Came across this thought-provoking post by Basab Pradhan in which he talks about “flat world ventures” and how the traditional approach to VC “is leaving big underserved gaps in the market”…Although the article is largely about Indian start-ups and their approach to global markets, a lot of it is probably relevant to Chinese start-ups as well…
Basab defines “flat world ventures” as startups whose product or service is largely put together or provisioned in India for global markets. He cites his own company as an example which does research in India for the US market (there are of course others including Aranca and RocSearch - both run by friends and fellow LBS alumni, Hemendra Aran and Neeraj Bhardwaj)
Basab argues that the reason why flat world startups are underserved by traditional VCs is because of the fact that they straddle two worlds and “it is very rare that you will find a VC who is as familiar with the Indian market as he is with the US market.”
While finding such a person may well be impossible, the situation is not really as bleak as it looks…In most cases the entrepreneur (and his/her team) will have connections and network in at least one (if not both geographies)…so what they can look for is an investor who can complement their relationships and networks…reminded me of a report on the Indian VC marketby Alok Aggarwal, head of Evalueserve in which he talks about some of these issues… (see 4.3 and 4.7 of Alok’s recommendations) (also see “Another hot day…in an over-heating market“)
Another way of achieving that balance is to actively try and cultivate a network in more than one geography…this is even more critical as startups and markets increasingly becomeglobal and move beyond traditional VC boundaries…(see my earlier post on “Globalization – What’s it got to do with me?“ )
And I slightly disagree with Basab’s 4th point (re. what should VCs do?) where he says ”The reassuring handshake will get rarer, unfortunately.”…I think the opposite will be true…as global travel becomes increasingly feasible and economic, the value of personal touch in a relationship is likely to become even more salient…
February 6th, 2007
Posted by
Shantanu |
Entrepreneurship, India, Venture Capital |
2 comments
First it was Davos, then the FT 
and now The Economist*
So I guess “Overheating India” is the new cool in circles where they discuss such weighty matters and amongst people who read the FT to work**
On the WSJ’s Davos blog: “Is India Overheated?” Balaji wrote a great comment in reaction to Stephen Schwarman (CEO, Blackstone Group)’s “outsider’s perspective”. But first the “outsider’s perspective” (as reported by Christopher Emsden):
“A couple of years ago, he said, his company decided to start investing in India. He liked India because it was a democracy, the legal system was well established, and the costs seemed low and the potential seemed high.
But when Blackstone tried to find an office in the commercial capital of Mumbai (formerly Bombay), the only space it could find was a hotel room. (”And I thought hotel rooms were for sleeping, not officing,” he said.) Employees, wired into the world, wanted wages competitive with what they would earn elsewhere. And even the investment climate seemed somewhat overheated, with high multiples. Land prices alone, he was told, are more than 10 times what they were 18 months ago.
“Overheated?” asked Mr. Schwarzman, who describes himself as a big India booster. “You decide.”
Here is what Balaji wrote in response:
Keep Reading…
February 2nd, 2007
Posted by
Shantanu |
Development Issues, Economics, Entrepreneurship, India |
7 comments
In my continuing series of FAQs for Entrepreneurs, I came across this gem…fellow blogger Ventureblogalist’s wiki titiled VC101 with some great links on various VC and Entrepreneurship related topics here (Hat Tip: Max)
Two of my favourites:
“Microsoft will acquire my company” and “VC Primer from an Entrepreneurs’s POV“
On sandhill.com James Quist has a nice story with some guidelines on bootstrapping and raising capital. As he says:
“During our journey, we identified three important guidelines for successfully bootstrapping a company.
Guideline #1: Before starting a business and taking capital, validate your products with real customer pain
Guideline #2: Bootstrap for the right reasons, raise capital for the right reasons
Guideline #3: When you decide to raise capital, find good partners to help grow your business major shareholder.”
Another nice one: A basic (and simply explained) introduction to venture capital by Tom Smith, Partner at Mid-Atlantic Venture Funds…and finally, Rodi Guidero of VantagePoint has a nice list of FAQs on Sfgate.com’s site:
Meanwhile, Rhiannon Evans, who runs TiE’s Mentoring programme has very kindly linked this category on the TiE Members Page…Thanks Rhiannon…
Comments welcome, as always (especially from any entrepreneurs out there).
