The Venture Intelligence Blog

Best practices for cross-border companies With Silicon Valley VCs pushing portfolio companies to India and Ishoni Networks already a case study on how not to handle an offshore operation, there is clearly a need for understanding the rules for managing cross-border companies successfully. Businessworld magazine recently provided some "thumb rules" as provided by Bob Williams, general partner at Bay Partners: The head of the offshore operation in India should, ideally be a returning NRI, and "go back a long way" with the top managers or founders of the US entity. The engineers from the Indian and US entities should regularly switch places--in order to facilitate strong linkages. (Incidentally, this is one rule that Unimobile/Graycell--one of the earliest venture backed US-India cross-border start-ups--followed religiously.) Apart from actually using the video-conferencing and other remote communication equipment, it is also very important for the CEO and ...

Vinod Khosla to go part-time at KPCB, to be more active in India: reports Ace entrepreneur-turned-VC Vinod Khosla is to go part time at Kleiner Perkins Caufield & Byers, the leading Silicon Valley VC firm where he has been a General Partner for the last several years, says a report in Mercury News. "Khosla will pursue philanthropic interests in his native India, and may do some investing in companies from there. He also wants to spend more time with his children," the report says quoting unnamed sources. Accordring to the report, Khosla's move comes to light since KPCB is in the process of raising a new fund (which is a typically a time when VC funds renegotiate their partnership arrangements). Meanwhile, Khosla himself is currently touring South Asia, visiting a range of organizations--from R&D centers of KPCB portfolio companies (like Infinera in Bangalore), to colleges (like the Indian School of Business in Hyderabad), to micro-finance institutions (like S...

From fighting VCs to funding Hindi films In a new column for BusinessWeek Online, Vivek Wadhwa, Founder, Chairman and former CEO of US-based enterprise software firm Relativity Technologies, talks about how he fought--and won--against his Venture Capital investors while recovering from a massive heart attack. And how he has now stepped back to do something "less stressful": produce Hindi films. "While still in the Critical Care Unit, I received a phone call saying that my investors felt the need to renegotiate the terms of the current financing. Two days later and still bandaged, I left the hospital and walked, uninvited, into a closed-door meeting, where investors were trying to convince my executive team to accept more money for a revised agreement that would give them majority ownership. I flatly refused, and ended the meeting," he says. "My investors sent me a letter demanding that I step aside and allow the younger brother of a partner in one of thei...

Capital intensive businesses not suited for VC investments: Michael Moritz Capital intensive businesses are not suited for venture capital investing, says Michael Moritz of Sequoia Capital in an interview to Harvard Business Review. "We had an investment in a calamitous fiasco called Webvan which was an enormous, capital intensive undertaking. Those sorts of infrastructure investments are best left to others. The best venture returns are those that come from investing very small amounts of money," he says. According to Moritz, many people make the mistake of thinking that if they are successful at making personal investments, they can also be successful at VC investing. The latter requires the ability "to marry the real determination and enthusiasm with a considerable amount of patience". "This is not something where you can measure, at the end of the week or at the end of twelve weeks, if you have written all the lines of code you promised or achieved...

Lessons in retail With the boom in consumer spending, VCs have begun to show keen interest in funding organized retailers in India. ICICI Ventures has been especially proactive in this sector with investments in companies lilke Shoppers' Stop, Pantaloon, Subhiksha and Trinethra. But unlike IT and BPO sectors (the "traditional" destinations for VC money), retail requires significant investments before profitability can be achieved. For instance, according to media reports, Shoppers' Stop--which was started in 1991 and has also received investments from IL&FS VC--continues to make losses. So, how attractive a business is retailing in India? Kishore Biyani, managing director of Pantaloon Retail India Ltd (which reported a profit of Rs.11.41 crore for 2002-03), provides some clues in an article in Business Standard . Some extracts: On Pantaloon Retails' multiple formats "Under lifestyle retailing, we have two formats—Pantaloon (a departmen...

Wi-Fi is actually under-hyped: Bill Gurley While some of his peers in Silicon Valley are swearing to stay away from Wi-Fi saying that the sector is over-funded, J. William Gurley, General Partner at Benchmark Capital, claims the technology is actually under-hyped! "I believe that 802.11 is remarkably underhyped, relative to the massive impact this seemingly simple standard will eventually have on the entire wireless communications sector", he says in his latest column for News.com . "There will be numerous doubters and numerous challengers, but they will all succumb to the inescapable power of the first true open-standard radio. Resistance is futile," he adds. Gurley uses the examples of the x86 computing architecture and the Ethernet networking standard to say that once an open standard gains critical mass, it is extremely hard to derail. "Simply put, 802.11 is to wireless communications what the x86 is to computing and what Ethernet is to networking,...