galatime.com - Kaushik Gala

Note: The views & opinions expressed in these essays are strictly my own, and not those of any entity I may be associated with as an employee, consultant, promoter, investor, etc.

ARCHIVES

 

Pune

Technology Venture Investors in Pune

 

Technology Entrepreneurship in India - Teams

Entrepreneurial traits

Picking cofounders

 

Technology Entrepreneurship in India - Generating Revenue

Is your business model well-defined?

Your industry's value chain

What is your value proposition?

Which distribution channels will you use?

Who will drive business development?

 

Technology Entrepreneurship in India - Raising Capital

Venture capital & venture capitalists (VCs)

Corporate venture capital

Angels & angel networks in India

Government support for Indian startups

Proof-of-concept funding

Do you need a business plan?

How much money should you raise?

Startup valuation

Pitching to investors

Figure out the term sheet

Negotiating with investors

Due diligence - A necessary evil

Time to sign the investment agreements

 

Equities, ETFs, F&O

› Oct 2011: Equity Risk Premium for India

› Jun 2011: Investing in Indian equities

 

Technology Enterprises in India

› Nov 2010: Technology investment in India - WATER

› Aug 2010: Technology enterprises in India - 3 avatars

 

Risk Capital for MSMEs

› Mar 2010: Risk mitigation for investors in MSMEs

› Mar 2010: Why don't (Indian) MSMEs get risk capital?

› Feb 2010: Angel investing - Will it work for Indian MSMEs?

› Feb 2010: What's so special about innovative MSMEs?

› Feb 2010: Where do Indian/NRI (V)HNIs invest?

› Feb 2010: Funding options for innovative MSMEs in India

› Jan 2010: Innovative MSMEs in India

Corporate venture capital

(Last revised Mar-2012, Send comments to galatime@gmail.com)

Corporate venture capital ('CVC') is the investment of corporate funds directly into new ventures, usually in the form of equity financing. MNCs such as Intel, Dow, BP, Cisco, Siemens, Motorola, etc. have been active CVCs for a long time. In India, Reliance & Airtel are two examples of CVCs.

The usual reasons for an entrepreneur to prefer a CVC are: access to distribution channels and industry networks, acquisition potential, and synergies with corporate business units.

An an entrepreneur targeting a CVC, you must:

  • Identify a CVC whose industry focus, funding amount, investment goals/criteria, etc. are well-aligned with you
  • Figure out how to navigate the CVC's internal hierarchy and decision-making structure, before and after investment
  • Speak to companies previously funded by them, to understand the CVC's pace, typical terms, strategic value, etc.
  • Research the CVC's record of resolving conflicts between their investees and their business units

If you are unsure about whether to take funds from a CVC, instead of a traditional VC, ask yourself this - if capital was not an issue, would you still want to develop a close (strategic) working relationship with the corporation?

Perspectives