Alternative VC Lightbox: good VC shouldn’t put the eggs in the basket too much

cloud network hunting note: as a venture capital firm, Lightbox don’t walk unusual road, not as widespread as other vc investment, dispersing risk, but will be a lot of money betting on a limited number of companies. Such a distinctive style is derived from the founders of company associates genes, are derived from their willing to industry development to pushing the wonderful vision of social progress.

there is one thing the Sid Talwar do better than before, now is a homework before a project is introduced. Now he would never go to a cuff project promotion, it is important to ensure that early reading the entrepreneurs from the material and research the related industry. Otherwise, “you will be impossible with an already research field of a long enough time, and promote speaker can give you valuable communication,” the Lightbox venture partner says, “you can’t expect to listen to promote speech of 20 minutes and then know how to reply the entrepreneurs. It’s not fair and it’s a waste of time.”

Talwar admitted that he had just entered the field of vc to ignore it. “I used to just one by one to meet with people. But it’s different now, I must be at least browse your information and made notes, or not to meet with you. Most of the time, I can make the material more homework than you sent me, so that we can really to have the quality of the conversation, “went on a business trip in bangalore, when drinking coffee in an interview said.

this takes quite a long way, just also is Lightbox overall style.

this is a vc firm composed of technical personnel and entrepreneurs, located in India and the United States, they want to be deeply involved in their investment in startups. Unlike many other VCS habits will invest dispersed (given the high failure rate of a startup), be very harshly Lightbox selection, investment is very little between several companies.

since founded last year, Lightbox first investment fund with it six start-ups, and in three months ago raised the second fund, nearly $one hundred million. Talwar said Lightbox Venture II (the second fund code) are eight or nine companies will only be used for investment.

here’s investment philosophy is raise the stakes. “If invested in many companies, including a lockout does not mean the end of the world. Is different, but for us, “explained Talwar,” such a high degree of focus can not enjoy such luxury – see let us company failed down and think it’s not a big deal.”

the entrepreneurs thinking mode is the result of Lightbox several partners. Sid Talwar Evolv set up vocational training company and sold to the NIIT (India’s national institute of information technology), Sandeep Murthy in Sherpalo VCS before decided to withdraw from India do a general partner, Jeremy Wenokur long ago sold his first company to netscape, Sunny Rao sold Half.com eBay in 2001, and the like.

“when we invest in a startup, we invest to entrepreneurs, are also investing in ourselves. We bet and entrepreneurs to work, can let the company succeed. We are willing to pay all efforts to achieve this goal, “said Tawar.

this is why he before decide whether to invest in a company, can take a long time to do homework. “We spend time on studying a company may be more than any of the funds in the world,” he admits.

Lightbox Venture investment is the first company of Embibe II, an education technology company, focused on engineering and medical professional admission test, especially the prestigious Indian institute of technology, such as university joint entrance exam.

Talwar Shared their education field in the big market in India chose this branch of logic behind it. “Broadly speaking, education is a level of trillion dollar huge market. But once you start it you will find a large part of the detailed research is highly regulated by the government, and from the point of view of a technology and development, only a small part is fit into.”

a about India’s education is the fact that most people are all in order to find a job and study. “The test is critical in our education system. But you completely in the school of the final exam is not important, is the entrance examination decide whether you can enter the ideal university. So we think that people would be willing to use a more efficient than other way of education technology tools to prepare for the exam, “Talwar said,” the entrance examination of the engineering and medical here than anywhere in the west are more complex and more based on application. However, most people don’t get high quality tutoring. So great potential and the field use technology to develop its ideal.”

the Talwar said, this is a $7 billion market value. “Every year there are 300 students prepare for joint entrance exam. Every year new students join in. People now began preparing for the exam of the Indian institute of technology, in ninth grade. It’s a little crazy – spend four years to prepare for an entrance examination!”

Embibe to become students to prepare for the road of the auxiliary role, provide exercises and answers. Later, Lightbox has been added to the process, it began to really work.

“we are aware of any investment people exam tutoring companies are able to put a lot of practice. It is not difficult, and therefore cannot be difference competition advantage. So we turn around improve scores the selling point in order to develop the service. We will focus on, through our platform to get huge amounts of information to improve scores. If you think about it this is a great selling point – old consistent patterns just information (exercises) stack, and we mean, can I use the data and analysis to really improve your grades, “explained Talwar.

here’s an example using the data of this.

in the joint entrance exam score of each question is the same. For example, you have 60 minutes to answer the question of 60, a points every correct answer. There is no problem to give you two points, regardless of the difficulty, score is the same. “So do you have any reason to spend more time than other on a problem?” Own Talwar replied, “no reason to do so. But almost everyone in doing this, spend more than the other one on a problem of time. They get stuck on a problem. Then I need to do with the rest of the topic, to make up for lost time.”

the opposite is also common. “Some people see a topic, think they know the answer, so it only took 25 seconds on the problem, rather than a minute, then the answer is wrong, it’s a waste! If you spent enough time on it, you could have got it, “Talwar said,” we call this wasteful problem solving. If it is in line with paper and pens, we can’t figure out why you do it wrong, we can’t know that you are a was supposed to take on the topic of 1 minute only took 25 seconds. But now we can clearly tell you, if you spend enough time on this problem, you can do it.

only solve such a small point can improve student performance. And this is only Embibe has developed 15 one of the ways to improve performance.

this pattern makes the Lightbox can join in the very early stage, sometimes before profit, is fully involved in the process of establishing a start-up enterprise. This also explains why it to maintain a very small investment portfolio, and for the enterprises selected to join.

start-up business potential is not the only factor. The founders also must be willing to venture capitalists in-depth cooperation. “No matter whether good companies, if they don’t want to take the time to work with us, we will not on their investment.” Talwar said.

he believes that the past companies in the development of the industry is in a state of isolation, because they raise capital in the form of borrowing. “But now, science and technology industry and venture capital are interdependent. A bank will lend the loan to the company, but they would not participate in the lending operations in the company. And here we have two industry, technology and venture capital industry, in the development of each other support each other.”

Talwar like looking at a broader picture, about technology companies and venture capital in the social role of India. “From it and Snapdeal until every received seed investment, speed up running a small company, they are help our country to reduce differentiation, provide people with something that often contact. I don’t think there are a lot of industry can say this. Some industries can, but we are in an unprecedented scale on it.”

as a result, he is willing to spend a lot of energy to do homework, to achieve this goal.

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