo-US Ventures Managing Director Vani Kola to learn more about the firm’s latest investments. The full version of this interview is to appear in the next issue of the India Venture Capital Report.

Venture Intelligence: Tell us more about Attero Recycling. Has this kind of business been VC-funded elsewhere?

Vani Kola: It’s the first of its kind in India for sure. This business is pretty much in existence in many countries in Europe but I cannot confirm whether they have been PE or VC funded. We are excited about this investment as India doesn’t have a proper solution for e-waste management. Nor do we have a proper recycling system for the e-goods that we use.

VI: You seem excited about outsourcing opportunities in the publishing industry. What is driving your interest in this sector?

VK: There are certain industries where the cost models are going through radical changes just like it happened with the IT industry. Publishing is one such space. Even with the advent of online news and online consumption of information, publishing still has a strong role to play. The cost models have changed fundamentally that India, as an enabler in the publishing industry, will continue to grow as a destination, much the same way as IT did. We are glad that we are early in that trend.

VI: Isn't selling to Indian educational institutions a tough business? What excites you about Idenizen?

VK: I agree that selling to educational institutions in India is difficult just in terms of how they adopt these kinds of solutions but we also understand that there is a need for different kinds of solutions in these institutions. What excited us about Idenizen was that they pioneered a very interesting business model. It is such that there is no cost to the educational institution at all and the benefit accrues to students if they pro-actively adopt next generation technology and solutions. The offer that Idenizen makes is that “we will bear the investment cost of setting up the solution for you as a college and if your students derive value from it, they will subscribe to it”.

VI: How does your investment in Basiz Fund Services correlate with the current environment for hedge funds in the US? Is this a play on their being forced to outsource more, given the tougher investing and fund-raising environment?

VK: It is similar to what we were discussing about publishing. Fund management companies in the US are facing cost & skills crunch. Cost cutting is where the arbitrage with India can be very effective. There are many companies in India rendering general purpose financial accounting services for companies in the US but Basiz is providing specialized accounting services to fund management companies.

VI: Given the turbulence in the airlines sector, how you do view your investment in Via?
VK: Via’s market-share in the overall pie is small and it has got ample scope to grow. Even though there is a slowdown in this aviation sector, there are people to be served who are always on the look out for cheaper airfares.

VI: Given Vinod Dham's background, we expected NEA-IUV to make some semiconductor-related investments. Can we expect any investments in this sector in the near future from your firm?

VK: It’s a sector that interests us, but we have not yet found any interesting opportunities. If we find interesting investment opportunities, we have no problem in considering it.

October 20, 2008

Growing Knowledge - By Sanjay Anandaram

It is fashionably said that we now live in a Knowledge Economy. Where value is created not by gaining access to proprietary information or by political wheeling-dealing but by better utilizing in-depth knowledge of a subject, market and process. Ideas and innovation are key and central elements of this economy.

Now how do ideas and innovation emerge? They emerge from insights and observations. From asking questions and challenging assumptions. From imagining possibilities. Insights generally come from individuals while ideas are developed and shaped by groups. Innovation usually requires an organization of some sort to deliver on ideas. It is therefore critical that each individual learn to be insightful and be able to ideate in groups for innovation to occur. Only a prepared person recognizes when opportunity or serendipity knocks on the door. Preparation, in turn, implies that one must be aware, informed and knowledgeable.

How does then the current financial and economic crisis around the world affect us in India’s entrepreneurial ecosystem? What are the different options ahead of us? What can we do to deal with the situation?

We must first be aware there’s a problem. We must then be able to assess the likely impact on our businesses and then group together to generate ideas – hopefully innovative ideas – to not only survive but prosper when the conditions improve.

One cannot be aware, informed and knowledgeable if one doesn’t read, introspect, discuss and debate. Through this process ideas and innovation emerge. Now the big question: How many of us really read? And I don’t mean this in a facetious or in a facile manner. Reading not simplistic headlines that reduce knowledge to the equivalent of instant noodles. For example, how many of us read about and try to understand the economic landscape of our industry? How many of us read to understand the technical issues in depth? How deep is our understanding of issues that concern their industry? In addition, how much do we read about and how aware are we of the broader environment – markets, customers, technology, regulatory and legal aspects, processes and subject domain areas? Do we read case studies of different businesses, understand entrepreneurial experiences and journeys, observations and actions by investors, learning about investment matters and so on.

Ideas come from multiple sources and being widely read certainly helps a big deal. In a larger sense, to abstract the learnings to create transferable and usable models and templates, to apply experiences from one area to another, the ability to see things as multiple shades of gray and not just black and white, to understand nuances, to avoid making simplistic assumptions, to have a historical and socio-cultural context since these are very important requirements to be able to “see” and appreciate the possibilities of innovation around.

Without knowledge and awareness, our focus tends to be on the transactional, on the here and the now. Our focus will be on treating everything as an unnecessary cost without being able to distinguish investments from costs, assets from expenses. We cannot develop long term thinking and strategies. And without long term thinking, we will continue to muddle through and somehow manage to do things without getting the full benefit of the value creation. And this muddling through, in turn, will ensure that we will not be able to build businesses that can truly take advantage of the knowledge economy.

There’s an interesting Chinese proverb that says:

If you want 1 year of prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you want 100 years of prosperity, grow people.

We, in India, have created a billion plus people. Now we need to grow them to become insightful individuals who can develop and shape ideas and play important roles in the creation of the innovative industries. Growing people requires an investment in knowledge and awareness creation.

Can each one of us in the entrepreneurial eco-system decide to start reading?

What do you think?

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.

October 07, 2008

Symbiosis business plan competition

Symbiosis Institute of Business Management is running a business plan competition for working professionals and startups.

This event seeks to provide an opportunity for working professionals/start ups to pitch to venture capiltalists for seed funding. Participants are given an opportunity to present their B-Plans to an eminent panel of venture capitalists for a period of 8 minutes.

The winning teams would get :
- Funding of Rs. 5 crores
- 30 minutes to present before the core team of Seedfund in Mumbai.

Participating Venture Capitalists :

Seedfund | NEA-IndoUS Ventures | IndiaCo Ventures Ltd
Indian Angel Networks | Canaan Partners

For more information Click Here

October 05, 2008

Understanding the Critical Factors of your Business - By Sanjay Anandaram

In the late 1990s, a large number of internet entrepreneurs emerged in India, spurred no doubt, by the successful acquisition of Indiaworld by Sify. All of these young entrepreneurs were convinced that they had the makings of the next Yahoo or Amazon (Google wasn’t that big then!). With very impressive looking web-sites the only thing missing for success, in their minds, was the money. Almost everyone who started an online business in that period believed that THE critical factor for business success was in building a really good web-site which would generate traffic (eyeballs) which in turn would lead to advertising revenues and then the magical acquisition!

But hardly anyone survived that era. And the very few that did, are doing rather well. All those who’re still around and flourishing realized early on that having a good looking web-site wasn’t the most critical factor for the business since the reality in India was rather different. PC and Internet penetration was very low and broadband was unheard of; fulfillment of online transactions had to be managed through a complex network of vendor and supplier relationships, online advertising revenues were mythical and internet payments weren’t going to happen because apart credit card penetration was abysmal and the infrastructure to process payments online wasn’t up to the mark. Therefore they figured out two things - an alternative mechanism for generating revenues and the need to also have an offline or physical world presence. Building a web-site was the easy part, ensuring reliable service and fulfilling customer needs was a very different kettle of fish indeed.

