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April 30, 2005

Will US PE firms' recent troubles in China, Korea favor India?

A new regulation prohibiting the creation of offshore companies "is bringing foreign private equity investments in China to a halt", says a news item in Private Equity Week:
VCs came up with the practice of setting up offshore holding companies as a way to exit their investments in China. Using that strategy, they took 10 Chinese companies public last year on U.S. stock exchanges.

Richard Xu, a private equity attorney and partner at the law firm Jingtian & Gongcheng in China, says that his own work and that of his firm is slowly grinding to a halt as a result of the regulation...

...Jean Eric Salata, chairman of Baring Private Equity Asia in Hong Kong offered a more sanguine assessment of the regulation. He suspects its goal is to gain tax control over the many citizens who have made considerable fortunes through the sale of equities in off-shore companies. Such investors have escaped taxation by Chinese authorities. Salata maintains that the government is not trying to lessen foreign investment in the country.

Korea's National Tax Service is investigating several US-based private equity firms, says another PE Week article. The firms under investigation reportedly include Newbridge Capital, The Carlyle Group, Lone Star Funds and CitiGroup.
One source told PE Week that tax authorities "invaded" Carlyle's offices in Seoul last week, demanding access to documents and seizing files, as part of an investigation to determine whether the firm qualifies as a permanently domiciled investment company in Korea. If so, the firm may be held liable to pay taxes on deals, such as its lucrative $2.7 billion sale last year of KorAm Bank to Citigroup...

Part of the reason for the rising resentment over the success of U.S. private equity firms was caused by Korea itself. Until recently, the government allowed only foreign firms to invest in private equity within Korea. In December, the government began to reverse that trend as Korea instituted a regulation that allowed domestic firms to invest in private equity within the country for the first time...

...However, of the five Korean funds established under the new regulation, only two have been successful in raising capital thus far. Some have speculated, therefore, that the government has started the latest crackdown on investigating foreign firms, because local firms haven't been able to take advantage of the new regulations.

I wonder what the recent regulation that has brought "China PE to standstill" will do for the occupancy rates on flights from San Francisco to Shanghai vis-a-vis the ones to Mumbai, Bangalore and Chennai.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 27, 2005

Blog Watch: Sramana Mitra

Sramana Mitra is yet another new blogger that I intend to track.

Here's an extract from her bio:
Sramana Mitra has been an entrepreneur and a strategy consultant in Silicon Valley since 1994. Her fields of experience span from hard core technology disciplines like semiconductors to sophisticated consumer marketing industries including fashion and education.

As an entrepreneur CEO, Sramana founded 3 companies: Dais (Off-shore Software Services), Intarka (Sales Lead Generation and Qualification Software) and Uuma (Online Personalized Store for selling clothes using Expert Systems software). Two of these were acquired, while the third received an acquisition offer from Ralph Lauren which the company did not accept (wrong decision).

Here's an extract from her recent post:
Heritage Hotels: Roll-up opportunity for a Private Equity firm?

Spain developed the Paradors concept very effectively, by converting old forts, palaces, and monasteries into beautiful “experience hotels”. India has done only the beginnings of this, but has a very long way to go yet.

Here is a business concept for KKR or Carlyle for India: The real estate market is booming. Old, beautiful architecture crying to be restored, are everywhere. British colonial bungalows in the mountains, hunting lodges in the forests, old aristocratic homesteads in the cities and villages -- dwindling under severe resource pressure.

Buy them up, restore them, staff them up with superb local cuisine chefs, pampering personnel (staff costs literally nothing in India), masseurs, yoga instructors, ... and you have a franchise that could become a global brand, and a great investment!

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 22, 2005

Off Coast software development

H1-B visa caps preventing you from shipping software engineers to the US? No problem. Just buy a cruise ship and park it close to a major US port and have your programmers work "near shore".

Sounds outlandish? Well, that's exactly what SeaCode, led by its fomer tanker-ship captain CEO David Cook, is planning to do three miles off the coast of Los Angeles.

