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The opportunity goes beyond IT and services: Vani Kola
Bangalore, June 13, 2007: She went from India to the US, built companies that were eventually valued at billions, created a great deal of wealth for many and is now back home to do it all over again. Ms Vani Kola, successful entrepreneur and role model, has returned to India after 22 years in the US, in a new role as venture capitalist with NEA-IndoUS Ventures (NEA-IUV), a Bangalore-based firm co-founded with Ms Vinod K. Dham.

After a successful career spanning two decades in the US, it took her just two months to decide on returning to India. "More Indians have returned back and plan to return back," says Ms Kola. "It is motivated by three factors: business opportunity, lifestyle parity and sentimentality."

According to her, the opportunity goes beyond IT and services. "Every infrastructure sector is growing, consumer consumption is enormous, and the competence to deliver globally and leverage the India factor is huge."

Twenty years ago, when Ms Kola left for the US, India was a land where entrepreneurship was a birthright, not an earned right. There were very few first-generation entrepreneurs; global exposure was limited, as was spending capacity. Moreover, access to capital was "excruciatingly difficult." But now she sees an India and Indians believing that "we are as good as or better than anybody in the world. Our thoughts are of leadership; our society wants to be at the global centrestage."

Ms Kola is confident of finding and backing the entrepreneurs who will help India storm the world. What kind of entrepreneur is she looking for, exactly? "Someone who has inner confidence and yet listens to feedback objectively. A person whose passion to create, blinds him to the risks. A leader who inspires and encourages others to join hands."

And how does she plan to identify, assess and fund a venture? "There are many parameters. The market potential, the unique differentiation of the company, risks and assumptions of the business."

Like all VCs, she too places high premium on the quality of the team. "The management team is everything. Markets can do sudden shifts ... products may not live up to the promise. But the teams have to be committed and live by their passion and commitments."

She adds: "If the team is wrong, chances are we won't win even if the plan is right. If the team is right we will win even if the plan is wrong, because they will course correct."

NEA-IUV invests in early and mid-stage companies and always takes board seats, with rare exceptions. "We are hands-on in being supportive of the CEO to enable the success of his strategy and execution. We are hands-on in dialogue, introductions and advice."

But Ms Kola is clear about not getting hands-on operationally, since that can only create conflicts and chasm. "We build a relationship with our companies where they value the value-add we bring. We are very respectful of the challenges a CEO faces on a day-to-day basis."

She adds that entrepreneurial aspirants must understand that there is "no free lunch. A business is about making money, yet without the intangible emotion attached to the product there is nothing to sell."

Ms Kola sets the same benchmarks for VC performance. "VCs are rated by the returns they generate to their investors. After all, VC investment is an instrument where you can lose all your capital. This is one reason why the potential of return has to be greater than other financial instruments available. Also, a private VC investment has to do much better than the stock markets, considering the capital risk and long-term lock-up of capital."

In her book, entrepreneurs must keep valuation in mind when seeking VC money. "If that is not attractive, even if the idea is good and the entrepreneur is solid, the financial equation has no fuel in it."

Yet, she is particular that anyone who sets up a business must be willing to share wealth. "Looking at lessons from the past, any society that harboured a significant divide in its citizens' access to resources eventually created civic unrest."

She is keen that India's growth includes its poorest and makes rural societies thrive and survive with pride. "In a country where car manufacturers are launching luxury cars by the day, how can we explain farmer suicides?"

This outlook has resulted in NEA-IUV investing in a mobile payments company that plans to support its platform for enabling microfinance. Microfinance is now being widely touted as a panacea for all rural ills.

But it may not be that, says Ms Kola, "because disbursement, collection, coverage, administration, availability and education are all real challenges. But micro-entrepreneurship and self-empowerment are important tools."

All the more so in the case of women. Ms Kola believes that education and empowerment are key factors in the progress of women, in society and in tech.

"Women's literacy is a societal issue, which we need to address, but it is not directly related to women in boardrooms. If anything, in high school girls are willing to be geeks, but what happens in their careers?"

According to her, elements such as aggression, self-expression, self-centered choices, building networks and leveraging positional power play out in business leaderships. "These are not traditionally the skills that women are groomed for or acquire, so there is even a cultural challenge to seeing women in this role."

Taking a dig at stereotyped portrayals of men and women, she says: "While I see plenty of stereotyping in the saas-bahu playouts portraying women as conniving, men play this out in boardrooms every day, but get portrayed as alpha males!"

Despite women being disadvantaged at many levels, Ms Kola believes "we don't need reservation and quotas for women. What we need is role models and women networks that invest in providing a platform for personal growth of working women. We need sensitivity on the part of corporations to create a supportive, conducive environment for women to succeed."

Does she see any change happening? "I am an optimist. There is so much change in attitude towards professional women, which is encouraging. When I went to engineering school, hardly five per cent were women. Now I see about 50 per cent - that's a start."

Many VCs are bullish on incubation, and Ms Kola is one of them. She believes that incubation is an "important lever in the ecosystem. We are supportive of it and we actively participate. We have even incubated a few entrepreneurs. We have deliberately included a space to do that in our office, apart from setting aside our time and providing capital."

With more and more people taking the entrepreneurial plunge, VCs are finding it difficult to get the right people with the right skills in evaluating a business, judging teams and understanding the investment equation in relation to exits.

She laments that not many professionals have proven skills and prior experience in the areas of recognising trends and emerging markets, advising and mentoring teams and building trusted relationships with entrepreneurs.

In the late 1990s, Ms Vani Kola founded RightWorks, which made software for procurement. She sold the company in 2000 in a deal that valued RightWorks at $1.2 billion. She was also founder and CEO of Certus Software, a player in the financial compliance market with over 70 customers worldwide. Before founding RightWorks, she worked at Consilium and Control Data Corporation. She holds M.S. and B.S degrees in electrical engineering.



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