Fast forward to 2008. There still are a lot of consumer internet sites that haven’t internalized the lessons of ten years ago. A lot of startups are also chasing the same dreams in the Mobile Value-Added Services (MVAS) area.

Lets take another example from the last 12 months. Realising that travel was going to be a hot sector, this company invested heavily in acquiring state of the art vehicles. They then launched a web-site and unleashed a marketing blitz that included very attractive prices and options. Sales started booming and the vehicles were on the road all the time. The vehicles started developing small problems which then became big problems. The company had not invested in creating an auto workshop to cater to matters of minor repairs and overhauling. Every time a problem arose, the vehicles had to be sent to the manufacturer for checks and repairs, replacing parts, tuning and the like. Naturally these resulted in delays leading to vehicles being off the roads and very high costs. The company now realizes that having its own workshop, mechanics and spares leads to far lower costs and much faster vehicle turn-around times.

A fast food company decided to be different from the competition by focusing on the guaranteed delivery of its food within a certain number of minutes of an order being placed. Else, the customer received the food free. They then advertised this heavily and soon enough orders started pouring in. The company poured its energy and resources in meeting its promise of guaranteed delivery within the promised time. Given the conditions in India, the costs of ensuring this started mounting. The company invested more in planning its delivery routes, restaurant locations and in technology. It was able to, in general, honour its time commitment. But then sales started slowing down. Upon researching the reason, they found that most customers didn’t like their fast food anymore. The company had focused so much on its logistics that it had ignored the fundamental reason for its existence, namely quality and tasty food! In addition, those who were ordering the food were those customers who weren’t very profitable to the company since they ordered low margin items.

It is important in each business therefore to understand what the critical factors for success really are. Many times, the reasons that appear to be attractive are just mirages while the “unglamorous” activities of the business are the most critical. It is important therefore to really understand this and spend time and energy in ensuring that these activities of the business are built on a solid foundation.

What do you think?

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.

September 20, 2008

Outlook for Indian Corporate Venture Capital - By Sanjay Anandaram

While VC funds have played a critical role in the creation and sustenance of companies in the US, it would be a gross oversight to miss the role that US corporations, especially in Silicon Valley, have played in engendering and nurturing innovative startups. From hi-tech companies (e.g. IBM, Intel, Microsoft, Cisco, SAP, Motorola, Google) to bio-tech and healthcare (e.g. Dow Chemical, Johnson & Johnson, SmithKline Beecham, Pfizer) to publishing and media (e.g. Reuters, EW Scripps, McGraw-Hill, Disney, Sony) to aerospace and defense companies (e.g. Boeing, Lockheed Martin) to energy (e.g. Chevron, BP) have played an important role in furthering innovation in the US. According to PricewaterhouseCoopers and the National Venture Capital Association, in the first half of 2008, corporate venture capitalists were involved in roughly 300+ companies or 20% of VC deals signed and invested over $1 billion or 7% of overall venture capital dollars invested in US companies. Even the CIA spun out a venture capital fund called In-Q-Tel in Silicon Valley about a decade ago for investing in next generation companies!

Over the past couple of years, the funding environment for Indian startups has changed dramatically. There are funds across the entire chain – angels to early stage to growth and beyond. The ecosystem is becoming more and more developed and conducive for entrepreneurial companies. The one big missing link was the serious involvement of the Indian corporate sector. Therefore, Bharti Airtel’s recent announcement of the Rs 200 crore Airtel innovation fund aimed at fostering innovation and entrepreneurship in telecom was a long overdue and extremely welcome one. And as a poster-child for world-class entrepreneurship from India, it was only apt that Bharti Airtel be the one.

Of course, while companies like Infosys had incubated and spun-out companies like Yantra and OnMobile and HCL and Infosys had invested in the odd VC fund, there hasn’t been a formal investment and corporate development effort by Indian companies for gaining strategic advantage apart from financial returns. In recent times, Reliance Technology Ventures, Capital18 (the investment fund of the Network18 group) and the Future Group (brands like Pantaloons and Big Bazar are part of this group) have established formal programmes as well. These are very welcome initiatives and must be encouraged by all interested in the creation and growth of Indian entrepreneurs and innovation. The shifting of gears by the Indian economy and the consequent explosion in opportunities have, of course, played a great catalytic role in engendering change in the traditional mindset. The realization that constant innovation in a knowledge economy is critical for continued value creation is forcing companies to set up corporate development programmes.

The specific reasons are therefore straight forward: no one company can keep up with the rapidly changing market and technology scenarios; early investments in startups can provide interesting marketing, sales, channel, customer support, supply chain and technology insights; access to high calibre talent and innovative business models is another benefit; and of course, potentially attractive downstream M&A opportunities and financial returns. Startups, for their part, apart from having access to traditional VC funds now also can access corporate funds which provide advantages like access to customers, markets, technology, best practices, manufacturing, brands, and so on. Startups with corporate venture capital backing gain higher valuations at IPO than those without and also get higher takeover premiums in acquisitions according to studies in the US.

Startups should also be aware of the challenges of taking capital from corporations. A close relationship with a corporation might prevent other companies from associating with the startup due to fears of competition. The startup can end up serving only the custom needs of the corporation to its detriment since it may be ignoring a larger and more lucrative market opportunity that might not be of interest to the corporation. The startup should also take care not to be excessively close to its corporate investor as the corporation’s bear-hug might become suffocative.

Clearly, as the Indian economy and Indian companies continue to grow and mature, the premium on rapidly creating and delivering innovative solutions to customers will only rise. Innovative solutions require innovative approaches and insight. And innovation around the world is nurtured best in fast moving, high calibre startups. Hopefully therefore we’ll see more Indian corporate VC funds playing their part in the Indian entrepreneurial ecosystem.
What do you think?

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.

September 16, 2008

NSRCEL's workshop on Finance and Biz Dev for entrepreneurs

Nadathur S Raghavan Centre for Entrepreneurial Learning (NSRCEL) at IIM-Bangalore is organizing two day workshops for entrepreneurs. The first - on Sep. 29 & 30 - will focus on Business Development Skills and the next - on Oct. 3 & 4 - will focus on Finance for Entrepreneurs.

For more information, contact:

Girish
Nadathur S Raghavan Centre for Entrepreneurial Learning
Indian Institute of Managment Bangalore
Bannerghatta Road, Bangalore 560076
Tel: 080-26993701, 3721, 3710
Fax: 080-26993769
nsrcel.orgnsrcel@IIMB.ERNET.IN

September 07, 2008

Are We Inventive Enough? - By Sanjay Anandaram

Over the weekend, I was immersed in reading Madcap Crazy Inventions by Gyles Brandreth, a slim volume published in 1997 as a tribute to the imaginative people from around the Western world. These quite remarkable people dreamt up an incredible variety of inventions that, no doubt, they thought would prove very useful but which we recognize today as being simply ridiculous. Of course, the inventors themselves had faith in their inventions! The inventions range from a spaghetti eating tool to a robber catcher to a rat scarer to a stammer stopper to reversible trousers to the Smellorama (where smells were made to match the action on a movie screen!). Most of the inventions were made in the 1st half of the 20th century.

On February 28, 1856, the Government of India promulgated legislation to grant what was then termed as "exclusive privileges for the encouragement of inventions of new manufactures". On March 3, 1856, a civil engineer, George Alfred DePenning of 7, Grant's Lane, Calcutta petitioned the Government of India for grant of exclusive privileges for his invention — "An Efficient Punkah Pulling Machine". On September 2nd, DePenning, submitted the Specifications for his invention along with drawings to illustrate its working. These were accepted and the invention was granted the first ever Intellectual Property protection or patent in India!

