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June 19, 2006

First Round Capital

When it comes to clarity of positioning to entrepreneurs, true early-stage firms in India (ie, Rs. Lakhs rather than $ Million investors) would do well to look at the web site of US-based First Round Capital.

This is what their home page has to say:
We are not afraid of investing in pre-revenue companies - and often provide a company's first outside capital. As former entrepreneurs, we understand the challenges of launching a new enterprise. We look to take an active role in most of the companies we invest in. We believe our insight and expertise are far more valuable than our capital -- and we look for entrepreneurs who feel the same.


The site's "Our Focus" page provides a listing of what the firm does and does not look for in the entrepreneurs they wish to meet. (Emphasis mine)

Companies must provide a unique solution to an existing urgent need. We don't invest in companies which try to change consumer behavior or create a new consumer need.

We look for companies that are able to leverage advances in distribution, technology or marketing to change industry economics or invent a new business model.

Beginners make a lot of mistakes. We look for proven management, with emphasis on repeat entrepreneurs who are strong executors.

We love investing in technologies and business models that are able to shrink existing markets. If your company can take $5 of revenue from a competitor for every $1 you earn – let's talk!

Companies must provide a unique solution to an existing urgent need. We don't invest in companies which try to change consumer behavior or create a new consumer need.


And here's probaby the best message First Round Capital's site has for entrepreneurs:
We recognize that time is an extremely valuable resource for an entrepreneur -- and seek not to waste it. We operate as an entrepreneurial shop and are able to make quick decisions. No investment committees. No months of negotiations. If we're going to invest, we usually decide within days.


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