From ADT (Application Development Trends) magazine (via .
By stationing the ship in international waters..SeaCode will be able to remain close to U.S. clients while picking and choosing IT talent from around the world—something that tightening H1B visa requirements have made difficult in the U.S.

Depending on your point of view, it may also allow them to pay less than the rate a team of U.S. developers would command...

During off hours, programming teams can partake of the ship’s recreational facilities or head for the lights of L.A. on a water taxi, since each worker will be required to have a U.S. tourist visa, Cook says.

At first blush, admits COO Roger Green, it sounds like they’re trying to avoid U.S. taxes, regulations and pay rates. Not so, he maintains. SeaCode will be a U.S. corporation, and the ship will fall under a number of state and federal regulations. Green, who has managed outsourcing projects before, says just 10 percent of every dollar spent will go to paying developers—most of whom will probably be non-U.S. citizens. Remaining expenses will overhead—for equipment and supplies, fuel and other costs—all purchased in the U.S., the three say.

For non-U.S. developers, “The take-home money [will be] the same as if someone was working as an H1B inside this country,” Cook says.

The company will use microwave and U.S. providers for phone and Internet access, thus addressing a common outsourcing concern: ownership of intellectual property. Under international law, Cook says, the first point of contact with land determines whose laws will apply. “One of reasons we’re doing things this way is so U.S law will apply.”..

The company has secured funding and is ready to launch once they sign on the first client, Green says.

UPDATE: A colleague suggested a new headline for this post: Sea++

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 16, 2005

BA Systems and Teneo Systems: New stealth mode start-ups with Indian founders

Businesweek's Deal Flow blog as a profile of these two companies as part of an article on "Stealth Deals of Q1"
* BA Systems -- Just four months old, this San Jose, Calif. company is so stealthy that we have little idea what it's doing. Bessemer Venture Partners led its $880,000 series A round. Founder P.J. Singh has been an entrepreneur-in-residence at Bessemer since 2003. Previously, he founded router maker Allegro Networks and gigabit Ethernet company Packet Engines. Could another communications equipment play be in the offing?

* Teneo Systems -- Founded in December, this stealth startup appears to be funded entirely by its founders, whose past ventures likely supplied them with the means. Venkat Rangan is the former founder and chief technology officer at, and Charu Rudrakshi is the former VP of engineering at They put $4 million into Teneo in February.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

Start-ups shouldn't bother with detailed business plans: Mike Moritz

According to BusinessWeek's Deal Flow blog, Michael Moritz, a general partner at VC firm Sequoia Capital and an early investor in Google, Yahoo! and Cisco, while speaking at the VentureOne conference in San Francisco told a story about Google that demonstrated why VCs always say they invest in entrepreneurs or ideas--and not business plans.
As you might know, Google started out thinking it would sell its technology to corporations for internal use. After a year or two, that plan clearly wasn’t working. So the entrepreneurs started casting around for another strategy. "There is nothing like a declining cash balance to focus the mind," Mortiz quipped. Google's founders noticed the success of GoTo (later renamed Overture and bought by Yahoo) and set out to improve on its paid-search model. The rest is history--and so is Google's original business plan, which, to the founders' credit, they never formalized.

When evaluating a nascent startup, Moritz doesn't look for a detailed blueprint of the future. "The longer the business plan, the worse the prospects for the company," he said. "The more comprehensive the financial projections, the more unlikely a company is to meet those expectations." The business plan for Intel was famously written on half a sheet of paper. Yahoo! never had a formal plan, Mortiz said. But in both cases, the founders had a very clear idea of the product or service they wanted to build.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 13, 2005

"India AND China" season

The Chinese Prime Minister Wen Jiabao’s visit to India this week has triggered a lot of "India and China" articles. Here are a few interesting extracts.

