With the trickle-down impact of the downturn surfacing in the Venture Capital industry, a general sense of indecision pervades start-ups that are scouting for funds as VCs are paying more attention to their existing companies than new investments. While certain sectors will find fund raising very challenging in this environment, experiences from the last downturn suggests that ventures that strike the balance between capital efficiency and economic viability with reasonable valuations will continue to see investments right through the downturn. In fact, several great companies were formed and funded during the previous dotcom bust.
It’s again one of those times in which some great companies will be built. Canaan Partners remains committed to the Indian market and we are excited about the opportunities here.
To predict which sector and which business will create the benchmark during this downturn, the fundamentals remain the same. Some of the lessons from the last crunch are:
§ While low-cost infrastructure and marketing costs are suited to benefit start-ups, a slowdown in new deals is in the offing. Some funds have decided to go slow or not invest in near term. It will get worse before it gets better. Raise money if you can; don’t vacillate on valuations!
§ With VC debt being scarce, capital efficiency is the key. To make the money, you have to go the extra mile. Trust me - your company has flab - cut it out. Cut costs with a zero base analysis - there’s more than you think!
§ Watch your receivables hard. A lot of old receivables could evaporate!
§ Be cognizant of potential slowdown in some customer segments. Get your blinkers - focus on your existing lines of business, focus on customers. Postpone the more uncertain and long term investments if required. Think about how this downturn affects your customers and your partners - how does it affect you?
§ Employees will be much more scrutinizing of the companies they elect to join. Keep your team together - share and celebrate successes, be transparent about the challenges. Invest in your best people.
There is a silver lining of opportunities in each of the challenges. Make sure you grab them!
Alok Mittal, Managing Director
BharatMatrimony, the largest online matrimonial services site, launched its “Discover Love” sweepstakes that will give away a $12,000 diamond engagement ring and two sets of all-expenses paid cruises to its subscribers. The offer is open to US residents and runs from October 20 through December 31, 2008. The timing of the sweepstakes is significant for BharatMatrimony which recently crossed the milestone of 12 million registered members; and apart from the festive season, it coincides with the launch of its new, glossy bi-monthly publication, Bharat Matrimony Times, which hopes to be the last word on everything on marriage.
Dan Reed, CEO of UnitedLex, the global leader in legal consulting, technology and outsourcing, spoke at the Association of Corporate Counsel (ACC) Annual Meeting in Seattle on October 20, 2008. Mr. Reed’s panel discussion in the Law Management session track – “Considerations in Outsourcing Legal Services” - focused on practical guidance, terms of engagement, and areas of law that are prime candidates for an emerging market.
Blurb, a provider of Web-based self-publishing software and services, raised $5 million in its third round of venture capital. Canaan Partners, one of the previous backers also participated in the round. San Francisco-based Blurb’s service lets anyone upload text and images, edit their layouts, and make their self-published books available to consumers in a print-on-demand offering.
Dexterra, Inc., a leading provider of software to automate and manage mobile workforces, recently announced the close of $21.5 million in funding. Canaan Partners, one of the existing investors also participated in the round. Dexterra will use the funds to support the advancement of its mobile business platform and applications, strong partner and wireless carrier ecosystem and future opportunity in one of the fastest-expanding segments in the enterprise software market.
NewTeeVee, a property of Giga Omni Media, a leading provider of publications and events for the technology and information industries, will hold its second annual conference dedicated to exploring the issues and products driving digital entertainment on Nov. 13, 2008, at the Mission Bay Conference Center in San Francisco. Canaan Partners will participate as a leading sponsor for the event. NewTeeVee Live will benchmark this year’s progress in the world of online video, introduce the behind-the-scenes people leading the industry, address the hard questions facing the online video market and identify the trends that will move the industry forward.
Canaan Partners, partnered and sponsored the 2008 Pop!Tech Scarcity and Abundance Conference that was held on October 22-25, 2008 in Camden, ME. The annual Pop!Tech Conference explored ideas to accelerate the positive impact of world-changing people and ideas and to create a better world by fostering visionary conversations about science, technology and the future of ideas. John Balen, general partner at Canaan, presented to budding entrepreneurs and innovators at the conference looking for guidance on how to build and grow transformative companies and programs.
TiEcon Delhi 2008 one of the largest conventions for entrepreneurs and in its eighth consecutive year, was hosted by TiE Delhi from October 22nd - 24th, 2008 at Hotel Maurya Sheraton. The theme of this year’s conference was “Entrepreneurship Comes of Age”. The event attracted CEO’s, successful entrepreneurs, industry professionals, venture capitalists, investment bankers, policy makers, academia, leading law firms and MNC’s from across the world. In addition to the main agenda certain dedicated activities were initiated for delegates to maximize their participation.
Canaan Partners invests in entrepreneurs and works alongside them to turn visionary ideas into valuable companies. Since 1987, the firm has catalyzed the growth of disruptive technology startups and healthcare companies revolutionizing the practice of medicine. With $3.4 billion under management and more than 95 acquisitions and 55 IPOs to date, Canaan has funded companies such as Acme Packet, Associated Content (acquired by Yahoo), CommerceOne, DoubleClick (acquired by Google), ID Analytics (acquired by LifeLock), Match.com (acquired by IAC), SandForce (acquired by LSI), SuccessFactors (acquired by SAP) and Virsto Software (acquired by VMware), as well as notable healthcare companies such as Advanced BioHealing (acquired by Shire), BiPar Sciences (acquired by Sanofi), Chimerix (NASDAQ: CMRX) and Elevation Pharmaceuticals (acquired by Sunovion). Current technology investments include Blurb, Kabam, Lending Club, Performance Marketing Brands, SOASTA, Tremor Video (TRMR), and Zoosk in the U.S.; BharatMatrimony, Loylty Rewardz and UnitedLex in India; and PrimeSense and LiveU in Israel. The Canaan healthcare portfolio includes emerging leaders such as Liquidia Technologies, Civitas Therapeutics and DICOM Grid. Canaan maintains a presence in the global innovation hubs of Silicon Valley, New York City, India and Israel. For more information visit www.canaan.com or www.facebook.com/canaanpartners. Follow us on Twitter @canaanpartners.
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