Venture Finance Venture Finance
Alok Mittal, Managing Director, Canaan India joined Canaan India in March 2006. He focuses on investments in digital media and mobile companies, as well as innovators in managed software services and other IT enabled businesses. Alok also co-founded JobsAhead.com, a leading web-based recruitment business, which was acquired by Monster.com. He shares his expectations from the entrepreneurs and effects of recession on the venture capital industry with Vishal Saxena.
- Which are the sectors you focus upon
We are early-stage investors, focused on IT and IT enabled services. Some of our past investments in India have been in sectors including mobile (mCarbon, Cellcast), Internet (BharatMatrimony, Naaptol) and outsourcing services (iYogi, UnitedLex).
- What are the deciding factors in choosing a startup company?
We invest in people who turn visionary ideas into valuable and significant technology. Therefore team is first and foremost in our consideration to invest. We also look closely at the market – size, growth, competitive pressures. We try to answer the question – “why should this particular startup succeed” both today but more importantly in the long run? What is your competitive advantage and why will you be able to sustain this going ahead.
- What are your expectations from an entrepreneur in terms of their mindset and the way they handle their business in India?
Our expectation of entrepreneurs is the same worldwide – we want to work with people who are passionate about building a great business. We recognize that the entrepreneurial journey is challenging so we want to work with someone who will stick it out even through the tough times. Beyond that, being thoughtful and open to ideas are useful traits as most startups have to react quickly and evolve based on the external environment. Lastly it helps to think deeply about the customer – technology, finance etc. are important – but why will your end customer accept your product?
- Which are the sectors, you think will witness tremendous growth in future?
We are bullish on mobile – factors such as improved devices, infrastructure and customer demand are key driving factors. Online consumer services and ecommerce also continue to be relevant.
- Is there any effect of recession on venture capital industry?
Till date, startups have been mostly shielded from the slowdown; however startups globally should be prepared for tougher times in 2012.
- What is the future of venture capital in India?
Venture capital is still a relatively young asset class in India. The investing environment continues to mature – driven by rapid innovation and overall economic growth. The last few years have also seen steady exits, though we still have some ways to go to catch-up globally.
- What is your level of involvement in an investee company?
We invest in early-stage companies, and are actively involved with our portfolio. We prefer to take on Board seats and bring the strength of our global resources – ranging from helping hire the best candidates to expanding in overseas markets. We also work directly with our portfolio companies in setting strategy. Lastly we provide future financing support – using our internal resources as well as introducing the company to other investors.
- What do you do when things go bad past investment?
We are realistic that all startups go through ups and downs. We work closely with our entrepreneurs to chart the best possible course – leveraging our past experiences both as investors and entrepreneurs.