From Businessworld's cover story:

Amartya Sen, the Nobel Prize-winning economist, says that this gives the lie to India's argument that its democracy is the cumbersome, if wonderful, weight that is slowing its road to development. Many democracies are progressing much faster than India. The gurus of India's economic and political establishment would like to claim that China's economic boom is rooted in its authoritarianism. But then, they cannot explain why other authoritarian states such as North Korea, Pakistan and Myanmar are economic basket cases.

New York Times columnist Thomas Friedman writes in his book, The Lexus and the Olive Tree, that the dividing lines of the 21st century are not based on politics, ethnicity or history, but on speed. Success, he says, will come to those who are fast and adaptable. And what India lacks when compared to the East Asian tigers and the rapidly modernising Islamic states such as Iran, the UAE and Qatar is their speed and sense of purpose.

An especially interesting part of the Businessworld cover package was the article on some of the common myths regarding India and China: becomes difficult to argue that getting a head start on reforms is the fundamental reason why China's development is ahead of India's. Instead, it becomes clear that the real reason behind China's success is that its reforms have been consistent, focused and pragmatic. Combined with a breakneck drive to create world-class physical infrastructure, this has allowed China-based businesses to plan projects more aggressively and execute them more effectively. Having virtually destroyed itself during the Cultural Revolution, China is now seized with a determination to rebuild itself and the Communist Party knows its future is at risk if it cannot deliver quick economic growth. Hence, the entire nation is driven by a sense of urgency that is missing in India. And this apathy is the real ghost bedeviling India's development...

...It is the other elements of China's economic system - a disregard for the environment, a ban on independent labour unions, disdain for personal property rights, the use of the banking system to subsidise the public sector and a total disregard of intellectual property rights (IPR) - that are more troubling and less understood. These are not just the ills of the system; these are the essential features of it. The reason China performs so much better than India even in the many industries that are more or less equally open in both countries is that the banking system is used to cover up the cost of the infrastructure, and China-based companies have the advantage of not having to negotiate fairly with workers, pay fairly for land, follow environmental standards, or respect IPRs...

...If the last, American century was defined by a battle between ideologies, the coming Asian century looks as if it will be defined by pragmatism, an art of which the Chinese are the supreme practitioners.

While many analysts seem to be stuck between the 'will India and China co-operate or will they compete?' dialectic, the truth is that they will probably do both. Both countries will compete fiercely at the grassroots level, but they will probably begin to co-operate on macro or strategic issues, i.e., an agreement to compete but within an agreed framework. This is a proven and reliable basis for a relationship, and one which binds the western world together.

From Harvard Business School professor Tarun Khanna's McKinsey Quarterly article:
China trumps India when it comes to industries that rely on "hard" infrastructure (roads, ports, power) and will do so for the foreseeable future. But when it comes to "soft" infrastructure businesses—those in which intangible assets matter more—India tends to come out ahead, be it in software, biotechnology, or creative industries such as advertising.

..Moreover, many hard-asset companies in China exist because the government funnels money to them. The government can do this because it intervenes in domestic capital markets. In India there is no such government intervention. Hence successful companies tend to cluster in industries where capital constraints are less of an issue. You don't need a deep reservoir of capital to start a software company; you do for a big steel plant.

The Indian government's lower level of intervention in capital markets and its decision not to regulate industries that lack tangible assets (software, biotech, media) have created room for entrepreneurs. Entrepreneurial activity is fueled both by incumbent (often family-owned) enterprises and by new entrants...

(In China,) productivity and long-term economic growth, as we all know, thrive on competition, which is all too often stifled by government intervention...

...As India opens up further to foreign direct investment, we might well discover that the country's more laissez-faire approach has nurtured the conditions that will enable free enterprise and economic growth to flourish more easily in the long run.

From McKinsey Global Institute Diana Farrell's McKinsey Quarterly article:
Since there are such big differences in the performance of different sectors within the same country, it makes sense to compare the performance of India and China at the sector rather than the national level. In IT and business-process outsourcing, India is so far ahead of the game that China can't do anything during the next 10 or 15 years that would bring it close to catching up. In consumer electronics, however, China dominates, and India won't provide serious competition during the next 10 years.