After the patent for the “efficient punkah pulling machine” one would have imagined that the electric fan would have been patented in India electricity having come to India in 1906. Look around and see the environment around – there are thousands of opportunities for innovation and invention. Yet the story of inventions and patents in India has been a long and sorry one.

That set me thinking. What would a list of Madcap Crazy Inventions look like for India? I suspect our list, if at all, there were one would be rather short and boring. And why should that be the case?

Madcap and Crazy are two words that as most stereotypes would have us believe adjectives that describe brainy scientists and inventors. Would we describe our scientists and inventors as “madcaps” and “crazy”? Why not? I think the problem lies in our social milieu. To make truly quantum leaps in science and innovation, one needs to be imaginative, unafraid to question the status quo and be willing to experiment. And even more unafraid of failing. Einstein imagined what it would be like if he were to ride atop a beam of light – A madcap idea? Yes! Crazy idea? Yes!! Edison is supposed to have tried several hundred materials before he chose the tungsten filament for his electric bulb. Our social milieu frowns upon questioning, imagination, experimentation and indeed failure.

True innovation comes from both right and left brain thinking. Not valuing or appreciating the arts and humanities adequately leads to atrophying of creative powers and insight. Creating “insanely great” products like what Apple routinely churns out, for example, requires not just engineering smarts but a high degree of creativity. As a nation, we’ve consistently under-emphasized the arts (the economic rationale is appreciated but that’s not the point) over the last 50 years and are now therefore left wondering about the arcane intricacies of say, user interface design, which is all about understanding how humans interact with each other. Movie making, for example, is another field which requires an enormous amount of creativity – from writing a top class script to visualizing the scenes to creating the mood to the music. Without the training in giving free reign to one’s imagination, experimenting and failing, it is hard to see how top class movie making talent from India can stand up on the world stage and be counted.

Another example: how many of our youngsters read science fiction for example? How many writers of sci-fi do we have? How many of our youngsters read or write or undertake creative pursuits? Sci-Fi by its very genre challenges the writer and the reader to imagine worlds that don’t exist. Innovation will ensure that these worlds come to pass! Is it a coincidence that the US and Japan have the world’s most evolved and robust sci-fi sub-cultures?

Sure, there have been truly Indian innovations that have addressed Indian problems but these have been sporadic and highly uneven. The National Innovation Foundation, the GIAN-Honeybee network are terrific initiatives to harness innovation and grass-roots inventions. But there needs to be many more such programmes especially ones that can be scaled.

With India’s booming economy and growth prospects, it can only be hoped that more and more madcap and crazy ideas will be worked upon, failures notwithstanding. After all, as the saying goes, if you haven’t failed it means you haven’t tried hard enough.

What do you think?

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.

August 31, 2008

LIBA, TiE Chennai launch Business Plan Competition

Loyola Institute of Business Administration (LIBA) and
The Indus Entrepreneurs, Chennai (TiE-Chennai) are organizing a Pan-India Business Plan Competition. IDG Ventures India is sponsoring the event.

Apart from prizes worth Rs. 8 lakhs worth, the event offers funding and mentorship opportunities.

Significant dates:
Closure of Registration: Sep 23, '08
Last date of submission of Executive Summary: Sep 26, '08
Last date of submission of detailed Business Plan: Oct 24, '08
Last Date for submission of Final Presentation: Nov 19, '08
Final Presentation: Nov 21, '08

For more information, visit the competition page on the LIBA web site at http://www.liba.edu/bpc/index.php or email queries.bpc@liba.edu

August 10, 2008

"Swifter, Higher and Stronger!" - By Sanjay Anandaram

The 2008 Beijing Olympic Games would has just begun with 10,500 athletes participating in 28 sports and 302 events for personal and national glory.

The Indian contingent consists of only 57 athletes representing the dreams of a country with over a billion people! With the Indian hockey team failing to qualify for the Olympics for the first time, the Indian contingent will compete in shooting, track and field, boxing, archery, tennis, wrestling, rowing, table tennis and badminton. For the first time, interestingly enough, India’s medal hopes rest not on a team sport like hockey but individual sports like shooting and boxing. Our national game has been reduced to becoming an inconsequential non-entity on the world stage.

There are lessons from the Olympics that entrepreneurs will do well to keep in mind.

First, creating and sustaining a winning team is very different from being an individual superstar. Team work requires shared beliefs and goals, planning, understanding of individual roles and responsibilities, discipline, large-heartedness to do things for the glory of the team not for one’s sake with the awareness that the team has to win not the individual. Over the last several decades, India has successfully demonstrated that playing as a team is something that doesn’t come naturally to us. As someone once said, “One Indian is equal to 10 Japanese; Ten Indians are equal to 1 Japanese!” A successful startup is one that is able to marshall the individual brilliance and capabilities of its people for its collective success.

Second, be well aware of the rapidly changing nature of world around you. The past is not a guarantee for the future. The game of hockey has changed dramatically over the past 3 decades. There have been immense changes in the playing surface, pace of the game, physical demands on the players, rules, coaching, equipment, and styles of play. Unfortunately, we have not adapted well and fast enough. Countries like England and Korea without any hockey playing legacy have no problem playing and even defeating India. Couple this with petty politicking and corruption in the administration and the reason for hockey’s demise isn’t hard to determine. As a startup, you need to be more than aware of the rapidly changing market and environment conditions which includes competition, regulatory matters, training and mentoring of employees, and changing demands by customers. A startup more than any other has to continue to execute well and not rest on its laurels simply because that’s the only way forward. Also, governance, management and ethics play a great role in creating the right culture and “soft” infrastructure for the company.

Third, keep in mind that athletes immerse their minds, bodies and souls for the sake of winning at the Olympics. Very often, there’s hardly any difference between the winner and the rest. But the world remembers only the winner. It is combination of very hard work, mental preparation and flawless execution on the day that brings home the laurels. The time of preparation is spread over the 4 year period between Olympics. Similarly, a startup has to prepare and execute relentlessly over the long term. Ideas and execution have to come together for the winning combination.

Fourth, remember the Olympic spirit that’s captured in the words “Citius, Altius, Fortius” which are Latin for Swifter, Higher and Stronger. Speed of conceptualization and execution is one of the critical advantages enjoyed by a startup. A larger company takes a long time to think through thea options and a longer time to execute on the plan. A startup is also nimble and can change tack and direction far faster than a larger company can. Next, a startup has to be able to soar higher and higher in the shortest possible time. It must be able to quickly demonstrate growth and market share to be taken seriously by the players in the market. And finally, become financially strong and robust as well in as short a time as possible to ensure its continued survival and growth.

Are you now ready for the Olympics? What do you think?

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.

August 08, 2008

Top Investors from General Atlantic, UTI Ventures & Baring PE join Speaker Roster at IT Services

Sunil Kolangara of UTI Ventures; Abhay Havaldar of General Atlantic; Subbu Subramaniam of Baring Private Equity and Dev Raman of Tricolor India will be the investor speakers at IT Services & BPO Connect '08 (IB Connect).

IB Connect is a conference that brings together investors, entrepreneurs and top executives in the IT Services & BPO sectors to network, discuss and share best practices. The 2008 edition, to be held on August 28 at Mumbai, aims to review current trends and explore new opportunities.

