The US Silicon Valley’s venture capital industry, the primary source for venture capital in India, is in crisis with exits via initial public offerings down to a trickle — only six worth $470.2 million in the first nine months of 2008 (Source: NVCA). Trouble with exits implies that investments in new companies also slow down. Indian startups will find it tough to raise fresh funds and the environment will get tougher as growth slows down in the Indian economy. What can startups do to ride out these difficult times. Suvir Sujan, co-founder and CEO of Nexus India Capital, a Mumbai-based venture capital firm that manages $320 million in funds, shares some tips. Sujan has been an entrepreneur who lived through and survived the difficult dotcom crash era (he co-founded and led online marketplace Baazee, now known as eBay India).
By Suvir Sujan
Ten Tips for startups to ride out the economic slowdown:
Don’t panic! Economic cycles are a part of life. The best companies are built in the worst of times. If you panic, your employees will panic.
Conserve cash. Delay spending on non-critical things that do not result in revenue generation. Renegotiate vendor contracts, rental contracts, etc.
Improve productivity. Get more out of your team.
Why do some entrepreneurs grab venture capitalists’ attention more easily than others? How do some startups manage to raise multiple rounds of venture funding with apparent ease while others struggle eternally? What is that elusive quality that venture capitalists look for in an entrepreneur? Suvir Sujan, co-founder and managing director of Nexus India Capital, a Mumbai-based venture capital firm that has $320 million in funds under management, says a good venture capitalist looks for Six Sigma entrepreneurs. Sujan has been an entrepreneur himself (he co-founded and led online marketplace Baazee) and explains why being a Six Sigma entrepreneur is not as complicated as it sounds.
By Suvir Sujan
Markets change. Competitors change. Customers change. Regulations change. Suppliers change. But people rarely change. What differentiates a great venture capitalist from a good one is the ability to identify and invest in the right people or ‘Six Sigma’ entrepreneurs, as we like to call them at Nexus India Capital.
Top Ten Traits of a ‘Six Sigma’ Entrepreneur
- Smart – High on common sense
- Passionate – Really believes in the idea
- Quick – Acts on things immediately
When Sandeep Singhal, director, Nexus India Capital, sent across a list of deals from the firm’s first fund, I was taken aback. The $100 million fund, which completed fund-raising in July 2007 — see press release — has done 13 deals and is now fully committed. Yes, that is very fast work. Nexus actually started investing a little before it formally completed fundraising — its first deal was Mobile2Win in January 2007. Still, 13 deals in 18 months is an uncommonly rapid deal run (I thought Helion Venture Partners was the only one in a tearing hurry to close deals). Nexus’ investors seem to think that the firm is doing just fine and have just backed a second fund that is more than double the corpus of the first — $220 million (press release). I met with the firm’s affable founder team or rather more than half of the three-member founder team — Naren Gupta and Singhal — last evening to chat about the new fund and entrepreneurship in India. Suvir Sujan, the third founder, could not make it. Edited excerpts from the interview:
What is the final portfolio looking like for Fund I?
Singhal: Fund I is now fully committed. We’ve done 13 investments from it and will probably do two more to complete investments from the fund. On an average, we would end up investing/committing $6-8 million per company.
Did someone say slowdown? After Helion Venture Partners earlier this year — see post — Mumbai-based Nexus India Capital has raised its second fund — the $220 million Nexus India Capital II, LP. The firm, which launched operations here in 2006 with a $100 million Fund I, has invested in 13 companies so far. List below:
- Dimdim: Open source web conferencing (2006)
- DLight: LED lighting products
- Games2Win: Online gaming
- Kirusa: Voice SMS services
- Komli: Online advertising (2007, Rs 30 crore, with DFJ and Helion)
- CE Info Systems: Navigable maps (2007, Rs 10 crore)
- Mistral Solutions: Embedded systems
- Mobile2Win: Mobile value-added services