The auto sector is a toss-up. India's competitive forces have driven an enormous amount of innovation in the sector. Low-cost labor has been used instead of expensive automation, and local engineering talent has developed innovative new products such as the Scorpio—a sport utility vehicle that sells for a fraction of the price of an equivalent car in the United States. In China, large amounts of foreign direct investment have built a big industry, but regulation has so far limited its competitive potential.

Some older "India-China" links:

Reuters article in which some experts talk about how "Patient investors can win big in India"

Blog post and discussion around an article by Tony Nash (former head of VC Research at Red Herring and The Industry Standard) on foreign investments in India vis-a-vis China at the Pacific Epoch blog.

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

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 12, 2005

Why ICICI Venture's Renuka Ramnath is smitten by the retail sector

Economic Times has a profile of ICICI Ventures CEO Renuka Ramnath with a special focus on her fondness for the retail sector.
Definitely the first and one of the few private-equity funds to put its money on the organised retail sector, the $400 million fund has pumped in close to $49 million through its flagship, the $240 million India Advantage Fund, and even
more through other funds.

And it’s reaping benefits beyond the financial. ICICI Venture is now seen as a crucial industry player. Its year-on-year returns are close to 25%, and according to the company’s managing director and CEO Renuka Ramnath, are expected to reach 40%.

From pushing a multi-state expansion plan for Subhiksha, to finding prospective second-round investors at PVR Cinemas, Ramnath is driving growth in the sector. If some ICICI Venture officials play a pivotal role in real-estate negotiations on behalf of companies they have invested in, others are leading financial restructuring and often forcing mergers and acquisitions to achieve economies of scale.

Pantaloon recently picked up the 68% stake that ICICI Venture held in Indus League, and Subhiksha almost acquired Trinethra, a Hyderabad-based retail chain in which ICICI Venture owned 40%...

...But there have also been setbacks. Its investment in Sanjay Narang’s Mars Restaurant has turned sour and while it wants to exit, the company’s IPO plans
don’t seem to be going anywhere. In the last six-months, the fund has liquidated its investments in low-performing companies like Indus League and Trinethra.

Some observers believe that exiting Pantaloon last year was a mistake, but Renuka Ramnath points out that the investment was made in ‘90s and the tenure of the fund was getting over. “The bullishness in retail is not a short-term trend; it’s going to continue for at least another 20 years” says Ramnath and adds, “The Indian consumer is taking to organised retail like fish to water and the lifestyle of young India will undergo a dramatic change”...

However, Ramnath points out that the fund’s focus on the retail sector also stems from the fact that the sector is fairly insulated from external developments and international trends like geopolitical stability, oil shocks etc. “Investors like retail because of its insular nature. It’s ‘the’ India story,” she says. Ramnath believes that the country is in the midst of a consumption boom with almost half of its population migrating from one income level to another every year and the rate of expenditure growth is outstripping savings.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

Hey, wanna go public?

I got the following unsolicited email today:

I hope this finds you well, as you may already know, we specialize in assisting companies in Going Public. We also assist with Private Placement preparation. The President of our company is a very experienced securities and corporate law attorney.

Many people are not aware that any company can go public. Please go to see our site to receive our Advantages of Going Public Report and our Go Public Report.

We would like to propose a joint venture with you. If you or an associate of yours is interested in taking a company public, please let us know. We are happy for you to be very generously compensated for any referrals.

I wish I could convey, all the many benefits of going public in a letter. I'm not sure if you can imagine how valuable and powerful a public company can be in achieving your goals and objectives.

We look forward to developing a long term business relationship.