Here is the latest speakers at the conference:

Aparup Sengupta, CEO, Aegis BPO
Nitin Shah, CMD, Allied Digital
Subbu Subramaniam, Partner, Baring Private Equity
Salil Parekh, Executive Chairman, Capgemini India
Akshaya Bhargava, CEO, Fulcrum Group
Abhay Havaldar, Managing Director, General Atlantic
Partha De Sarkar, CEO, HTMT Global
Srinath Batni, Director, Infosys
Rajesh Jain, Director, KPMG
Niteen Tulpule, Director, KPMG
Raj Chatterjea, Director-M&A, Motilal Oswal
Shailesh Shah, Chief Strategy Officer, Satyam
V.K. Raman, Head-BPO Services, TCS
Dev Raman, Principal, Tricolor India
Sunil Kolangara, Director-Private Equity, UTI Ventures
Ashutosh Vaidya, CEO, Wipro BPO


Participants at the event include a healthy mix of Large- & Mid-sized Companies as well as Leading Private Equity & Public Markets Investors.

For participation details, Email info@ventureintelligence.in or SMS “IBCONNECT” to 56677.

August 07, 2008

Are the Best Years of Outsourcing Behind Us? Find out from Top Investors & Industry Executives

Spooked by the appreciating rupee, stock markets punished IT Services and Business Process Outsourcing (BPO) companies in 2007 - even while stocks in other sectors were booming. Private Equity and Venture Capital investments in outsourcing companies have also declined 50% in the first half of 2008 compared to H1 '07.

All of which prompts the question: are the best years of Indian outsourcing companies behind us? At IT Services & BPO Connect '08 (IB Connect), leading industry executives and top investors will discuss this and other crucial questions facing Indian outsourcing.

Speakers at the conference include:
Aparup Sengupta, CEO, Aegis BPO
Nitin Shah, CMD, Allied Digital
Subbu Subramaniam, Partner, Baring Private Equity
Salil Parekh, Executive Chairman, Capgemini India
Akshaya Bhargava, CEO, Fulcrum Group
Partha De Sarkar, CEO, HTMT Global
Srinath Batni, Director, Infosys
Rajesh Jain, Director, KPMG
Niteen Tulpule, Director, KPMG
Raj Chatterjea, Director-M&A, Motilal Oswal
Shailesh Shah, Chief Strategy Officer, Satyam
V.K. Raman, Head-BPO Services, TCS
Dev Raman, Principal, Tricolor India
Ashutosh Vaidya, CEO, Wipro BPO


Participants at the conference would include Private Equity / Venture Capital firms and other investors; Entrepreneurs & Senior Executives from IT Services & BPO companies and Service Providers including Investment Banks and Corporate Law Firms.

Don't miss it!

Click Here for the conference agenda

For participation details, Email Us

July 27, 2008

Taking Care Of Customers - By Sanjay Anandaram

The CEO of a leading online bus reservations company arrived late for our early morning meeting. I was upset for having been made to wait for what was our weekly meeting. He apologized profusely upon arrival and I could see that he was upset. He looked tired as well. I asked him if all was well. His story took my breath away.

Apparently, a customer had booked tickets through the company’s web-site for the last bus that departed late at night for Mumbai from Bangalore. Upon reaching the departure point, the customer was shocked to learn that the bus had been cancelled (the bus industry is not unknown for springing such surprises periodically) and that there was no other bus available.

The desperate customer, who had to urgently reach Mumbai the following morning, called the CEO’s company. The call-centre was just about to close after the last buses for the day had departed and were not at their responsive best. He was naturally livid. The CEO and his head of bus operations were hurriedly informed about the plight of the hapless customer by the call-centre. The two of them rushed to the bus-stand on their bikes where the customer was waiting – anxious and furious. They then arranged for a taxi to take the customer to the airport, booked the customer on company expense on a 2 am international flight that touched Mumbai and finally saw him off. The customer reached Mumbai in time for his meeting the next day.

The CEO returned home and sent an mail to the customer apologizing for the experience, promising to put in place systems to prevent such incidents from occurring in future, and hoping that the customer would give the company a second chance. Needless to say, the customer he was delighted with the high-touch customer care that he had experienced and wrote a long mail full of praise to the company soon thereafter. What could have become an extremely unhappy customer was converted into a customer for life!

The company incurred a big loss on the transaction but earned the lifelong trust of a customer that would hopefully translate into more satisfied customers. The CEO then set about putting in place systems and processes as promised to the customer. These ranged from enhanced call-centre operations and training to better communication with bus operators, including sensitizing them to the importance of customer satisfaction as a win-win situation for all, to putting in place economic incentives for employees and operators. These were then communicated to employees so that every employee understood the importance of customer care. Customers were also informed about the kind of service they could experience. That every customer would be happy with their experience became the implicit operating mantra inside the company. This fanatical adherence to customer care has seen the company acquire a loyal following not just with direct customers but also with bus operators and partners who too are treated with the same kind of attention and care.

All too often, the focus is on sales and more sales. And all too often, there’s not enough focus on meeting let alone exceeding customer expectations. This is all the more true in countries such as ours where customer service is more often experienced by its absence. There’s a belief that the customer really has nowhere to go once sales are achieved. The knowledge that one unhappy customer usually spreads the bad experience more diligently than a happy one is little understood. That catering to a returning customer is more profitable than trying to acquire a new customer. That in the long run, the life-time value of a customer through repeat purchases is what matters rather than a narrow focus on short-term profits. That apologizing for mistakes and working to rectify these mistakes is a sign of strength and honesty.

Treating people with respect and acknowledging one’s shortcomings are what this kind of behaviour therefore naturally abstracts into.

And who wouldn’t like to deal with another if this is the basis of a contract? What do you think?

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.

July 15, 2008

'Leading by Example" - Article by Sanjay Anandaram

Example 1: “I’m catching an overnight train to Hubli. My regional manager has set up a meeting with retail and corporate investors late tomorrow afternoon”, my friend told me. I asked why didn’t he just drive down in the morning rather than spend a night away from home. He replied, “It will give me time to spend with my branch colleagues there and I also plan on having lunch with them. There’s a nice masala dosa place near our office there and it’s been a while since I’ve caught up with all of them.” My friend is the founder and CEO of a leading financial services company. He tries his best to accept invitations to various events involving birthdays and weddings of his colleagues. He’s takes a genuine and personal interest in their well-being. He’s as comfortable in a road-side dhaba as in a high end 5-star restaurant.

My friend’s job requires him to travel extensively not just to metros but also to smaller towns around India. When travelling by air, he routinely takes the air-conditioned Volvo bus service bus to and from the new Bengaluru International airport – a journey that takes him about 90 minutes and costs him about Rs 150. Its convenient, takes the same time as a car or taxi would and much cheaper. He usually catches a train or takes a taxi (a Tata Indica no high end luxury vehicle for him) for intra-state travel. Though entitled to fancy hotels, he prefers moderately priced ones. He’s conscious of how his lifestyle and behaviour impacts people around him. He’s very successful in his job and has built a very committed and driven team.

Example 2: The CEO of a just VC funded (and therefore flush with the warm glow of capital) startup called me to say that he was moving the following day to a brand new office. As a boot-strapped angel backed startup, he had been managing literally on a month by month basis. And naturally, he was excited to be moving to a new fancy office with all fitments in place. He also told me that the move to the office would save the company at least Rs 2L per month relative to other places they had looked at. “We spent over 6 months looking for an office space and managed till things were well past breaking point!” Incidentally, the “new” office was in fact being sub-let by a once well funded startup that had spent a lot in finding the “right” office and then doing it up in style.

