The Venture Intelligence Blog

Are VCs and software entrepreneurs incompatible? According to Joel Spolsky, founder of Fog Creek Software, "there's something wrong with the VC model as it exists today". "There are certain fundamental assumptions about doing business in the VC world that make venture capital a bad fit with entrepreneurship. And since it's the entrepreneurs who create the businesses that the VCs fund, this is a major problem," he says in an article titled "Fixing Venture Capital" on his web site "Joel on Software". The basic problem, according to Joel, is that founders would prefer "reasonable success with high probability", while VCs are looking for "fantastic hit-it-out-of-the-ballpark success with low probability". Some extracts from the article that explain the "problem" further: A VC fund will invest in a lot of startups. They expect about seven of them to fail, two of them to trudge along, and one of them...

Pune software firm puts itself for sale in unique fashion A Pune-based software services firm with intellectual property in the networking area has put itself up for sale. Interestingly the company is using classified advertisements in publications such as the US-based deal newsletter, VentureReporter , to advertise its sale. It is also using a different name, Network Enginuity, and an associated web site for the purpose of the sale. "Network Enginuity has been unsuccessful in its bid to secure a second institutional round of funding. We therefore seek to be acquired," the ad says. The company claims its management team has significant networking, network management and offshore development expertise. "A software development contract with a large US network software firm provides sufficient revenue to keep the company intact, but does not provide the margins to introduce our intellectual property to market. We are therefore seeking appropriate candidates to acquire ...

Raman Roy on the evolution of India's BPO industry--and his baby, Spectramind In this 2-part interview to Knowledge@Wharton, Ramon Roy, Founder & CEO of pioneering third-party BPO firm Spectramind, talks about the evolution of India's BPO industry. Especially interesting are his thoughts on why third-party BPO firms can succeed in the face of the trend among MNCs to set up captive centers. Here's just one extract from this fascinating interview: K@W : What was the principal objective with which you started Spectramind, and to what extent has this been satisfied? Roy : We had very clear objectives in setting up Spectramind. We wanted to demonstrate what could be done out of India. We were all big believers in the capability of the Indian workforce. I wanted to be able to tell my grandchildren, “Your grandfather played a role in creating this company.” I’m not trying to say we weren’t trying to make money—that was a driver as well. But that was not the main dri...

Caught between a threat to the L-1 and a decline in the H-1 As has been widely reported (including in the New York Times ), John L. Mica, a Republican Congressman from Florida, has introduced a bill to prevent US companies from hiring foreigners with L-1 visas. What makes the L-1 visa so important to Indian companies? For one, there is no cap on the number of such visas. The NYT article also points out that the L-1 does not require employers to pay workers prevailing wages. The Mica bill, if passed, would ensure that L1 visa holders can work only in their own company premises and not at a client location. OK. But why do large Indian companies like Infosys and Wipro have to worry? After all, these guys can get most of the work done at their offshore development centers, right? Well, that is certainly the goal. But, in reality (going by the trend in recent quarters), the percentage of onsite revenues has been going up. Analysts attribute this phenomenon to the new types of s...

Heralding the arrival of 4G 4G mobile telelcom technologies combine Wi-Fi-style Internet access with the blanket coverage, and fewer base-stations, of a mobile network, says The Economist . And companies like IPWireless, Flarion, Navini, ArrayComm and Broadstorm are offering them to operators as a way to make money out of existing 3G licenses. "Such 4G wireless-broadband systems can be seen in two ways: as a rival to Wi-Fi that offers wider coverage, or as a wireless alternative to the cable and digital subscriber-line (DSL) technologies that now provide broadband access to homes and offices. Mostly, the wireless operators evaluating 4G see it as the first, and fixed-line telecoms operators as the second," the article adds. Click Here to read the full The Economist article

Congresswoman probing use of Indian IT workers by US insurance firms According to a report in The Hartford Courant , Connecticut Republican Congresswoman Nancy Johnson has requested five leading American insurance companies with offices in Connecticut--Aetna Inc., CIGNA Corp, The Hartford Financial Services Group, The Phoenix Cos. Inc and Travelers Property Casualty Corp--to reveal how many Indian citizens they are employing in their IT departments. The report said Johnson wants to know how many Indians the companies employ on H-1B visas now, whether that number has grown during the past two years and how many American IT workers the companies have laid off. "The congresswoman's interest in this is to see that Connecticut jobs are protected and that the law is followed," Johnson's press secretary said in the report. The report pointed out that 165 employees of Infosys Technologies worked at various US offices of Aetna (as of last June) and 400 more of the...

Bank of America tech worker's suicide linked to offshore outsourcing Naturally, the "3-m plus-US jobs-to-be-lost" Forrester Research study figures prominently in the reports about the suicide. Here are some extracts from the article headlined "Job losses sap morale of workers" in Contra Costa Times (May. 19, 2003). One month ago, Kevin Flanagan took his life in the parking lot of Bank of America's Concord Technology Center, on the afternoon after he was told he had lost his job. It was "the straw that broke the camel's back," his father said, even though the 41-year-old software programmer suspected it was coming. He knew that his employer, Bank of America Corp., like other giant corporations weathering the economic storm, was cutting high-tech jobs. He knew that Bank of America was sending jobs overseas. He had seen his friends and coworkers leave until only he and one other person remained on the last project Flanagan worked on.....