Shaun Anthony

We also have a newsletter available.
P.S. If you prefer to not hear from us any further, email us with no longer in the subject.
8721 Santa Monica Bl. #359 Los Angeles, California 90069

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 07, 2005

Moment of truth for the Indian textiles industry

McKinsey Quarterly has an article on the opportunites thrown up for the industry by the removal of world trade quota restrictions.
India's apparel industry faces a moment of truth when world trade quota restrictions are fully removed, in January 2005. Exports could increase by more than 15 percent, making India the big winner after China—but only if the Indian government accelerates economic reforms and local manufacturers become more competitive...

With full-blown reforms, we estimate that Indian exports could increase by 15 to 18 percent annually—much higher than the historical growth rate of 6 percent. This expansion would enable India to win 5 percent of the global apparel-exports market by 2008 and to capture $25 billion to $30 billion by 2013. With only minor reforms, we expect annual growth of 8 percent at best.

Private equity firms, who have made significant investments in companies like Welspun India and Sintex Industries, will be watching the government's moves quite keenly as well.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 02, 2005

Is publishing a good investment opportunity?

There is certainly a lot of action suddenly, as this Businessworld Cover Story shows:

And a lot of investments going on as well:

But are the players going to make money?

Sure, it has been a good year for advertising and many mainline papers are doing well, but The Hindu's Murali thinks it is a "bubble". "A shakeout or churn is bound to happen," he thinks. "All this growth has come on the back of very low pricing."

What he means is that it is not economically sensible for publishers to sell newspapers for Rs 1-1.50 a copy, when the printing costs alone are anywhere between Rs 4-7 a copy (This does not include fixed costs)...

...This puts newspapers in India at the mercy of advertisers. It means that the focus is more on the trade, the advertiser and the media buyer and less on the main currency of publishing - the reader. Now, add price cuts to an already reduced cover price. "Price cuts are usually short term if you look at the UK market. In India, TOI started using price cuts in 1994 and worked at it for 10 years in Delhi," says Murali.

That is bad for everyone, TOI burnt cash by bleeding on circulation revenues, and so did HT in trying to match it. "We are just chasing numbers which have become a surrogate yardstick for success. How many of these papers are making money?" asks Murali. What he says is not new, but when dozens of brands start doing that, the value they sometimes erode could be greater than the one they create. So, if all that investor money simply goes in price cuts and circulation losses, and not in creating a good brand that will survive the slump years, it will bring publishing back to where it started. Instead of unlocking value, all that Rs 1,000 crore will go into destroying it.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

The appeal of value-added BPO services

Businessworld examines the opportunity in outsourcing of services like data analytics, patent examination, tax return preparation and market research. That is, stuff that can fetch billing rates of above the $10 per hour (or less) that call center services fetch.

The Opportunities:

The Players:
These niche players include MarketRx (pharma marketing research), Ugam Solutions, Copal Partners (research and analytics in areas like e-commerce), Scope e-Knowledge Centre (market information), Take Solutions (supply chain management), Inductis (equity research and analytics), Lexadigm, Intellevate (both into legal services) and TechBooks (publishing). Joining them are larger, 'blended service' players like WNS, Wipro Spectramind, EXL Service, ICICI OneSource, 24x7 Customer and Msource.

The Challenges:
But as these companies are getting into these new services, they are facing new concerns, too. For one, getting professionals who can do the complex tasks can be a problem. For the sort of job Bisht is doing, companies want PhDs. With India producing just about 5,000 PhDs a year, there could soon be a shortage of such professionals.

...Adds Dhritiman Bhattacharyya, partner, Fox Mandal, solicitors and advocates: "You won't find too many senior lawyers eager to get into legal BPO work, despite the attractive billing rates. The money might be good but the nature of the work is not appealing or satisfying." It's the same with PhDs. The better among them might prefer to work at research institutes.

And even when they do get the staff, there's no surety of success. This niche has already had its own failures. The Escorts group targeted the legal services niche with services like drafting, research and doing memos and opinions for firms in the US. It hired law graduates at Rs 35,000-40,000 a month. But it simply failed to sign up clients and had to keep up with the high training costs. Ergo, it shut shop.

