Author Archive for Udhay Shankar N

Angelsoft - salesforce for seed stage investors?

Published by Udhay Shankar N on September 2, 2008 in Ecosystem and Ideas & Companies.
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Fascinating article in Wired about the resurgence of angel investing in the US, as well as a new software platform for angel investors that seems to be a category killer for now. Alok, would you know more about this?

Okay, so what? Well, the classic V.C.’s simply have too much money under management, and too expensive a talent pool, to waste time looking at investing anything less than $10 million in a project. Meantime, no entrepreneur wants to give up equity by taking in more money than he absolutely needs. So, when it only costs a few million to get a serious new company off the ground, how can the V.C.’s really play? They have to find places to make gigantic gambles, usually overpaying because the other big V.C.’s are also trying to invest in the few really big-dollar opportunities out there. It has become a system doomed to failure.

The flip side of the story is the rise of angel investor groups. These investment consortiums have always been ideally positioned to provide $500,000 to $5 million equity injections; but until recently, that wasn’t enough to get a serious effort off the ground. More fundamentally, however, they have historically not been terribly investor-friendly, largely because the individual members have other occupations.

The individual members didn’t work in the same place or even at the same times, so angels were terribly inefficient at evaluating transactions, sharing information, and negotiating and documenting deals.

Those days are over, thanks to software developed by David Rose, founder of the New York Angels (yes, I belong). Angelsoft is a wonderful collaboration platform that manages deal flow, helps match talent and expertise to projects, provides easy-to-use data rooms for potential investors, and generally drives the investment process. It combines project management and social networking in a way that, for the first time, makes the angel process efficient for both the company seeking capital and the potential investors.

The big news now is that, in a period of just a couple of years, over 400 angel groups around the globe have standardized on the platform. That means, of course, that they will also be able to share deals between themselves, vastly expanding the capital and expertise available for any given project.

Venture industry in US slowing down?

Published by Udhay Shankar N on June 19, 2008 in Ecosystem.
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A piece, via WSJ, provides some sobering stats:

There were 844 venture firms investing in U.S. companies last year, 40 fewer than in 2006, according to the latest data from VentureSource, a research unit of VentureWire publisher Dow Jones. That is down 30% from the bubble year of 2000, when there were nearly 1,200 active investors.

The total includes a substantial number of firms–224, or 27% of the total–who didn’t back any new companies last year, an indication that the ranks of active investors will continue to thin.

The post goes on to give some more data about the US-based National Venture Capital Association’s members:

Heesen said he foresees a 15% decline in the next two years in the total number of venture firms investing in the U.S., many of them too small to meet the NVCA’s membership threshold of $5 million under management. The NVCA has about 470 member firms representing 90% of the venture capital under management in the U.S.,

Many of the active investors in 2007 did only a few deals. Less than half–45%–completed four or more investments. And 29% made just one investment.

What does the community think? Is there a sense of slowdown here in India as well?

The Internet according to Akamai

Published by Udhay Shankar N on May 28, 2008 in Ecosystem.
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Akamai has published the first in a series of quarterly looks at the state of the internet (warning, requires registration), which they would be in a unique position to report on. From the summary:

Starting with the January to March (1st quarter) 2008 time period, Akamai will be publishing a quarterly “State of the Internet” report. This report will include data gathered across Akamai’s global server network about attack traffic and broadband adoption, as well as trends seen in this data over time. It will also aggregate publicly available news and information about notable events seen throughout the quarter, including Denial of Service attacks, Web site hacks, and network events.

Here is a local copy of the report, for those who don’t want to provide an email address.

Indian PE affected by meltdown

Published by Udhay Shankar N on March 24, 2008 in Ecosystem.
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ET has a piece on PE investments slowing down and deals taking more time to close.

The current global meltdown propelled by subprime concerns has left its mark on the Indian market too, which is also evident in the number of private equity deals slowing down.

Industry experts say unlike in the past when term sheets were signed in six-seven days, the duration has now increased to a month. Fund managers are taking a longer time to make up their minds on investments. They are also agonizing over what valuations ought to be. Some are even backing out of deals.

This bit, about players backing out after the termsheet is signed, is especially interesting. Can readers comment if there are more examples in the recent past?

For instance, Indivision, a part of the Future Group backed out of an impending deal with DishTV after signing the term sheet. Sources said, this was because valuations were driven down. Then, sources added, there is the case of General Atlantic Partners backing out of Essar Power, once again, after signing the term sheet.

Domestic BPO market - next big opportunity?

Published by Udhay Shankar N on January 9, 2008 in Ecosystem.
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Avendus has a report out on the domestic BPO sector. With the decline of the dollar and the expansion of the India domestic market in all spheres, could this be the next big opportunity?

Historically, the outsourcing market in India has been export focused and most participants have been focusing their energies in building businesses catering to US and European clients. However, with the emergence of India as one of the largest economies in the world, the Indian domestic outsourcing market is also emerging as an attractive target market.

To enable various participants of the outsourcing market to understand the Indian domestic BPO market better, we are publishing a report titled “Indian Domestic BPO Market - An Emerging Opportunity”.

While it is a US$1.8Bn market and expected to reach US$6Bn by FY2012 (CAGR of 35%+), we expect the third party segment of this market to grow much faster at 53%, taking the third party share from 18% in FY2008 to 30% in FY2012. Dominated today by call center activities from Banking, Telecom and Insurance, we expect this business to also show growing demand in the back office processing activities as the market and vendor sophistication grows.

