Archive for September, 2006
I read the posts/comments on VW since I have been away with interest. In my opinion most of the conflict and frustration arise from a lack of understanding on what kind of funding a venture needs and at what stage it is. First time entrepreneurs find it much harder. Entrepreneurs with a track record find it much easier.
To be “Angel ready” a venture has to have the potential of an exit ( $10MM +) if no more funding will be required and a much higher exit if more funding will be required. There has to be a team, a company and some traction.
To be “VC ready” the requirements are similar to being “Angel ready” execpt that the bar is higher.
If entrepreneurs ask themselves whether they and their venture will be a good fit for the angel/VC route and what they need to do to get ready they could avoid heartburn.
Getting ready seems to be a “pain point ” and maybe the “Y combinator” approach offers a solution.
Paul Graham has an interesting approach for seed funding. Maybe there is something we can learn and adapt. Some of us in Band of Angels may like to launch a Y Combinator . To do a proper launch will take some time.
This post is just a test check to see what prospective entrepreneurs in India think of Paul Graham essays and the Y combinator approach.
A few things I found interesting
1. YC looks for ideas and entrepreneurs and not business plans. It helps incorporate companies and get the entrepreneurs ready to get funding if required from angels/ VC’s
2. YC does not invest much. Maximum it has invested in a company is $24,000. It takes upto 5-7% of the company
3. YC seems to cater to entrepreneurs who have fire in their belly, good ideas and the ability to execute rapidly. They also need to be first time entrepreneurs who need help with getting started.
4. YC is not an incubator. All founders have to be in a sort of boot camp for 90 days but they work out of wherever they live.
I am in Delhi for just a few days in Sep/Oct so will investigate launching a Y combinator type play in India in November if I find enough interest.
Briefly, secondlife is a virtual world with a real economy. People can buy land, build houses, offer services and so on. And the currency in the virtual world can be used in real world. So there are people who are making real moolah by offering services or trading in secondlife. At first it sounded crazy to me, but people are spending there and thats the reality.
This obviously has interesting (and perhaps at this point, unfathomed) implications. There is a claim that there is $410m worth of creative effort happening inside secondlife every year — that can add up quickly. Where does the economic benefit that people can reap in a virtual world start overtaking that in the real world — in some sense, the virtual economy starts competing for talent with real economy — especially with all the low cost of labour we have in India! Go imagine.
Tactically, I think this is one good way for some social networking sites to offer something compelling — provide social networking in context of virtual worlds that to an extent, map real places and buildings and people — of course, much less heavy in terms of computing and bandwidth requirements.
Btw, I am on secondlife now, and I am called Alok Blackmountain there They dont have Mittals!
This is a draft report, but looks very interesting. I will re-read this in more detail soon.
China is now the world’s fourth largest economy and growing very fast. India’s economic salience is also on the rise. Together these two countries will profoundly influence the pace and nature of global economic change.
Drawing upon the latest research, this volume analyzes the influences on the rapid future development of these two countries and examines how their growth is likely to impinge upon other countries. It considers international trade, industrialization, foreign investment and capital flows, and the implications of their broadening environmental footprints. It also discusses how the two countries have tackled poverty, inequality and governance issues and whether progress in these areas will be a key to rapid and stable growth.
We have had some discussion on long tail earlier, including Lee Gomes’ critique earlier.
Chris Andersen, the original proponent of Long tail, comes back with an explanation and rebuttal in this podacast. His central point — he refers to long tail not as a back loaded distribution of goods (with respect to sales), but the opportunity in all items that are otherwise not available on physical stores. Once you look at that perspective, Chris claims, there is no debate.
Chris also goes into explaining why this is relevant to the mainstream folks and why they can’t ignore it.
Thanks to Errol Smith for pointing this out on the original Venturewoods post.
Kamla Bhatt did an audio interview with me earlier this week — it is available here.
I was looking through their site, and they seem to have done a fair number of very interesting interviews with people focussed on the indian entrepreneurial environment. The audio format also makes it more engaging relative to a text interview. And Kamla had researched well before the interview, which gave it more depth — watch out for her!
I think what an audio interview doesnt do well is allow people to scan randomly — would be great to have some tool to keep tagging key topics (even if it is manual, since the whole file is anyway edited manually) in-stream audio. So if you clicked on “views on internet businesses”, it could take you straight to that point in playback.
Just saw a couple of side discussions on some comments posted elsewhere on VW. Am bringing this up as a main post as it might be of interest to others as well.
What applies to the rest of world, doesnt apply to India. Everybody – Indian Entrepeneurs, Indian VCs, Indian Angels need to think and act differently. If you guys think about your country and strive for a pride that comes from having a Sony or a Google, you would find yourself spending more time with young guys nurturing and mentoring them, rather than than just chasing fund targets.
Whats missing in India is Idealism, Romance and long term vision.
Rad, I understand what you are saying. What we also need to understand is that in the investment business, there is no “long term” unless the fund targets are met. As important the long term vision is, it is equally important one understands how to get there. Sony and Google are prides of their countries because they are business successes, not because they are romantic.
… please tell us what are the things a VC is looking at when he invests in a startup ?
Anon, I think at 30,000 feet, we look for the ability for ourselves to make good returns on investments. That typically requires large markets, great teams and sustainable differentiators in the business. At a high level, it is really that simple. As you dig in, some factors become more important than others. In Internet, a great team might mean passion and understanding of the medium; in enterprise sales, it also includes past experience in selling to enterprises. Sustainable differentiators might exist on day one due to technology, or you might be able to build them over time (as in case of consumer internet companies, where brand and first mover advantage can be significant).
And then, our own understanding of the space and our ability to address risks in that specific business become important. Most successful early stage investors are conscious of the fact that all good investments are not necessarily good investments for them.
Would love to continue the discussion,
and yes, we are adults — we can use our names here
Online travel continues to get interest. After half a dozen early stage investments and launches, consumer experience remains at abyssmal levels. My own view is that these players will figure it out over next few months, but a person I was talking to made a valid point — focus on user experience is in the genetic makeup of the company; its either there or not there…
This saturday i attended a event organized by Tie-BoA . Agenda of this event was to announce a collaboration /Alliance bitween Tie and Band Of Angeles as an initiatvie to nurture a Silicon Valley like Eco System in india.
I am writng this post to highlight one aspect of this eco system which i have seen in all such events . sometime under the surface sometime discussed openly .
Its the Silo or Communication gap bitween Investor and Enterprenuer .
Be it VC or Angel , Institutional or Individual there is always a conflict of interest bitween both of the parties . As a matter of fact this phenomena is not confined to this country . Even in developed economies tales of VC-enterprenuer conflict is commonplace.
This used to baffel me when i started attending such gathering around a year back . by every logic i can think of , VC and Enteprenuer should work togther and it should be a win-win deal . but after one year and 10-12 such gathering i can safely say that this is hardly the case .
what is suppose to be a “Meeting Of Minds ” often Turns into a “Clash of Heads” . why ?
As an aspiring enterprenuer i have a significant interest in exploring answer to this Question.So that when i approach potential investor in my venture i can avoid all that . so here is my analysis of this phenomena . I wanted to post the complete text here but the post was a bit too long so i published it on my blog .
You can read the complete text here .
Your Comments /Advice is awaited and greatly appreciated .