Example 3: “This guy is a very heavy-duty guy. He’s asking for Rs 35L plus stock in my company. The highest salary in our company now is Rs 10L. Should I take this person?” asked the CEO of yet another startup. The candidate was experienced and qualified. His company is well funded and is the fastest growing company in its segment and needed top class talent to grow to the next level. The CEO was concerned not because of concerns about affordability but about what impact the high salary would have on his company culture. He had prided himself on building the company on a step by step basis where every senior hire shared the vision and the risk. Finally, he decided against hiring the person.

Example 4: I met an entrepreneur the other day at a coffee shop in a five star hotel. He arrived a few minutes late in a chauffer driven high end sedan. After apologizing for being late, I ordered a hot lemon tea while he ordered a frappe. He was clearly passionate and driven. He was wearing well-known brands for his fashionable shirt and trousers. He had on designer sun-glasses and carried the latest cell phone. He was articulate and focused. He also happened to be the single largest shareholder (the other shareholder was his wife) in his company, was trying to raise VC money, and was having a problem in attracting and retaining talent. His attitude was “I don’t have good people now. But once I raise the money, I’ll just hire the best.” He was clearly able to spend company money on himself but was unwilling to spend money on paying employees more! Clearly, sharing of equity with others was something that hadn’t even entered his consciousness. In addition, he was looking to use the VC funds to pay for the hires.

What do you think? What kind of a example do you wish to set?


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.

July 11, 2008

Profile of National Entrepreneurship Network

Business Today has article on the pioneering efforts of NEN, which has been promoted by NRI entrepreneur Romesh Wadhwani, to promote entrepreneurship in India.
NEN began with six colleges (winners of a competition in 2002 called Lock Stock and Trade) in Mumbai and spent the next few years building its own team, bank of students’ cells and entrepreneur-advisors as it sought to effect a change in the mindsets of students. “Five years ago, when we launched NEN, there was a clear need to accelerate entrepreneurship in India, especially at the college and university levels,” says Romesh Wadhwani, serial entrepreneur, whose eponymous foundation runs this network. The original goal for NEN was to launch thousands of first-generation entrepreneurs over 10 years, creating 100,000 high quality jobs and accelerating economic development in India. “Five years on, we have come a long way and made a big difference. Today, there are nearly 400 colleges and universities with entrepreneurship programmes and over 50,000 college students are now actively engaged with us. Then, there is a network of resources that can be accessed and used by any NEN member at no cost,” he adds.

In February this year, some 250,000 students across 360 educational institutes took part in NEN EWeek (entrepreneurship week). And over the course of the event, they took part in group discussions and met investors and successful entrepreneurs. They also spent three days on a “Rs 50” game, where they had to devise out-of-the-box businesses (with an investment of Rs 50) in three days and prove their viability. These businesses ranged from dog washing to salsa classes, printed T-shirts and costume jewellery.

At Bangalore’s Mount Carmel College, students baked a cake for Rs 50 and sold one slice of that cake for Rs 20 and used the surplus to bake more products and make a handsome profit—all this to eventually learn being well-rounded entrepreneurs.

Besides nurturing first-time entrepreneurs, the next step for NEN is to play a broader role in building an entrepreneurship ecosystem in the country. “We need to encourage college students to consider a future in start-ups—not just in founding companies, but working in these start-ups and understanding the nuances of working with them,” says Biocon founder and CMD Kiran Mazumdar-Shaw, a strong votary of NEN’s activities and an advisor to the network.

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.

July 04, 2008

"My Lips are Sealed Mr. VC"

Rick Segal provides a list of 3 VC Questions You Should Not Answer and, if you can't seal your lips, some sample bogus answers.

1. Who else are you speaking to? [Answer: The usual suspects.]

2. What pre-money value did you have in mind? [We are looking for a deal that provides great returns for all of us.]

3. Can we speak to a few of your customers so we can better understand the value proposition? [No. Customer calls are post term sheet due diligence]

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.

June 28, 2008

Company Culture - By Sanjay Anandaram

This is about two companies. Or rather, about the cultures of two very successful and well known companies. As invariably happens, the culture of a company, over time, reflects the beliefs and values of the founders and impacts its performance on multiple dimensions.

One company was started by a group of middle class, educated, aware, passionate individuals. The other was a traditional Indian trading company that was inherited by the foreign returned scion. Capital was scarce for the first company and not so scarce for the latter. Both companies had strong value systems and were determined not to become part of or contribute to the endemic corruption and sloth around them. Hard work and attention to detail were common to both. The foreign returned scion hired a professional management team that enabled him to diversify into newer businesses. The first company stuck to their knitting – perhaps not knowing anything else to do.

The first company had a strong awareness of its social milieu and wanted to make a difference while the second company was singularly focused on building a profitable company. The first company therefore had egalitarian and employee friendly policies – their widespread employee stock option plan included even secretaries and administrative staff. The second company was very significantly owned by a single individual and was less sensitive to employees in general. Both companies were operationally very tightly run with a strong focus on cost management and cash-flows. Both companies valued integrity, ethics, and quality and both created a professional and apolitical working environment. Both companies favoured low-key management styles and valued simplicity.

Over time as the environment changed, the former company set up world-class campuses with world class facilities and employee amenities. The second company felt that such investments were wasteful and even tried to dissuade the other company. It felt that costs of operation would go up thereby hurting its financial performance. The first company then started investing heavily in marketing and brand creation, forging relationships with top tier global customers and academic institutions and in differentiating itself from its global competition. Investing in marketing was seen as an unnecessary expense by the second company since business was pouring in thanks to market dynamics. The first company became a media darling thanks to smart marketing and PR and due to its unique employee and market friendly initiatives. Its leaders were socially and politically aware and were involved in trying to fuel social change through their foundations and public-private partnership programmes. The second company kept a low profile and stuck to its goals of delivering shareholder returns. But over time, the second company too bowed to media, peer and market pressures and set up campuses and provided amenities to its employees. It also tried to become far more visible in social upliftment causes.

The first company listed itself also in the US thereby raising its profile and enhancing its access to customers and capital. It understood the value of market capitalization even while the second company was more focused on operating cash-flows. Its board of directors consisted of internationally leading corporate and academic leaders. The second company was forced to change (due to market and peer pressures) the composition of its board and also get listed in the US.

The first company set up relationships with international top tier academic institutions and started hiring actively from them; It invested in R&D, supported entrepreneurial employees when they spin out ventures, and invested in building relationships with various international entities. The second company was less inclined to support new initiatives and therefore saw an exodus of a large number of people who pursued their entrepreneurial dreams elsewhere. The second company was focused on low investments, cost management, cash flows, and did a world class job in driving operational efficiencies. The first company has grown organically while the second company has made several acquisitions.

The leader of the first company is a thought leader. The leader of the second company reads books like “How to cut costs and double your profits”. Almost all those who have quit the first company are involved in some social development work while those who’ve left the second company appear to be less socially conscious.

While both companies are at the top in their markets, the first company enjoys higher market capitalization, revenues, margins, reputation and brand image than the second. The company has created wealth for a large number of employees and the founders have become small minority shareholders today. The second company is very significantly owned by the head who’s several times richer than the group that set up the first company. None of the first company founder group’s progeny are involved with the company while the second company employs the foreign returned son of the largest shareholder.

One company was unafraid to lead and take steps that were unusual at the time they were taken. The second company was a world class follower learning from everywhere. It is not a matter of good versus bad, right versus wrong kinds of judgemental decisions. It is a matter of company and leadership culture and if it works, it works.

What do you think? What kind of a company do you wish to build?

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.

