VentureWoods

Techcrunch has a good article on the subject - in essence, emphasizing on quality of revenue. The mantra suggested is recurring revenue, low churn, high LTV and operating leverage.

For consumer companies equally, the notion of high lifetime value, repeat behavior, and margin structure are the key. A CapitalIQ analysis shows a strong correlation of the revenue multiple to (ebitda margins x revenue growth rate).

Interesting infographic from Legatum on impact of AP ordinance on Indian microfinance industry.

Apart from effective blacklisting of millions of poor women in AP from access to private credit, the ordinance has impacted availability of credit across the country. All in name of protecting the SHG initiative, and backed by suspect claims damages that MFIs were causing.

Just finished reading Steve Jobs’ Biography by Walter Isaacson — Great account of a genius. As someone whose only impressions of Steve Jobs are formed by this book, it is an amazing story of personal passion and entrepreneurial possibilities. At a more sublime level, its a story of a person who almost everyone would have liked to change, but whose weaknesses were intertwined with what made him immensely successful. Be yourself.

And once again, hoping we see more of such intense product people.

Happy 2012 to all readers. 2011 has been an eventful year for venture capital in India - perhaps a record year in terms of overall volume of financing. More importantly, traditional growth equity firms stepped in and provided later stage support to venture backed companies, which augers well for entrepreneurs and venture industry. While in the middle of the year, valuations, especially in ecommerce were beginning to look heady, over past 90 days we have seen some sense return - in the long term, thats good news. Predicting a year out is always tough, but seems like venture capital is getting its roots entrenched - hoping for a great year 2012.

2011 was actually a bit of a disappointment on the exit front. Public markets were choppy throughout the year in India, and globally in the latter half. We track a pipeline of a dozen plus venture backed companies (largely internet related), which could be half a billion or more in value - however, the primary exit theme for most of those is IPOs. So 2012 outlook might again be driven more by health of the markets, than by availability of a good pipeline. Investors may start thinking about diversifying their exit options - both in internet companies where traditional thought in India has been around IPOs (for lack of M&A market), but also in terms of looking at investment areas where the dependency on IPOs is lesser (good old outsourcing).

In terms of themes, 2011 was clearly the year of ecommerce. Interestingly, every year over past 5-6 years has had a “never before, never after” flavor to it - 2006 (Mobile VAS), 2007 (Education, Real estate), 2008 (Healthcare, Retail), 2009 (Microfinance), 2010 (Rural, Agri) and so on. Not many themes have continued the momentum - I do hope ecommerce does. And for 2012, may be we will be back to Mobile VAS (yes, times are changing there), or may be finally Enterprise/SMB software. Any bets?

One element that has continued to keep the confidence going around is increasing quality and quantity of startup entrepreneurs. Here’s wishing 2012 continues to build on that!