Investor Panel in Headstart 2009

The investor panel on Jan 9 participation from the entire spectrum of VCs. The panel was moderated by K Ganapathy Subramanian who was formerly with Jumpstartup. The other panelists were Mohanjit Jolly from DFJ, Varsha Tagare from Intel Capital, TC Meenakshisundaram from IDG Ventures, Karthee Madasamy from Qualcomm Ventures and Gagan Kumar from Accel Partners. The discussion largely happened in motions that Ganapathy moved and the panelists added from their experience.

Motion 1: What is the current scenario of Venture Capital in India and what are the objectives of your fund?
– MJ: The pace may slow but we are certainly not shutting down the tap really. Opportunistic mid-stage companies would be interesting to watch for DFJ. $2.5-3M
– Gagan: Accel only invests in 100k-200k range. Accel India 1 is invested. Accel India 2 has just closed with $60M. We believe in stage investments, investing up to $3M in the lifetime of a company. We do not invest in something that requires deep pockets.
– Varsha: We do not have an upper bound. We can invest upto $1 B as well. The mandate is to look at innovative opportunities outside of Intel. It is a global fund.
– KM: We invest out of the balance sheet of Qualcomm. We are also investing in opportunities that are along the strategic priorities of Qualcomm.

Motion 2: Why is it VCs don’t get back to entrepreneurs at all or in the time they promised?
– A VC has got several plans to fund. There are often cases when the entrepreneurs’ expectations were not met purely because he had very less time to have a look at it.
– A plan between a Yes and a NO is the one that requires highest response time. What should be clear is that a no today is not a no forever. You can come back to us with necessary changes.

Motion 3: What are the alternatives to VC funding?
– Students or moonlighting
– Burn low
– The first money comes from yourself, friends and family
– The order should be Beg borrow steal and VC
– VC money would be the msot expensive money. You don’t have to take it. But if you do take it don’t cry about losing control.
– Some companies do consultancy alongside product development too. Whatever works for you, it is good

Motion 4: What is required to have a very good angel investing ecosystem?
– I think from an ecosystem standpoint there is a need to make more angel investors. Can we as a group of VCs do something about it?
– Why isn’t it that we are seeing group of very very bright PhDs graduating from an Indian university? Basically there has to be a wealth creation exercise which kickstarts this process. That would lead to a potential angel investing network.
– This would help the entrepreneurs raise that little bit of capital which is required. I see that a lot of angel networks like Mumbai Angels or Indian Angel Network that is coming up and this is a healthy trend.
– Late stage PE has seen such high returns that money managers have not been interested in investing in early stage which is tough inherently. But the situation is changing as the public markets have not been giving the kind of return that they used to. So, we can expect to see a surge in early stage investing.
– Angel investing is s difficult business. More so because there are transparency issues as well in India. But as the issues get resolved as the success runs many times over, the progress will be made. Mumbai Angels and others have put together a good screening process.
– Intel has internal angel investing enabled. Employees can get support in their entrepreneurial ventures.

Motion 5: If you have a business plan, what do you do in these days of turbulence?
– Cash is king. Slow your burn. The less burn you show, the better it is.
– Educational training and healthcare are two good sectors.
– Much longer exit horizons. The deal cycle might be longer.
– Get to revenues as quickly as possible.
– The number of deals would be still lower as well. Even if you are able to raise money in a down round, be glad that you at least didn’t run out of cash!

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