June 15, 2008

WHAT BUSINESS AM I IN? - By Sanjay Anandaram

Quick, which companies come to mind when you read the following?

- “Relationships Matter.”
- “Broadcast Yourself.”
- “____________ is a social utility that connects you with the people around you.”

Each of the above describes an internationally leading company on the Internet. I’ve picked these as examples to illustrate a point. Namely, the importance of being able to describe your business in simple language to an average consumer. Or, as one venture capitalist likes to question eager entrepreneurs “How would you explain your business to your grandmother?” This may sound trite and facetious but has a very important purpose. Answering this question requires one to articulate what the objectives of your company are to your target customers in simple language. Many times, entrepreneurs when asked to describe their business use complicated and vague sentences peppered with jargon. I like to term it “buzz-word compliance.” Consider this example, “we leverage technological innovations to deliver solutions across demand-supply service chains at globally lowest costs”. I’m not sure what the entrepreneur wishes to convey but it is certainly buzzword compliant and might perhaps actually sound important! However, this kind of language is so abstract that it describes any and every business since all businesses at a high enough level offer cost-effective solutions to their customers by leveraging technology (after all, even using a phone can be “leveraging technology”)! But then are all businesses really the same?

Using complex language to describe things when simple language will suffice is often times an indication of ignorance and insecurity. The entrepreneur hopes to hide his ignorance by taking refuge in obfuscation. Using complex language also gives a sense of false superiority as it bestows a cloak of importance on the user. It indicates a failure to think clearly and almost shows contempt for one’s audience. And what of the poor audience? They are left confused, frustrated and soon ignore the speaker. And such examples abound from all around us especially in the government and corporate sectors. Look at this case of meaningless verbiage from a company memo “Through focusing on the company’s objectives, CSFs (Critical Success Factors) and risk profile, we can determine an optimal audit review approach and resource requirements and skill to ensure that maximum value is extracted from the function!” Phew! Does anyone know what is being said? Can you imagine the effect of this memo on those executives in the company who not only had to read it but had to actually make sense of it and take action, whatever that might have been?

Therefore, as an entrepreneur, it is a very good idea to first write out what your business is all about in a few sentences and what makes it unique. Use simple language to describe what you do and why it is different from what others are offering. And remember, the better you have understood your business, the easier it is to express it in simple terms. After you’ve done describing this, try explaining your business in no more than two sentences to potential customers. Do they understand what you do? Do they think it is interesting? Would they buy from you? If so, why so? If not, why not? Learning to listen to the responses of your target audience is important. The questioning and listening provides very useful inputs and insights that can be important for refining your core values. It is through such an iterative process does one arrive at the simple elucidation of the core value of your business.


Here’s an apocryphal example of Albert Einstein describing his Theory of Relativity thus: “If you are with someone you love, an hour seems like a minute; If you are with someone you hate, a minute seems like an hour. My theory describes this relative passage of time.” This is an example of stating an incredibly complex theory in simple layman terms.

Can you describe your business in such simple language? What do you think?

By the way, the companies with the interesting descriptors or positioning statements are, in order, LinkedIn, YouTube and Facebook respectively.

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.

May 27, 2008

Hiring for Start-ups: Does an IIT/IIM degree matter?

US-based entrepreneur-turned-angel investor Paul Graham has an essay emphasizing why "it does not matter all that much where you go to college".
A recruiter at a big company is in much the same position as someone buying technology for one. If someone went to Stanford and is not obviously insane, they're probably a safe bet. And a safe bet is enough. No one ever measures recruiters by the later performance of people they turn down.

...Back in the days when people might spend their whole career at one big company, these qualities must have been very valuable. Graduates of elite colleges would have been capable, yet amenable to authority. And since individual performance is so hard to measure in large organizations, their own confidence would have been the starting point for their reputation. Things are very different in the new world of startups. We couldn't save someone from the market's judgement even if we wanted to. And being charming and confident counts for nothing with users. All users care about is whether you make something they like. If you don't, you're dead.

...Indeed, the great advantage of not caring where people went to college is not just that you can stop judging them (and yourself) by superficial measures, but that you can focus instead on what really matters. What matters is what you make of yourself.


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.

May 21, 2008

Doing Due Diligence on VCs

These days, there is a lot of good advice online – see examples here and here – on raising Venture Capital in the Indian context.

A lot of knowledgeable persons advice entrepreneurs to do due diligence on a VC firm before accepting their money. For instance, here’s US-based investor Bill Burnham on his blog:
One of the more unfair aspects of VC fundraising process is that VCs are allowed to take months probing every orifice of your company, but entrepreneurs are expected to make one of the most important decisions of their life in a week or two and often with little or no information. There’s no good reason for this and all entrepreneurs would be well served by taking some time to do some basic due diligence on any investor who has offered them a term sheet.

I suggest, at a minimum, talking to at least two entrepreneurs that the VC has funded and then talking through with the VC (about) A) all the deals they have done and what happened to them (and) B) the current status of their fund and partnership.

Doing your own due diligence has 4 main benefits
1) it may help you avoid making a bad decision
2) it will create the perception of a competitive process
3) it will make you appear more savvy and diligent to the VC
4) it can come in handy when you are trying to stall while you get your second term sheet.

But how does an entrepreneur go about locating a list of VCs who might be interested in investing in his/her sector and also learn the list of companies they might have already invested in? Thus far in India, there has been no single place entrepreneurs could turn to for researching VCs and their existing investments. Which is why Venture Intelligence has come out with The India Venture Capital Directory providing an exhaustive view of VC firms actively investing in India.

The Directory helps entrepreneurs get a clear understanding of the VC landscape by providing a brief profile of the VC Firms, their focus areas, names of key executives along with the contact details in an easy-to-use spreadsheet format. Also, it includes a list of investments by each VC firm – so that entrepreneurs can avoid obvious conflicts-of-interest and select other entrepreneurs to reach out to for checking out the VCs.

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.

May 19, 2008

"Get competing term sheets"

So, you have managed to convince a VC to issue a term sheet? What next? Is it time to celebrate? Not according to VC-turned-hedge fund manager Bill Burnham, who has a post on "4 Things to Do After You Get Your First Term Sheet".

Here's item 1 (emphasis mine):
Get a second term sheet: It may sound flip, but this is the single most important thing you should do upon getting your 1st term sheet. Nothing loosens up a VC’s purse strings or makes them more flexible on a particular term than the threat of competition. Without competition (real or perceived) you have very little leverage against a VC. Now getting one term sheet, let alone two, is tough enough, but getting two must be your goal and you must not waiver in pursuit of that goal even after you get the 1st one.

The biggest problem most entrepreneurs have executing on this strategy is that they have mismanaged the sequencing of their fundraising. Many entrepreneurs make the mistake of pursuing an “in order” fundraising process whereby they take one meeting, run that process to its logical conclusion and if that doesn’t work out try to get a meeting with another VC. VC fundraising must be pursued concurrently! You must put as many irons in the fire in as short a time as possible so that all the firms start the process at roughly the same time.

As firms progress through the process, you should do your best to try and “herd” them along by trying to slow down the ones pushing ahead and speed up the ones lagging behind. The ultimate goal is to ensure that when you receive your first term sheet you have several other firms that are very close (within a week or so) to potentially issuing their own term sheets. Proper sequencing ensures that you are not forced to take an inferior “bird in hand”.

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.

