13th was a VC event on sidelines of TiECon. Key highlights:
1. Most people accepted the gap in early stage (series A) funding, but depending on who you believe, something around 10 funds are being raised to cater to this. People clearly see the opportunity here, and belief in Indian product companies is beginning to shape up (though still not there). Hopefully, some of these 10 funds will be successful in closing.
2. Arun Natarajan reported that early stage investments is the only category to have remained flat last year 🙁
3. Morten Lund, one of the investors in Skype was here. Interesting guy, tries to be anti-establishment. One of the things that I head more and more about is “management capital” if you will — successful entrepreneurs going out and associating with multiple startups in exchange for (largely) equity. I believe Raman is also pursuing a similar model, but with a large part of Spectramind core team with him
more to come…
- Promoters or Entrepreneurs – A choice for Private Equity players - August 3, 2019
- Startup Marathon Mindset - March 25, 2019
- What’s your Customer Culture? - March 4, 2019
Hi Alok,
The Moolah (Extra-ordinary returns or ROI) for a VC comes through 2 angles…..
1) Go for Private equity stake and exit out with an IPO
2) Go for private equity deals mainlyt among VCs.
The first one saw some excellent returns coming the VCs way…let me elaborate with examples
1) Temasek of Singapore is an Investment Bank with its role more like a VC which takes stakes in companies planning to go IPO in the next 24 months and take the preferential shares route of 3 year lock- in. Then it enchases after an IPOo like it did with Gateway Distparks.
Even ICICI Ventures plans the same with PVR Cinema and its ROI is likely to be a cool 500%
2) Mahesh Murthy of Passionfund did the equity stake route and reaped gains for his fund by investing in a BSE listed entity called Geodesic Tech Ltd.
http://geodesiconline.com/htm/financials/2005/equity/equity_sept05.htm
Its shares moved from a Rs.40 to Rs.1200 and after a split are again quoting at around Rs.250+ returning more than 3000% over 4 years( unbelievable but true).
Arisaig and ADAE did the same with the Wine company listed on BSE – Champagne Indage whose shares moved from Rs.40( Sept 2004) to Rs. 400
( Sept 2005). So the exit route is coming through the secondar market selling and the risk seems to pay off.
The VCs after selling their shares after long term( holding for >12 months) pay ZERO tax. ( who needs the Mauritius route now, thanks to Chidambaram) and SEBI s Investment Trust registration incentives.
Another example is Goldstone Teleservices and Goldstone technologies, where the US based Private VCs took an equity stake in return for their sweat equity which included getting the company more contacts and projects their way.
This happens to be the most popular route now as the line between VCs and Investment banks, FIIs, Investment Trusts, Hedge Funds has become thin as all of theses have a primary goal – MAXIMIZE RETURNS WITH LESS RISK.
All this has earned the VCs one more name – Vanishing Creatures
I find it all the more surprising as INTEL has a VC Fund for start ups, but our own desi INFOSYS, WIPRO, TCS do not have a VC fund for start ups in INDIA. Does it mean they do not believe in Indian start ups or they do not want competition to come their way in future?