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June 21, 2005

IBD Network VC event highlights

Highlights from a recent IBD Network event on Venture Capital (held at Menlo Park, CA) featuring Ron Weissman, Apax Partners (as Moderator); Raj Atluru, Draper Fisher Jurvetson; Tim Chang, Gabriel Venture Partners; and Venky Ganesan, Globespan Capital Partners:

* Where are venture dollars going?
o Consensus: consumer media, Internet 3.0, consumer wireless, open source software
o Other areas (no consensus): clean energy, fixed/mobile convergence, software as a service, relieving Sarbanes-Oxley pain points, social software

* What areas would you avoid?
o Consensus: enterprise software (bottom still two years away)

* Five things that make a great deal:
1. An idea that fits with one of the VC's investment theses
2. A rock star team
3. A business model that is highly capital-efficient
4. The VC having good chemistry with the team
5. The ability for the VC to really add value (helping with liquidity events, or helping to hire talent)

* The VCs want plain vanilla, straightforward simple term sheets. Weighted average, no dividends, option pools, etc.

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.