May 16, 2008

THE BUSINESS PLAN – PART I - By Sanjay Anandaram

I’m writing this piece from Singapore where I’m on a teaching assignment of a course called Business Plan Workshop at the INSEAD business school. And given the last Indipreneur column, I thought it would be good to also talk in some detail in this and the next columns about one of the more important documents an entrepreneur will deal with (outside of dealing with investment documents and a last will!), namely, the business plan. A business plan gives birth to the start-up. It enables the entrepreneur and the team to envision and plan how the business will be run and how funds will be raised. The business plan addresses the needs of both the investors and the entrepreneurs because both have a similar objective – creating a successful business.

Writing a business plan is easy. Writing a clear, concise and fundable plan is not. Investors are not likely to be impressed by gimmicks or by flashy and flaky presentations. If they are, you probably don’t want such investors.

Clarity of thought, understanding of the market and its dynamics, building a competitive advantage are some of the elements that the plan should demonstrate. Usually, savvy investors don’t spend too much time looking at the financials of a startup as opposed to the team, business model and market environment.

So having said that, what’s a business plan to look like? Should it be the size of a dictionary or the size of a pamphlet? How should it be structured ? While there are no hard and fast rules, its usually a good idea to keep a business plan to a maximum of 20-25 pages in length. Number the pages, check spellings, and make sure the document is logically consistent. Investors don’t have the time to read a 100 page document to understand what you are trying to sell!

One good way to approach a business plan is to first develop a presentation in a maximum of 15 slides (including the cover and the “thank-you” slide), then the 3-4 page executive summary and finally the business plan. The presentation should have no more than 5 bullets per slide and use diagrams to explain key points. Remember, a picture is worth a thousand words. The executive summary is a like a candidate’s resume – you should want to meet the candidate after reading the resume.

Here are some guidelines for writing a business plan. As mentioned before there are no hard and fast rules, but following the guidelines below will force discipline and ensure focus. All of the following has to be condensed into a 20-25 page document in a clear and precise manner.

Section 1.0 Introduction
When was the company formed & by whom. Team backgrounds Where is the company based. What does the company uniquely offer.

Section 2.0 Market Opportunity
What is the opportunity/need/problems in the market? Who is experiencing the need? How big is the opportunity? How fast is the opportunity growing?

Section 3.0 Offering
What is being offered to address the need in the market? What are the different components of the offering?

Section 4.0 Competition
Why/How is the offering unique? How will it successfully compete against competition? Why will people buy/use the offering as opposed to competition?

Section 5.0 Market
Who are the customers of this offering? How will they use it? How is the market segmented? How large are these segments? What is the value of this offering to them?

Section 6.0 Business Model
How will the offering be delivered to customers? What does the delivery chain look like? What is the value proposition across the chain including to partners? How will the support process work? How will revenue and costs flow across the chain?

Section 7.0 Sales/Marketing Plan
What will be the company and offering positioning? How will be the positioning be achieved? How will customers be acquired – what will you do to acquire customers both direct and indirect? What are the alliances/partnerships that will be established? What are the different modules/components to be sold? What are the price points?

Section 8.0 Product/Service Development Plan
What are the timelines and technologies? What is the strategy for product development?

Section 9.0 Road Map
Over the next 24 months what will be the sales/marketing objectives? What will be the company objectives? Product development objectives? What is the exit strategy?

Section 10.0 Current Situation
What stage is the offering/company in now? Are any customers testing/using the product? How much money has been invested? How many employees are there? What are the milestones ahead? How much money is required? For what purposes will the company use the money? How many employees will be hired?

Section 11.0 Financials
How much money do you need? When, how and at what levels will you break-even? What’s the monthly outlook for the next 12-18 months? In all of these, the most important is the cash-flow statement!

Easy?

What do you think?

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.

May 03, 2008

Operating Plan or Business Plan? - By Sanjay Anandaram

Often times I meet entrepreneurs who submit a great looking business plan with all kinds of fancy colour pie-charts and trend lines. It is evident that a great deal of time and energy has been spent in creating the plan. The plan contains enormous amount of secondary data about the market, the performance of Indian and U.S. companies in the similar/allied space, their valuations and the like. But precious little in the business plan about the business that’s currently seeking funding!

On the other hand, I also meet entrepreneurs who submit a non-colour 10 page stapled-together document without any fancy pie-charts and trend lines. Even more of them simply send in a presentation which essentially talks in simple language of the following:
•What is the problem that is being solved and who is experiencing it
•How is the problem being currently solved and the problems with the current solutions
•How will the company deliver a strong competitive solution and why will it win
•How will the business make money?
•The people behind the venture

Of course, there is some data on the market. But the focus is on the business that’s seeking funding. The plan is meant to be a guiding light for the company. It is meant for the investors and the management. It is intended for employees and potential partners. It is not supposed to be a showcase for cut-and-paste marketing data.

The point here is that a plan is not an end in itself. A business plan captures, distills and details the knowledge, strategic and operational matters of the business. Each functional aspect of the company should be covered – sales, marketing, operations, development, human resources, finance. A clear articulation of the strategy and the tactics for each of the functional areas demonstrates clarity of thought and purpose. The plan is something the key management team signs off on and is used as a management and measurement tool. Else, various functions will tend to exhibit random Brownian motion i.e. will operate in a knee jerk manner, in fits and starts and with no real end goal in sight. And as we all know, the total displacement is zero in Brownian motion even while a lot of distance is traveled!

A plan is a guiding light. A plan is not something that is done once a year to develop a fancy report. And then forgotten. In fact, a plan is a very live document undergoing constant change and revision. In the early days of the startup, it is not unusual to find large gaps between the numbers in the plan and the actual performance. The reasons for the deviations need to be analysed and fedback to create a revised plan. It is a continuous process. For example, the pricing assumptions may undergo a change based on experience and market situations. So also, various cost assumptions. The business model may be refined. Revenue assumptions may need to be restated. Remember, we are talking of a startup here that’s struggling to find its place in the sun and carve out a unique position. It is losing money and has to find customers. Quickly. The strategic and the operational or tactical at times merge and the plan should reflect it. The plan should be a management tool. And should therefore be measurable. Abstractions and generic statements (“we will create value for our customers”) have no place in the plan. There should be details about how the service or product will be developed, priced, delivered, supported, financed. The resulting financials must be captured. Projections for the next few months must be made. Feedback from operations must be used to refine strategy, refine the medium term goals, and sharply focus on the immediate near term milestones. In short, the business plan and the operating plan should be the same!

What do you think?

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.

April 22, 2008

Startup Funding: The Luck Factor – By Sanjay Anandaram

We hear all the time about the amount of money that's available to fund startups. For example, that private equity funds invested over $ 3.3 billion in just the first 3 calendar months of the current year. That VCs are always looking out for good deals as most of the plans they see merit little or no attention. That they invest in about 5-10 a year out of the 500-1000 business plans they get. And so on…But the truth is that a majority of deals that get funded are those that come through a referral or because the VC knows (of) the entrepreneurs; its natural because VCs don’t have the time to look at all the plans that they get to pick out the Rediff, Naukri, or Tejas Networks. Deals that come through some trusted source or through a trusted filtering process are therefore valued higher and rise to the top of the pile of business plans. It is therefore easy to see how many plans don’t get funded. And also how competitive the race to secure funding really is.

Given this situation, what then makes a VC invest in an unknown company started by an unheralded first-time entrepreneur? Imagine this situation: A first time entrepreneur in say, Bengaluru with degrees from Tier 2 educational institutions, average work experience in a regular job in a reasonably well-known company, but with no experience in building a business, no references you know or care for, and with no experience in building products or delivering productized services, sends you an email describing his vision of the way software will be used in the future. Now ask yourself: Will you take that entrepreneur seriously? Will you invite the entrepreneur for discussions? Will you then fund the business to the tune of say, a couple of million dollars with no business plan? Answer honestly.

