Skip to main content

Posts

Showing posts from November, 2004

Differences between investing in China and India

China has a very strong government and a weak corporate sector. India has a weak government and a strong corporate sector.


Some extracts from an interesting interview in Businessworld with James J.C. Birch, managing director, Institutional Client Services (equities division), Goldman Sachs International, who recently escorted a group of twenty large institutional investors to India:On the surface, as you step out of the airport, China appears to be light years ahead. It looks like Chicago. It's simplified by the fact that they have a one-party government. If they want to do something, it happens. But trying to find good companies to invest in is very difficult. China has an economy that has been fairly closed until recently. They don't have much history in competing on a worldwide basis. You (India) have companies who are leaders in their own field and have competed against the world's best companies in a reasonably open way. And in fact, they are doing better than ever at…

Getting VC funding without a MBA

# Unless your best friend in the world -- whom you happen to have embarrassing pictures of -- is a VC partner, please do not contact any VC. It makes no sense.

# Passion, experience, real-world results are not qualifiers for introduction to VCs. An MBA from some elite school with 20 board members who know Jack Welch personally, with an extremely complicated idea that has never been built, are preferred.

-- E-mail from a Dallas-based CEO to Jerry Colonna, a former VC with JPMorgan Chase, Flatiron Partners and CMG@Ventures.

Here's an extract from Colona's response to the e-mail in his column for Inc.com:

Yes, I'll admit, having compromising pictures of a VC may help get a meeting or even a term sheet, but the larger point speaks to the network effect. Implicit in his frustration is a question I often got when I was on the speaking circuit while an active investor: What's the best way to get the attention of a VC?

Unfortunately he's right about the business school ma…

Larger domestic IT market makes China more attractive to VCs

What is the size of the domestic market for IT products? This is one of the first questions that a General Partner at Boston and Silicon Valley based Battery Ventures posed to me, when I introduced myself to him as someone who tracks VC activity in India (at a Silicon Valley Bank event in Bangalore). The question was interesting since the popular assumption is that US VCs are primarily interested in India as a place for their portfolio companies to outsource R&D or other backend work.

Now, there's a new report saying Battery is set to invest $8-12 million in Bangalore-based optical networking technology company, Tejas Networks, most of whose customers are Indian telecom companies. Not surprising. Since telecom is indeed one sector where the Indian domestic market is large, fast growing and cutting-edge in terms of technology adoption to be very attractive to international product companies. And VCs.

Larry Cheng, an investment professonal with Battery, explains why "Huge…

Should Warren Buffet worry about Ram Shriram?

Ram Shriram of Sherpalo Ventures, an early investor in Google, is free to become a billionaire anytime - ie, anytime GOOG trades above $190. As of last Tuesday (November 16, 2004) the lock-in period on his shares - and that of other early investors in Google - expired.

Here is an extract from SiliconBeat (a blog created by two writers at San Jose Mercury News and seemingly, huge fans of Shriram), which "calculates" that Shriram's Google investment was "the best, if not the best, investment in a company ever":

Shriram is keeping the exact amount he invested into Google a secret. However, the angel round in 1998 of slightly less than $1 million consisted of four main investors, of which Shriram was one. When you factor in that a few other individuals, family and friends may have invested some money, we'll assume Shriram invested between $100,000 and $200,000 give or take.

Given that his return is near $1 billion (see math below), he's made between 5,000 a…

Heralding "global-from-day-one" start-ups

As I was going through the program agenda of Ernst & Young's Israel-India-China Global Hotbed Cross-Border Company Showcase event (at the San Mateo Marriott on November 4, 2004), I was intrigued to see a "Sandeep Kumar" listed as the presenter for an Israeli multimedia semiconductor company called Adimos. Must be a misprint, I thought. And marked Adimos as an "Indian company" whose presentation I needed to attend.

As I learnt later from Kumar's confident presentation to the gathering of VCs, investment bankers and fellow entrepreneurs (most of whom had traveled from the three "hotbed" countries to pitch for their companies' next round of funding) and a visit to the Adimos web site, the company is located in Los Altos, CA (USA) "with research and development facilities in Israel and a growing presence in Japan". Adimos' chips help electronic devices transmit multimedia content wirelessly within the home (like video from a DVD …

Indian gaming industry to grow 5-fold by 2006-07: KPMG survey

Fuelled by booming demand for mobile games and local content, the Indian gaming content industry is set to grow five fold to touch $100 million by 2006-07, according to a KPMG study. The current size of the industry is about $20 million, Economic Times reports quoting the KPMG study. Most of the 15-odd game developement companies - which together employ about 600 people - are focused on providing development services to overseas gaming firms.

Businessworld magazine recently profiled three of the largest players - Paradox Studios (a subsidiary of telecom services firm Reliance Infocomm), Dhruva Interactive and Indiagames - which are busy creating their own branded games.

"VCs are a hindrance for experienced entrepreneurs": Kintera CEO

While venture capital serves a valuable role in providing capital and partnership to young entrepreneurs, "if you have a seasoned management team and a track record, VCs are more of a hindrance than a help". This according to Harry Gruber, co-founder and CEO of Nasdaq-listed Kintera Inc., which provides software and services to help for non-profit organizations raise funding through the Internet.

Gruber, a trained medical doctor, has raised funds from leading VC firms like Kleiner Perkins Caufield & Byers and 3i Group for his earlier companies including two publicly traded biotech firms and InterVu (a provider of Internet video and audio delivery that was acquired by Akamai Technologies in 2000). For Kintera, Guber avoided VCs and had raised about $30 million from high net-worth individuals, before taking the company public in December 2003.

"VCs have a need to gain control of their investments because founders are typically inexperienced. So, certain decisions ar…

Entrepreneurs preferring to be stealth: KPCB partners

It is tough to do venture capital research in the US these days. Start-ups that receive VC funding are no longer keen to publicize their fund raising. So much so that the "dip" in VC investments during the latest quarter - indicated by data from VentureOne and VentureEconomics, may in fact be "artificial", according to a report in San Jose Mercury News.

The newspaper's assertion that "start-ups are trying to stay under the radar longer and not announcing their VC funding", is validated by no less than John Doerr, Brook Byers and Ray Lane (all partners at leading Silicon Valley VC firm Kleiner Perkins Caufield & Byers).

"Entrepreneurs want it that way. Ten years ago, as soon as a venture was funded by a reputable venture capitalist, within six months, two or three clone ventures would be launched like heat-seeking missiles right up their tailpipe. People got wise to that. Why should we say anything about what we're doing until we have h…