Friday, May 13, 2005

Panel Discussion: Where are the VCs investing?

Panel Members:
Alex Vieux- Publisher, Red Herring (Moderator)
Navin Chaddha - Gabriel Venture Partners
Pramod Haque - Norwest Venture Partners
Ajay Shah - Shah Capital Partners
John Malloy - BlueRun Ventures
Abhay Parekh - Accel Partners

A very interesting panel discussion that was moderated quite effectively by Alex Vieux making it quite enjoyable for the audience.

A few takeaways:-
1. Series A valuations are around 10-12mn USD today with typical investments of 5mn USD
2. VC returns are very market dependent but in todays environment with the public markets not very receptive the retrurns are about 10x are considered successful.
3. The VCs tend to not want to have more than one investor to co-invest with them in any deal unless the other investor is bringing a specific skill to the table.
4. Pramod was very clear and the view was concurred that there was too much capital in the industry and quite a few VCs would no longer be around in the medium term.
5. The VC industry is still pretty much built on integrity and trust on the entrepreneur.
6. The VCs are all looking for new category creating companies and dont like following the lead
7. blue Run ventures seemed like the most global fund interested in more global opportunities as well as quite a few things related to the mobile space.
8. Navin seemed to be very interested in funding companies out of india but the challenge was how to add value sitting in the Bay area.
9. Accel seemed to think that they were better off investing in more consumer focussed businesses where the verdict was shorter instead of waiting for the company to absorb 50mn USD before actively selling and hence having to be shut down.
10. Pramod who was really one of the most clear people on the panel stressed capital efficiency and true innovation. By capital efficiency he made it quite clear that of course the company needed to have an offshore strategy but also the company would not be raising money regularly thus distracting the managemnet from the goal of building a business.

Met up with most of the panelists post the event and they were all pretty keen to look at the middle east as a market for their companies. Need to follow-up now.

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