Summary of Harvard India Conference 2011

March 28, 2011 Leave a comment

If you are an “India Watcher” then my comments and observations might be useful. Of course this is just one man’s perspective and blogs are not worth a byte if one is not opinionated. Please take it for what its worth on my impressions of this wonderfully packaged and executed event by HBS and Kennedy School students.

  1. Political Situation – Not much has changed. The speakers often used words like “the corruption levels are scary”. On a positive note, solid growth and the efficiency of service industry suggests that one should just “live with this fact”
  2. Where is the Growth? – Health Care and Financial Services sector will see healthy growth. By the way, services sector is where the action is. Manufacturing is going to be a challenge because of (still) poor infrastructure development.
  3. The Energy Situation – 24% electricity is stolen! Capacity is growing at 6% p.a. In other words, the notion that there is shortage is over hyped. Interesting conflict of view between investors and industry pundits on the subject of renewable energy. Government and small scale sector (PPP) sees a great future in solar (not wind) but the investors seem to think that coal and nuclear can deliver energy needs much cheaper, despite all other factors.
  4. Investment in India – Private Equity and Hedge funds are very active in India. There are between 200 and 300 PE/Hedge funds operating in India already! Buyouts are not the best strategy is what I heard but I am personally not convinced. Most funds are finding their way into publicly traded equity. Majority of the LPs are from out of India – so confidence is still high.
  5. Talent Supply – Education and vocational training is badly needed – whether it is a good business opportunity is questionable as it may not be a viable commercially. That would explain why not many are rushing in. Exception is primary education. The discussion on Management Education in India was dull and non-thought provoking – perhaps because the panel did not include anyone from the industry. Several (other) panelists agreed that there is a huge gap in academia and the industry still.
  6. Perceptions of India – A 300 million strong economically emerging middle class is high on the list for global consumer giants but for average person, India continues evoke the image of an “outsourcing destination”. Dan Tanebaum who now lives and works in India gives the following advice to westerners who want to work in India. “Get on a plane and go”. Its simply not possible to get jobs from here. Folks who do not even reply to your emails are just as likely to hire you if you “simply drop in”.

Guaranteed growth, an ineffective but stable government, a rock solid democracy and a “billion entrepreneurs*” – where else would you invest?

* “March of a Billion Entrepreneurs was the conference theme”

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Harvard India Conference this weekend!

March 25, 2011 Leave a comment

In these lean times we are all making hard decisions where to spend our money and time. There is an abundance of networking events and conferences and its hard to make a judgment. To do my share of “honest” review I can say that judging by last years event, this one is worth going to.

Attendance make sense of course if India happens to be somehow relevant to your business success. In other words anyone who is an investor or doing business with India, a person of Indian origin or simply someone who likes to follow India.

Last year’s event was well planned and the individual break out sessions were charged with emotional discussions. There was never a dull moment. Judging by the agenda and the line up of speakers and  panelists, I am pretty sure we are going to get a repeat performance. The lunch box from Taj Boston should be definitely be an improvement, if there is at all an area of improvement I could have suggested. I am keeping my fingers crossed for a Chiken Tikka Sandwich!

I know this is a last minute thing here and weekends are precious for most of us to compromise. This one is well worth it if you can manage to go. The conference starts tomorrow at 2.30pm and is scheduled to continue all day on Sunday. Here is a link to the website.

They have even setup google moderator to collate attendee questions in advance. Its even better than eVite – we will know what guests will be talking about!

Our own Competitive Analysis

March 8, 2011 Leave a comment

If you are in need of custom market research, competitive analysis, or data analytics, here are your options:

  1. ZENeSYS – A virtual, scalable network of certified management consulting resources
  2. Guru/Elance – A host of other portals for engaging freelance consultants
  3. Big Firms – The big name firms like Gartner, IDC, Yankee, Forrester, & Big 4
  4. Client – You could do it yourself

So how do we stack up?

While we are relatively unknown, our unique model of using a network of our own certified consultants has two powerful advantages:

  1. Virtual Consultants meaning lower cost, faster engagements, diverse expertise
  2. Assurance of quality from ZENeSYS core team

Our consulting certification process is a result of developing unique course ware and assessment methodology for over three years. The result – all our past clients are willing to act as our references.

How to get acquired as a startup

February 19, 2011 Leave a comment

I love to speculate what the future will bring when this long recession is finally over. I do subscribe to the popular belief that there will be a new normal. Small business will rule. At the same time the big guys will go on an acquisition spree to play catch-up. Here are seven tips for startups planning to get acquired as their exit planning.

  1. Qualified and Passionate: The founders and leadership team should have a background that indicates not just capability but the ability to sustain ups and down.The casual and the un-passionate will not be able to face the “startup demons”.
  2. Be aware of the competition: Earth calling. Are we the only intelligent life on this universe? Others may be light years ahead. Either change course or do something to leap frog.
  3. Prove the model: Get paying customers and show that the business model works and is sustainable. This seems to be a standard litmus test for any potential investor or acquirer.
  4. Build Credibility: Have referencible customers and link up with well recognized partners. This is one part of assessing  barrier to new entrants.
  5. Get Noticed: Build a good online presence through a well laid out website and a social media marketing plan. When acquires come window shopping, they need to see an audit trail.
  6. Hit the milestones: Show a steady progress on your accomplishments. This is the second factor for building a barrier to new entrants. New entrants need to play catch up.
  7. Prove your uniqueness: Patents may not fully protect the IP but it gives instant credibility and gives investors a sense of assurance that a startup in on to something unique. The third barrier to entry factor.

