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Showing posts from April, 2015

Declaration of Independents: A New Venture Funding Model Without the Exit Pressure

Indie.vc is a new experiment (in the US) that provides equity like capital to founders in return for cash distributions from profits instead of needing to sell out or taking their company public.

The philosophy:
There’s a mythology that entrepreneurs need to take VC money to hit the big time. While it’s true that some companies really do need outside capital, there are many examples of great companies that have reached revenues of hundreds of millions of dollars, or even gone public, without ever taking in capital, or taking it in only at a late stage, when they’d already created a high valuation by bootstrapping the company. ...Like cement, the cultural foundation for new projects and companies sets early. Those who focus on raising outside capital and achieving fundable milestones have a very difficult time getting off that VC treadmill. Those who focus on creating value for customers and generating positive cash flow from the very beginning are able to make their own decisions inde…

From Unicorn to Oxymoron - Tech Startup Frenzy Spurs New Lexicon. "Private IPO" being the Latest.

Q: What do you call a $100 million plus investment by Hedge Funds, Mutual Funds and other typically  public market investors, in Startup companies? 

A:"A Private IPO" (to put a small spin on term coined by Josh Kopelman, CEO of US-based First Round Capital)

Q: Isn't IPO short for Initial Public Offering?

A: Well, fuddy duddy, welcome to Tech (Bubble / Not Bubble / Bubble / Not Bubble) Land. As of now, anything - including seeming Oxymora - goes.

In these unusual times, Indian startups dominate list of cases cited by investors in Asia and other parts of the world. Here's an extract (emphasis mine) from a post titled "Alert: Venture Capital Tsunami in South Asia" by Piyush Chaplot, Partner at Singapore-based Innosight Ventures :
Strategic investors such as Softbank, Rakuten, Alibaba, Naspers, etc. are throwing money as if there is no tomorrow. Sovereign Wealth Funds such as GIC, Temasek, QIA and Khazanah want their share of the pie. Even Private Equity firms do n…

Capitulation! E-Commerce FOMO catches up with the Best of Indian PE/VC Funds

The discussions at Venture Intelligence APEX'15 PE/VC Summit demonstrated how the latest E-Commerce wave - including the FOMO (Fear of Missing Out) factor - is challenging the convictions of some veteran PE/VC fund managers.

Veteran 1:
The key is to remain disciplined. Even if you have not managed to find a new investment opportunity for 24 months (because the valuations are unreasonable or whatever) and there is investor pressure to justify the fees they are paying you, it is important to back your conviction and not lose discipline.Veteran 2:
Investments are a question of timing. I can keep investing in safe businesses that I understand well and continue to make steady returns. But the opportunity to make extraordinary returns comes only a few times and, as a fund manager, I'm paid to get those extraordinary returns. So, like it or not, I need to figure out how to get on to the E-Commerce bandwagon! Come April, one of the leading VC firms in the country - which has very publ…

Worried about Tiger Cubs & other Hedge Funds in Indian StartUp territory? Now, start thinking about the Grand Cubs.

Economic Times has an article quoting some worried voices on Hedge Funds adventuring into startup territory:
Hedge funds, which have fuelled frenzied deal-making in Indian internet companies and stoked valuations to stratospheric levels, are moving down the food chain to take positions in younger, smaller startups.  Early-stage startups such as Zop-Now, Vserv and MobiKwik have got hedge funds to bet on them. But as these investors plant themselves firmly in India's startup landscape, analysts as well as entrepreneurs are wary about the funds' potential to abruptly pull out in a crisis, as they did during the econom ic downturn that began in 2008. ...The entry of these high-risk appetite investors and the rising pace of deal-making reminds some investors about previous peaks in investment cycles. ...“From 2006 to 2008, we saw prop books and hedge funds say that they will be in India for the long run, some even having teams on the ground. But after 2008, we did not see most of …

Private Equity investments tick up 20% YOY to $2.65 Billion in Q1’15

Pause in Mega E-Commerce deals sends QoQ value down 36% 


Private Equity firms invested about $2,646 million across 124 deals during the quarter ended March 2015, according to early data from Venture Intelligence (http://www.ventureintelligence.com), a research service focused on private company financials, transactions and their valuations. The investment amount was 20% higher than that invested in the same period last year ($2,212 million across 132 transactions), but 36% lower than the immediate previous quarter (which, on the back of blockbuster deals in E-Commerce companies had witnessed $4,120 million being invested across 112 transactions). Note: All figures in this note are exclusive of PE investments in Real Estate.
There were six PE investments worth $100 million or more during Q1’15 compared to four such transactions in the same period last year and eight during the immediate previous quarter, the Venture Intelligence analysis showed. The largest investment during Q1’15 was IF…