The Venture Intelligence Blog

LinkedIn, one of the more promising "online social networking" firms, has a nice primer on how venture capitalists can use the service to improve deal flow and get executives and board members for their portfolio companies. A quick search on LinkedIn for WestBridge Capital shows that pretty much everyone on the Bangalore and Silicon Valley based firm's team are registered with the service. Clearly, Indian VCs are becoming more and more online savvy. 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.

Brad Feld points to an article by Dennis Jaffe (Saybrook Graduate School) and Pascal Levensohn (Levensohn Venture Partners) titled "After The Term Sheet: How Venture Boards Influence The Success Or Failure Of Technology Companies." "Written in 2003, this is one of the best articles I've ever seen of the issues and dynamics surrounding the board of a venture backed company," Feld says. I agree. An Extract: The Board, and the roles and behavior of its members, evolve with the venture in three developmental stages: • Start-up/Seed: An embryonic Board assembles as soon as capital is invested and VCs join the Board as preferred shareholders. Their first joint task is to recruit talented employees and define their roles. The optimal size of a start-up Board is between three and five people.This breaks down into one management representative and two venture investors, or two management representatives and three venture investors. • Early Commercialization: A typical...

When their portfolio company is too small to launch a successful IPO, investors consider "reverse mergers" to obtain liquidity. (Reverse mergers or "reverse IPOs" - in which a publicly listed company with little or no business activity merges with a private company - are a pretty common occurance in the Indian market.) Fred Wilson provides whole bunch of reasons why he dislikes such transactions: # The people who control the public shells demand a "premium" for their business because they have the public company asset. The premium they demand often gives them a significant percentage of the merged business and it is rarely a fair deal for the privately held company. # There is no way to determine the valuation at which the merged entity will trade at once the merger is completed. In a traditional public offering shares are sold at the IPO and that sale price is a good indication of where the stock will initially trade. Because there is no way to determin...

US-based Battery Ventures, which recently led the $17 million third round investment in Bangalore-based communication technology firm Tejas Networks, is arming itself for making more direct investments in Indian companies. The firm, which operates out of both the East Coast (Wellesley, MA) and West Coast (San Mateo, CA) of the US, has recently appointed Manik Arora as a Senior Associate to focus exclusively on identifying investment opportunities in India . Manik Arora, Battery's Point Man for India "Battery is actively looking at making investments of between $5 million and $30 million in Indian companies across all technology and technology-enabled services sectors," Arora said during an exclusive interview at Battery's San Mateo office last week. Before joining Battery, Arora worked on BPO initiatives at American Express in New York. He has previously worked with General Atlantic Partners (GA) on India-US technology investments. Arora has had start-up experience ...

I was at the Nokia Growth Partners and BlueRun Ventures (BRV) sponsored TiE event in Bangalore last week. Given the almost complete drying up of early-stage VC investments in Indian companies (ie, not including the cross-border companies) over the last 2-3 years, it was a refreshing change to see a VC firm actively pitching itself to Indian tech companies and calling itself - proudly and clearly - an EARLY-STAGE investor. Here's wishing a warm welcome to BlueRun. May your moves catalyze other Silicon Valley firms who have so far dipped their toes in the Indian market via late-stage investments, move towards early-stage companies as well. Extracts from a Business Line report on BlueRun's press meet: "We are looking for one to two investments in India a year," said Mr John Gardner, founding partner of BRV, a venture fund that focuses on early stage companies in the IT, mobile, and consumer electronics markets. ...BRV, which started its India operations last year, has ...

Financial software maker I-Flex Solutions has created an interesting structuring for its proposed investment in Canada-based insurance software firm, Castek Software Inc. , according to an Economic Times report. "We might back out from buying 34 per cent of the stake in the Canadian company unless it turns around within the next 18 months," a top company official told the media. i-flex had recently signed an agreement with Castek that allows it to buy upto 34 per cent of its stake. "The turnaround of Castek is directly dependent on two pending contract negotiations with two US-based large insurance companies. If Castek wins those contracts, which are under progress, the company will come out of the crisis," the official added. i-flex officials said the valuation of Castek would jump manifold if it gets the insurance deals. "The option is similar to exchange traded derivative instrument-options. We paid a premium to get the right to buy upto 34 per cent over th...

US-based venture capitalists expect to expand their global investments, with China and India among their top targets, according a survey conducted by Deloitte & Touche LLP and the National Venture Capital Association (NVCA). According to the survey, 20 percent of U.S.-based VC respondents plan to increase their global investment activity over the next five years, up from 11 percent currently investing abroad. Forty-two (42) percent plan to invest abroad only with other investors that have a local presence; 39 percent plan to develop strategic alliances with experienced foreign-based venture capital firms; and 30 percent plan to open satellite offices in select regions globally. The U.S. VCs indicated they expect to maintain their U.S. investment presence, both in terms of physical presence and investment levels. Conducted between February and April 2005, the survey measured attitudes and intentions regarding investment regions and industry sectors of 545 venture capitalists worldw...