Friday, December 01, 2006

What VCs look for - Elements of Sustainable Venture Companies

Our focus in the last 15 years has been internet, specifically wireless. In India, we have a portfolio of 30 companies with around 10 in the internet/wireless domain. We go from seed stage investments to later stage investments as well. Things that we look for:
  1. Large Markets - Address existing markets poised for rapid growth and change. Example is TravelGuru which is a big market with scope of bringing in a lot of efficiency.
  2. Team DNA - 'A' Level founders attract 'A' level teams.
  3. Clarity of Purpose - Summarize company's business on the back of a business card.
  4. Rich Customers - Target customers who will move fast and pay a premium. Eg: Jassi Chadha founded MarketRx.
  5. Insane Customer Focus - Customers will only buy a simple product with singular value proposition.
  6. Pain Killers - Pick an issue of burning importance and delight the customer with a compelling proposition. Eg: PayPal
  7. Think Differently - Take the contrarian route and create novel solutions. Eg: Shashi Reddy started testing services company.
  8. Agility - Stealth and speed will ususally help beat out large companies. Eg: Steve Chen and Chad Hurley started YouTube.
  9. Frugality - Focus spending on what's critical. Eg: Nitish Mittersain started Nazara that has exclusive rights for sportsmen like Sehwag, Tendulkar.
  10. Inferno - Huge markets with customers yearning for a product developed by great engineers requires very little firepower.
We have always made more money with people who are not proven. We do 5-6 seed stage investments every year and we have some ability to assess the technology risk. Why should you come to us:
  1. Phenomenal track record in internet and technology space.
  2. Ability to foresee an idea, refine it and bring it out in a way that it is complementary to the team.
  3. History of 6 years in India, learnt from mistakes.
  4. Long term staying power. We were investing in 2000, 2001 when there were no investors.
Presented By:
Sandeep Singhal ( Sequoia Capital )

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