The Upside:

Higher-end work also means lower attrition...

Call centre work is mostly done by the night, but the new service areas can be worked at during the day, too...

...MarketRx, for example, is provided with data on prescription habits of doctors across the US and is supposed to prepare marketing models for new drugs. For such tasks, professionals in the US get $40,000-100,000 (Rs 18 lakh-45 lakh) a year, while in India it would cost Rs 3 lakh-10 lakh.

Says Pavan Bagai, vice-president and head (strategic business), EXL: "Professionals involved in new kind of tasks like analytics find the work enriching and see a clear career path. Labour cost arbitrage is bigger in high-end services, so clients also benefit more."

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

April 01, 2005

"Do I need a MBA to become a VC?"

Here is Fred Wilson's (of Union Square Ventures) answer to this often-asked question:

I never place any value on the schools people went to and the degrees they have. It's bullshit for the most part.

My partner from Flatiron Jerry Colonna has a liberal arts degree from Queens College and he was one the best VCs I've ever worked with.

My partner Brad Burnham doesn't have an MBA either and he knows more about startups, technology, and markets than almost anyone I've ever met.

I don't have anything against MBAs. Going back to school and getting an MBA can be a great break from the career path that allows someone to find out what they really want to do. And you can learn some things along the way.

But you can't learn real life business in school. That requires doing it, not studying it.

So I'll take a candidate who's got the track record over the pedigree any day.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

Why Aruba said no to Cisco

"You must always recognize that venture backed companies are not sold, they are bought. When the large company comes knocking on the door and offers a good deal, you should generally take it." - Fred Wilson of Union Square Ventures

Keerti Melkote, Merwyn Andrade and Pankaj Manglik co-founded Aruba Wireless Networks, a San Jose, CA-based provider of wireless LAN switching systems, did exactly the opposite when Cisco Systems made an offer to buy out the company.

In a nice PR move, the founders explain why in an interview to the New York Times:
Cisco, based in San Jose, Calif., first approached Aruba in early 2003, when it had just started selling its wireless systems. Leading the Cisco team was Dan Scheinman, the executive charged with keeping tabs on new rivals that might present a competitive challenge or an acquisition opportunity.

For Aruba's top executives, the disadvantages of life as a small unit of Cisco - constantly battling for resources and attention - outweighed the advantages of Cisco's brand and marketing muscle.

"I saw that it would have been impossible for us to fulfill our dream inside of Cisco," said Mr. Andrade, Aruba's chief technology officer. "I feel we're really on the cusp of this taking off, but know from my experiences inside Cisco how difficult it would have been to innovate."

Aruba's goal is not to beat Cisco so much as to carve out a sizable share of the corporate market for wireless networks, a market that Mr. Melkote estimates will be worth more than $10 billion in the next five years.

"Even if it's only a $5 billion market, and even if we only get a 20 to 40 percent share of that, we can go public on that," Mr. Melkote said.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.

VCs respond to Paul Graham's "VCs Suck" post

Quite a few VC bloggers have responded to Paul Graham's essay on "The Unified Theory of VC Suckage".

"I do not aspire to defend VC's. Like everything else, there are good people and bad people, good Germans and bad Germans, and good VC's and bad VC's," says Globespan Capital's Venky Ganesan.

"I won’t even try to defend my VC brethern since Paul’s theory is sound in many ways. He admits that he’s met a few VC’s that he likes, so there must be something messed up in the universe somewhere," offers Mobius VC's Brad Feld.

Fred Wilson of Union Square Ventures refers to Feld's days as an entrepreneur, when
his mantra was that all companies sucked in servicing their customers at some level and the goal for his company was to suck less. Entrepreneurs are always going to think that VCs suck at some level. But clearly some VCs suck more than others. If you must fund your company with VC money, it pays to do your homework and find the ones that are the exception to Paul's unified theory rule.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.