by Rajen KumarMiddlemen Rule PSU Banks
The Union Finance Ministrys recent advisory to the public sector banks to take a tough stand while sanctioning loans to the corporate houses is, to say the least, amusing. The advisory,...
Special ReportsOct 2013
Association of Healthcare Providers India AHPI represents the vast majority of healthcare providers in India to work as not for profit organization for advocacy with...
Want to build a High-growth enterprise that will create a lot of value?
Technology plays a crucial role in delivering services from these sectors in a cost effective manner to the majority of the population. For the past 44 years, Greylock has in turn served as a catalyst for businesses to deliver this crucial technology. Most of Greylock's colleagues are former entrepreneurs or senior executives in leading technology companies who can relate first-hand to an entrepreneur's journey.
What do VC's look for in an opportunity?
Venture capitalists look for a business's ability to scale non-linearly with cost: that is, revenue has the potential to grow much faster than expenses. Of course, the challenge is to know and recognize attributes that contribute to non-linear growth. As a result, Greylock focuses on evaluating a company's barriers to entry—technology, market position, etc.—that would provide enough runway for scaling the business before competitors can materialize.
What is an example of an opportunity that has built-in barriers to entry?
One area that poses barriers for global players is found in local markets. Pure-play global technology companies such as Microsoft, Google, Cisco, and Yahoo! dominate their respective categories in India precisely because there are few barriers to entry. India's largest indigenous internet portal, Rediff, has annualized revenue of ~$30 million—a drop in the bucket.
However, other areas pose considerable challenges for global players. For example, although India's Airtel has average revenues per user (ARPU) of roughly $6.00 compared to AT&T's ARPU of $60.00, Airtel's margins are better. In this case, AT&T cannot match Airtel's cost structure and obsessive focus on maintaining the lowest cost per transaction. This combination of healthy margins, location-induced cost advantage, and phenomenal growth is creating tremendous value.
Likewise, services relating to financial inclusion, delivery of quality, affordable healthcare to the majority of the population, extension of education to the nooks and crannies of the country all stand to create market barriers and, consequently, great value.
And finally, an idea without execution is a mere hallucination. Execute like there's no tomorrow! (Siliconindia)
Arvin Babu is Partner, Greylock Advisors India
- Winner of appreciation award for promoting SMEs in India.
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The Last Word
Of the 80 odd seasons that he has been through, he savoured less springs and suffered more rains, proverbially. Not that time took a toll on his age, it was his own siblings who dumped, nay disowned,...
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