Serial entrepreneurs are very hot for venture capitalists

Despite earlier failures, they are more sought after than first-timers

MUMBAI: Amar Goel founded Komli, a company that helps publishers optimise online advertising on their websites, in 2006. But that’s not Goel’s first venture. In 1995 his passion for golf led him to form an e-commerce start-up, chipshot.com, which facilitated the sale of golf equipment through the internet.

At 31, having already founded two companies, Goel easily fits the bill of a serial entrepreneur.

Such entrepreneurs, till now a rare breed in India, are fast making their presence felt, and the venture capital industry is salivating.

“Someone with prior experience knows the value of scale and how to get there fast,” says Sudhir Sethi, founder, chairman and managing director, IDG Ventures.

Sethi has invested in Manthan Systems, a company that helps retailers capture important information that can be used to run the business better.

It was founded by Atul Jalan, another serial entrepreneur for whom Manthan is the fourth venture. Microtrack in 1991, Cybertrek in 1995 and Net-kraft in 1998 are his previous companies.

He claims to have returned money to all his 14 investors across the first three start-ups. But Sethi claims that’s got nothing to do with IDG Ventures’ investment in the company. “Even if the previous venture is a failed one, there is learning in that,” says Sethi, “and that makes the new venture more predictable.”

That explains why Amar Goel received $7 million in funding from Nexus India Capital, Draper Fisher Jurvetson and Helion Ventures for Komli, despite chipshot.com going down with the technology meltdown in 2000.

Chipshot grew exponentially in two years to do $30 million in sales, and employ 200 people.

Venture investors flocked towards Goel, and he raised approximately $50 million in different rounds of funding from Sequoia Capital, Oracle, Sumitomo Corporation and some five others.

“All this happened very quickly. And some choices we made turned sour,” says Goel, who cites excess funding he received as one of the reasons why chipshot.com cracked.  But a willingness to learn and move on is what probably made Goel’s next venture, Komli, a candidate for venture funding. “Entrepreneurs who’ve got experience can avoid a lot of mistakes. And the outcome of a successive start-up is completely independent of the first,” says Rahul Chandra, director of Helion Ventures, which has invested in Komli. Chandra, too, believes that serial entrepreneurs enjoy a definite edge over first-timers. “There are certain things that are common to start-ups. If the entrepreneur has had prior experience, he will make the right hires, spend right, get everything organised in a shorter time and get to revenues much faster,” says Chandra.

On the flip side, however, he feels that those starting out again may not have the same hunger as they had before. But that said, several serial entrepreneurs are finding favour among venture capitalists. Krishnan Ganesh, CEO, TutorVista, which secured $12.75 million in funding from Sequoia Capital, Lightspeed Venture Partners and Silicon Valley Bank, founded four companies prior to that. Others include Dinesh Mehta of Catura Systems, GB Prabhat of Anantara Solutions and Srinivas Rao of Network Solutions.

With so many entrepreneurs to choose from (Sudhir Sethi says he and his team have met over 700 companies since IDG Ventures raised its India-focused fund in September 2006), the VC’s problem in India has been one of plenty. With serial entrepreneurs mushrooming, his task could have been made a bit easier. After all, backing an entrepreneur with a track record brings more predictability to his investment than backing one without one.

sanat_vallikappen@dnaindia.net