Contrary to popular belief, the Indian domestic BPO business, despite its relatively lower pricing levels, has better (or at least equal) profitability margins as compared to the companies catering to global customers.

We believe the Indian domestic BPO market is a strong potential opportunity for both financial and strategic investors looking at making attractive investments in this space.

Last, but not the least, we also believe that the existing players in the Indian domestic BPO market will stand to gain from the years of credibility and referencibility they have built in this space, with the infusion of structured capital into this market.

Al Gore joins Kleiner Perkins as Partner

Published by Udhay Shankar N on November 13, 2007 in Ecosystem and Ideas & Companies.
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Very interesting. Another lever for Gore to try and influence the climate change issue.

The alliance provides Mr. Gore an additional pulpit for his advocacy of environmental causes, but also gives the Nobel laureate an opportunity to nurture green businesses.

Venture capitalists said the move could help companies financed by Kleiner establish ties with big business and government, and obtain subsidies that encourage broader use of new technologies.

Mr. Gore’s part-time duties will entail investigating the growth potential of start-up companies focused on the alternative energy sector, and then weighing in on whether Kleiner Perkins should finance those companies.

80s all over again?

Published by Udhay Shankar N on October 30, 2007 in Ecosystem and News/ Events.
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Merrill Lynch has a fascinating analysis on the various striking similarities between this financial cycle (mostly in the US) and the one in the late 1980s. Have a look at the article - just the charts should be enough to provide a lot of food for thought.

  • The late 1980s was a cycle characterized by a synchronized global expansion, but in the context of a fatigued US economy and strength back then in Europe and Asia.
  • A cycle fuelled by tax cuts and highly accommodative monetary policies early on, “new paradigm” views on the equity market bull run, and a massive housing boom that morphed into a bubble and credit excesses that turned into a crunch.
  • As was the case this time around, the Fed moved in the latter stages of the cycle to hike rates aggressively and invert the yield curve. As is the case today, practically every reason was cited for why the yield curve didn’t matter any more (nice call).
  • Back then, the Asian stock market that caught everyone’s attention was Japan – today it is China.
  • We also experienced a wave of LBO-financed merger and acquisition activity that certainly also took hold through most of 2005 and 2006.
  • Of course, we also had a faltering dollar in the late 1980s and rising commodity and gold prices igniting concerns over the inflation landscape – concerns that we can now say were overdone.

Wal-Mart era drawing to an end?

Published by Udhay Shankar N on October 6, 2007 in General.
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The Wall Street Journal has a fascinating article on shifts in the US retail scene. Wal-Mart seems set to slip from being the sole industry-defining company, and will become one of several such companies. I think the writer misses a trick in not looking at the impact of high-priced oil (most of the items that Wal-Mart sells are imported, typically from China) and the whole environmentalist movement. Nonetheless, a topical and interesting read, especially at a time when the organised retail sector is set to boom big-time in India. Maybe the seeds of a few more business opportunities in here?

The Wal-Mart Era, the retailer’s time of overwhelming business and social influence in America, is drawing to a close.

Using a combination of low prices and relentless expansion, Wal-Mart Stores Inc. emerged from rural Arkansas in the 1970s to reshape the world’s largest economy. Its co-founder, Sam Walton, taught Americans to demand ever-lower prices and instructed businesses on running a lean company. His company helped boost America’s overall productivity, lowered the inflation rate, and strengthened the buying power for millions of people. Over time, it also accelerated the drive to manufacture products in Asia, drove countless small shops out of business, and sped the decline of Main Street. Those changes are permanent.

Today, though, Wal-Mart’s influence over the retail universe is slipping. In fact, the industry’s titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.

Norwest Venture Partners opens India office in Mumbai

Published by Udhay Shankar N on September 13, 2007 in Ecosystem.
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from ET:

Norwest Venture Partners (NVP), a leading Silicon Valley venture capital firm, has opened office in India. The firm, led by Promod Haque, is best known for its technology investments. Its portfolio has 60 companies including 20 that are based in the US but have an Indian presence. Five of its investee companies are based in India.

Norwests India operations will be based in Mumbai and headed by Niren Shah as managing director. Shah was earlier with eBay in the US as senior director of strategy and ventures and before that with KPMGs corporate finance team in India.

Two more executives are likely to join the team in Mumbai as the fund expects to finalise more India investments. Unlike a few VC firms that have floated India specific funds, NVP makes all its investments from a global fund. The investments are across the US, India and Israel. The firm has around $2.5 billion under its management with the current fund at $650 million. Mr Haque said the number of India investments may to go up from 10% to 15% of the total fund size.

Using Facebook professionally

Published by Udhay Shankar N on September 12, 2007 in General.
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WebWorkerDailyhas an interesting post on 12 Ways to Use Facebook Professionally:

Facebook has to be the most talked about, and the most misunderstood, web service/platform right now. If you havent gotten drawn in by the hype, it may surprise you to learn that many people have already found Facebook to be an essential addition to their web working toolbox. Why? Because the Facebook social networking experience can be precisely what you want to make of it. Think of Facebook as a professional tool, and thats what it is. It doesnt matter how millions of high school and college students are using Facebook to get out of doing homework. You can make it into whatever you want, even your own personal media broadcasting channel.

Lets look at 12 ways Facebook can benefit the web worker, particularly those who are home-based. The more connected you are to your co-workers and clients without being intrusive, the better your working relationship.