Around 1995, entrepreneurs in Silicon Valley were mostly 23 to 30 years old. There was a trend mentioned by Sramana Mitra that during her generation, she was just 24 years old when she started her first venture, 27 when the second one was launched and 29 at the time of launching the third venture. Mitra has been an entrepreneur and a strategy consultant in Silicon Valley since 1994. Her fields of experience span from hard core technology disciplines such as semiconductors to sophisticated consumer marketing industries including fashion and education.
As an entrepreneur CEO, Mitra founded three companies: Dais (off-shore software services), Intarka (sales lead generation and qualification Software; VC: NEA) and Uuma (online personalized store for selling clothes using Expert Systems software; VC: Redwood). Two of these were acquired, whereas the third received an acquisition offer from Ralph Lauren, which the company did not accept. In 2010, Mitra founded the One Million by One Million initiative to help a million entrepreneurs globally to reach a million dollars in annual revenue, build $1 trillion in global GDP and create 10 million jobs. In 1M/1M, she teaches the Entrepreneur Journeys (EJ) methodology to entrepreneurs around the world.
Similarly, Marc Andreessen was 23 years old when he started Netscape. Andreessen was born on 9 July 1971 and is an American entrepreneur, investor, software engineer and multi-millionaire best known as the co-author of ‘Mosaic’, the first widely used Web browser, and co-founder of Netscape Communications Corporation. He founded and later sold the software company Opsware to Hewlett–Packard. He sits on the board of directors of Facebook, eBay and HP, among others.
Erasmic Venture Fund was launched by three partners, namely, Subrata Mitra, Prashanth Prakash and Mahendran Balachandran. Mitra, before launching the Erasmic Venture Fund (EVF) in 2006, founded Erasmic Consulting to work with, mentor and invest personal time and capital into early-stage US/India cross-border companies along with his partner, Prashanth Prakash. Mitra was the chairman of Small-device ( www.small-device.com ), now a part of Digital Chocolate ( www.digitalchocolate.com ). He is also on the board of Mu Sigma ( www.mu-sigma. com ), a statistical modelling and analytics company with huge customer traction across multiple verticals. Prakash has more than 16 years of experience in the IT industry, Internet product development and consulting services. He started his fulltime career at S3 Technologies, a division of GSE Systems. Working for them in various capacities, he led a team that was responsible for building the next-generation case tools for real-time simulations (GemCase). Prakash also widely consulted for various companies in the United States before moving to Bangalore to set up NetKraft in 1998. Balachandran has more than 17 years of experience in the IT industry and was most recently the country manager of Apple Computers in India. He was instrumental in establishing a strong channel and retail presence for Apple as well as their success in the video and corporate segments. Under his leadership, the Indian operations became a high growth and profitable subsidiary of Apple in the Asia-Pacific region.
As per EVF, new technology and technology-led service businesses will emerge from India in the near future as evident from the buzz around start-ups in India. Therefore, many US VCs are getting interested in investing in Indian start-ups.
Availability of money for high-tech start-ups will not be a constraint in the Indian economy in the coming years. What would matter the most is where the deals are. The bigger/well-known companies have already been picked up with huge investments; for example, Indiatimes, MakeMyTrip, Yatra and Tejas Networks. There are a few more that people are running after, but nowhere close to the deal flows that can absorb $2 billion in capital. In addition, most VCs would like to invest in the order of $2 to $10 million per deal (even as initial commitment) at a time. Most India-focused funds also have larger corpus ($100 + million in size), and are, therefore, usually unable to invest less than $1 million at a time either.
The two Erasmic guys have looked at about 80 to 90 deals in the last 12 months. Not absolute zero-stage deals, but those with a little bit of validation, those that have already been set up with $10,000 to $20,000 of friends and family money. Of these, 20 qualified as worthy of further investigation, with only a few being fundable.
Erasmic claims to be the first of its breed of mentor capitalists in India, with a focus on moving ventures to the next level with extreme hands-on involvement. Their team has experience of running full-scale India operations, as well as of founding and existing companies in the United States and in India. They bring substantial contacts to the table, both in the venture community and on the field, in India.
Helion VC, another firm, is going to focus on early-stage deals in India (probably not seed stage, because $100 million is too large a fund to do seed-stage deals in India). Helion Ventures Partners is a $350 million India-focused, stage-independent venture fund, investing in technology-powered and consumer service businesses in sectors such as outsourcing, Internet, mobile, technology products, retail services, education and financial services. Their mission is ‘Partnering with entrepreneurs to build world-class companies’. They have an access to world-class executives who can add a lot of value to the ventures and bring value to their portfolio companies. Their expertise also lies in building a high-quality board of directors/advisors. They also help in managing rapid growth by participating in future rounds of financing in syndication with other venture partners. Their previous experience in mergers and acquisitions (M&A) is also available to entrepreneurs in driving inorganic growth.1
1. ‘Sramana Mitra and Marc Andreessen provide a distinct example of a particular category of entrepreneurs.’ What are the distinct aspects of entrepreneurship that can be learnt from them?
2. What was the purpose of launching EVF by the three promoters in India?
3. In the Indian market, what particular gap exists in terms of funding start-up ventures?
How can that be bridged?
4. What are the reasons for lack of deals for funding in the Indian market? How could it be overcome?
5. What is the difference between EVF and Helion Ventures Partners? Which approach, according to one, would be more suitable for what kind of ventures? Explain.