A unique strategy by a Digital Media PE fund

February 12, 2011 Leave a comment

Buyout PE funds are at an all time high since year 2005. Despite this, the amount of “dry powder” or unallocated committed capital in the buyout funds is above 50% for the last three years according to AARMCORP who track and benchmark PE funds . Too much money chasing not-so-plenty a deals.

Furthermore, a peer set comparison of buyout funds shows that funds under 500M in assets who are investing in Technology and Communications buyouts have reported less than 10% IRR in the last three years. Despite these two negative indicators, there is unabated interest in technology buyout funds due to the promise of high returns in a relatively short term.

The good news is that it can still happen. Provided, there is a capable management team with the right connections, a smart deal identification mechanism, a creative makeover process, and secured exit planning. Enter Michael Connolly and David Silver of Atlas Digital Media Opportunity Fund who have what it takes to take on the challenge in delivering the heady 40% IRR limited partners expect.

Their highly successful deals EldercareLink, BuyerZone, Big City Doctors, Med Trak Alert and Atehena East, has given them a rich ecosystem of deal selection expertise. They have already identified two Internet properties with interested buyers as suitable target firms. Zane Tarrence, an adviser to the Fund, maintains a large database of potential buyers and together with the Managing Partners who have relationships with both strategic and financial buyers; for example, QuinStreet, Internet Brands, The Health Central Network, and BankRate among many others. In all cases their criteria is to seek out fragmented private companies at a discount to their multiple much higher than what other private or financial buyers would pay.

Unlike other funds, Atlas Digital will examine potential investments with an emphasis on who the potential buyers of the portfolio company will likely be prior to the Fund acquiring a controlling interest so there is no delays in cashing out in a timely manner. The partners management consulting backgrounds has been instrumental in creating valuable “reusable know-how” from re-restructuring Internet property deals such as ElderCare Link and Big City Doctors.

Applying tried and tested methodologies to fix Internet properties gives them an edge over others who are failing to derive efficiencies in their asset management operations. This is a significant edge for Atlas over other funds of similar size. Not only are they able to make more deals but they can also manage them with a lower operating cost.

There are hundreds of Internet businesses with a value just below the transaction size threshold of what strategic buyers are looking to buy, leaving an opportunity for Atlas Digital to identify, acquire, restructure and exit by leveraging their connections, methodologies and pre-appointed exit deals. Email mic@atlasdigitalpartners.com for more information.

Both, Atlas Digital Partners and AARMCORP are past clients of ZENeSYS.

Connecting with leading B-Schools in India

February 9, 2011 Leave a comment

Our consulting skills certification program has attracted the attention of leading B-School students in India. In the last three years nearly 40% of a graduating class were snapped up by consulting firms. In some instances consulting intake has exceeded the traditional finance and marketing new hires.
Awareness about consulting as a career has jumped significantly on B-School campuses. Yet very few options are available for them to learn consulting skills. The opportunity to work on live consulting cases at ZENeSYS is a major draw.

Unlike other live cases on campuses,  ZENeSYS provides an entire life cycle consulting experience. They start with problem definition, creating the hypothesis, developing frameworks, conducting research and analysis/synthesis for the final recommendations. A unique experience for the participants.

To date interns from the following Institutions have worked on ZENeSYS projects:

  1. IIM-A
  2. IIM-B
  3. IIM-C
  4. IIM-L
  5. IIM-I
  6. IIFT
  7. SPJIMR
  8. SJMSOM
  9. NMIMS
  10. Symbiosis

Participants benefit by learning and applying tools and methods leading consultants use. A certificate, CV points, endorsements   and the sheer experience has put several ZENeSYS alumni in consulting jobs.  For ZENeSYS, the participants genuine desire to learn and demonstrate their analytical capabilities has created many happy clients. Some of our alumni are now returning to ZENeSYS as clients, creating a virtuous cycle.

What’s hot in India for business opportunities

February 5, 2011 Leave a comment

Since the 1990’s has created an image of “Outsourcing Nation” in the eyes of the West. This notion has blinkered the opportunity India presents itself as a consumer. Foreign Direct Investment (FDI) rose from $10B in 2005 to $40B to 2009. In year 2008 export from USA to India jumped 85% in just one year alone according to US Commerce Department.

Recent High Growth Sectors in India:

  1. Infrastructure: Real Estate, Automotive, Transportation, Nuclear and Alternative Energy
  2. Technology: IT product development, Business Process Outsourcing and Software Development
  3. Healthcare: Hospitals, Medical Insurance, and Biotechnology
  4. Education: Vocational Training, Schools, Universities, and Business Schools
  5. Retail: Organized Retail
  6. Food & Beverage: Packaged food and Alcohol

Some investment vehicles to consider are joint ventures or direct investment (several sectors are open for 100% ownership by foreign corporations. Franchising is taking on like wildfire with coffee chains, retail stores, hospitals, schools, white goods, eye wear, fashion accessories, garments, and fast food.

Entrepreneurship in the technology sector has proved to be a lucrative hunting ground for Private Equity investors. Several PE funds have been setup in the last three years looking for venture and buyout investments in technology, healthcare and biotechnology startups .