January 25th, 2007
Posted by
Shantanu |
Entrepreneurship, FAQs for Entrepreneurs, What VCs really do |
no comments
“There’s one shop for every 25 families in India. And 50 per cent of Indians are self-employed with many of them taking to small retail trade*. On the other hand, countries like the USA and UK have only four to five shops for every 1,000 of their population. So what does this mean for India?”
“Certainly there is good news and there is reason to celebrate, says Co Chairman of FICCI Retail Committee, Pranay Sinha.” From “India, no. 1 nation of shopkeepers“
A lot of that infectious enthusiasm and energy was evident at the first-ever TiE Entrepreneurial Summit in Mumbai that I attended last month (17th – 19th Dec).
700+ people paid and turned upon Sunday morning (yes, Sunday!) to hear speakers enthuse about entrepreneurship, new ideas and India…
Saurabh Srivastava, Chairman of IVCA mentioned in his opening remarks how entrepreneurship had always been an intrinsic part of the India milieu and he quoted the FICCI figures (above) that mentioned 50% of Indians were self-employed – which meant a lot of entrepreneurs!
Pravin Gandhi, President of TiE Mumbai spoke about how things are different this time around for Venture Capital in India – not least because of the emerging ecosystem, policy-driven changes and new breed of VC practitioners.
Keep Reading…
January 6th, 2007
Posted by
Shantanu |
Entrepreneurship, India |
no comments
Richard Wallace, Chief Editor of EE Times Europe penned a great Op-Ed in last month’s issue (Nov 6 – 19) on “Doing better than the 20-minute rule”
Richard was referring to the well-known aversion of VCs to invest in regions and geographies that are not in close proximity to their base (see e.g. ”It’s Not the People You Know. It’s Where You Are” and “The VC Stampede to Asia”)
Richard writes,
“Call me naïve but isn’t there more to capital’s role in the economic system that merely cloning Silicon Valley start-ups and creating safe harbors? Isn’t venture capital about risk, and the rewards that can accrue to risk takers across the full spectrum of the global economic system?”
He further says that Europe has been following the California model of VC investing for a much shorter time and therefore has less to feel defensive about. But,
“…in Europe the problem is exacerbated by the fact that technology-experienced entrepreneurs are only just starting to become high net-worth individuals, potential VCs”
If you agree with Richard’s observation that “like capital, technology has no nationality, is constrained by no borders, and entrepreneurial-driven ‘ecosystems’ can thrive almost anywhere…”, the lack of attention to Asia amongst European VCs is puzzling.
Amongst “European” VC firms*, I know of only ourselves, Quester and 3i as firms that have been devoting time and resources to Asia over the past few years.
Richard’s conclusion is sobering:
“In the world of global technology story telling, there are a lot of great places to hunt.
Is the VC industry really that different, or is it just out of touch with the global entrepreneur?
Any remaining followers of the 20-minute rule – in Silicon Valley or elsewhere – beware”
P.S. I must mention here the work that Alpesh and Sheetal, both good friends, have been involved with for some time now. This is the Global Entrepreneur Programme of the UKTI. Its primary purpose is to help entrepreneurs choose UK as the base for their new venture and provide support & facilitation along the way…A rare example of bureaucratic foresight.
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* I am aware that Joe Golden at Accel and Gerard Montanus at Atlas have been travelling to China a lot and George at Benchmark + Sonali at Atlas are both well familiar with India…but Accel, Atlas and Benchmark all came to Europe from US and I assume (therefore) are more plugged into “globalization” and what it means for venture firms than their counterparts in Europe.
January 6th, 2007
Posted by
Shantanu |
Entrepreneurship, Globalization |
no comments
Ed Sim recently wrote a nice post about how being a VC is really about people:
“…So in many ways, being a good venture capitalist is dependent on our ability to understand what drives the people we work with, how to constantly challenge them and motivate them, pat them on the back when they need it, and push them harder if they are slowing down…As much as some would like to think that being a VC is about the technology or numbers, it is all about the people.”
I usually have to spend a few minutes explaining to people what is common between my earlier job as a diplomat and being a venture capitalist…Next time I will simply point them to Ed’s post.
Interesting find: It’s Still The Economy, Stupid
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* with apologies to James Carville
December 24th, 2006
Posted by
Shantanu |
Entrepreneurship, Venture Capital, What VCs really do |
one comment