Sure, there is passion in the eyes of the entrepreneurs; sure, they have conviction and confidence; sure, they have researched the market and the business model; sure, they have a powerful business idea; sure, they know what they were talking about; But then so do many other entrepreneurs.

Is it the element of chance? Is it that elusive thing called luck? Is divine intervention? What would have happened to such a startup if the founder had not had a chance meeting with the VC in a conference? After all, it was only because the founder met the VC at the conference was he able to talk about his plan, a plan that made the VC resonate with his business idea, right? Surely that meeting was due to luck, right? Especially, when other VCs had rejected the idea?

Well, in our haste to qualify it as luck, we overlook the fact that the business idea and model had emerged out of research and market validation. Not from a pipe dream. We overlook the fact that the entrepreneurs at the startup were superbly prepared. And yes, they were in the right place at the right time. Luck is what happens when opportunity meets with preparation. Without preparation, opportunities cannot be recognized and capitalized upon. Without opportunities, preparations can go abegging. So the next time somebody ascribes something to luck or chance, ask them if they were adequately prepared to exploit the opportunity. It seems that “lucky” people constantly encounter such opportunities whereas unlucky people don’t.

A 10 year research project that led to the 2003 book The Luck Factor by psychologist Richard Wiseman has revealed that “lucky” people generate their own “good fortune” through four basic principles that every entrepreneur will do good to internalize:
i) They are skilled at creating and noticing chance opportunities
ii) Make “lucky” decisions by listening to their intuition
iii) Create self-fulfilling prophesies via positive expectations
iv) Adopt a resilient attitude that transforms “bad luck” into good

What do you think?

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.

TIE-Canaan Entrepreneurial Challenge 2008 opens for entries

Extracts from the Press Release:

Canaan Partners and TIE come together to launch the second edition of the TIE-Canaan Entrepreneurial Challenge


Canaan Partners and TIE, today announced the launch of the TIE-Canaan Entrepreneurial Challenge, a business plan competition open to early stage entrepreneurs from across the country.

Entrepreneurs from across India will have an opportunity to compete for business mentoring, access to early stage investors and recognition in the second edition of this unique business-plan contest.

To compete in the challenge, participants will need to download and submit their applications from http://www.tienewdelhi.org/canaan/. The deadline for submission of the business plan applications is May 12, 2008.

Eight teams will be shortlisted based on their potential scale of the business, the strength of the team and sustainable differentiation in the business model. These shortlisted applicants will be invited to participate in the final round in the month of June which will see them presenting their plans and ideas in detail to an eminent jury of the country’s leading entrepreneurs and corporate heads. At this stage the shortlisted participants will gain valuable inputs and be mentored on their plans by these jury members.

This year’s jury will include Pramod Bhasin (CEO & President, Genpact), Raman Roy (Chairman, Quatrro BPO Solutions), Saurabh Srivastava (President, TIE Delhi), Sanjeev Bikhchandani (co-founder and CEO of Naukri.com), Mahesh Murthy (Partner, Seedfund) and Alok Mittal (Managing Director, Canaan Partners India).

April 06, 2008

The Illusions of Entrepreneurship

Businessweek has an interview with Scott Shane, professor of entrepreneurial studies at Case Western University, and author of a newly published book with the above title.
At the individual level, the core fact here is the typical, median, right-smack-in-the-middle entrepreneur is a failure. The cost is everything associated with that. So if you start a business and the business dies, you could have been working for somebody else. You could have been making a salary. You could have had the stability—you wouldn't have had that kind of stress that comes from the up and down of running that business.

So there's the personal costs. From an individual level, the myth is that somehow if you manage to hit the average or hit the median, you're going to be fine. The reality is that the distribution is so skewed you have to hit the top for it to matter, and in fact, you have to hit the top 10% to have income as an entrepreneur better than what you would have gotten working for other people.

...It makes a lot of sense if people say, "You know what? I'm going to earn less money running my own business, but I really don't like to work for other people, and that's why I'm doing it. It's making me happier and I really don't care." I think that's great. The part of it that becomes a problem is when people just won't admit the reality that it may make them happy and they're doing it because they want to be independent, [but] then they delude themselves into believing that also it's financially better.


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.

Do QCs on the VCs - by Sanjay Anandaram

India is an attractive venture capital (VC) destination today and the future will only get better. Many more VC funds will come in and entrepreneurs, at least the good ones, will be badgered by VCs for “lets-get-to-know-each-other-better” meetings. This capital availability and increased VC activity is good for the entire entrepreneurial ecosystem.

But, in all this hype and hysteria about round and about VC and entrepreneurship, something has been missed. Namely, that in as much as due diligence is performed by VCs on entrepreneurs prior to making an investment, a reciprocal arrangement needs to be in place for VCs. Wheat needs to be separated from the chaff, the genuine from the pretenders.

Classic VCs are partners in business, not purely opportunistic money makers. They see themselves as company builders, not just as investors. They don’t take short term stock market oriented investment decisions. They help build successful businesses, not spend time on financial engineering. In the early days of the Indian VC industry (that’s less than 20 years old!), most of the VCs had a lender’s mindset where risk minimization (zero risk?) took precedence over risk management. They found it hard to understand the startup situation used as they were used to more stable and less risky companies. The situation today has undergone a sea-change with the entry of Silicon Valley style VC funds. Therefore entrepreneurs will do good to keep the following in mind:

a) Don’t adopt a servile attitude towards VCs (perhaps a social ill that puts someone with the ability to invest on a higher pedestal?) or for that matter, anyone! Learn to also ask questions. Among other things, probe the backgrounds of the VCs, examine their track record of investments, talk to fellow entrepreneurs who have raised money from these VCs, understand their investment focus and approach, and what can be expected from them. The real quality of the VC is known during the singular moments of crises in a startup: Do they want to cut their losses and run? Or, are they willing to help redefine the business? Can they bring in additional resources (management, financial, technical) to boost the company? Can they help make the deals? Can they open doors? Can they help hire people?

b) Get to know the person who’s going to represent the VC firm on your company’s board. Even if a top notch VC firm is investing in your company, it is useful to know which individual from that firm will be dealing with your company. At the end of the day, it is this individual who will play a key role. Is this person experienced? Can this person really help your company? What is this person’s experience with companies in your stage and sector? Is the person a straight-shooter who will give feedback or someone who engages in back-room wheeling and dealing? Can you trust the individual to take speedy action or is he someone who’s bureaucratic?

VCs spend a lot of time and effort understanding the market opportunity of the startup, the backgrounds of the founders, the business model, and the likely paths the company could take post-funding. Entrepreneurs should also do the same with the VCs. After all, the entrepreneur and the VC must see eye-to-eye and there must be absolute congruence on objectives and philosophies. For example, timelines can be an important consideration. Is the VC willing to wait to realise value from the investment or is the VC in a tearing hurry to exit? Notwithstanding the fact that the nature of the business calls for a minimum of 4 years to build a successful company? A mis-match in time-lines that can therefore lead to unwanted complications.

Choosing the right partner is therefore as important to the entrepreneur as choosing the right entrepreneur is to the VC. After all, when you don’t even buy a washing machine without talking to a few people, shouldn’t you at least talk to a few people to check if your VC will take you to the cleaners?

Remember VCs need QCs (quality checks) too!

What do you think?

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.