Rajesh Rai, VC, Likes Internet-Reliant, Capital Efficient Companies
We are excited to showcase our first podcast with Rajesh Rai, a co-Founder and Partner at New Markets Venture Partners (NMVP), an early stage venture capital firm in the mid-Atlantic region. Raj had many interesting things to say and we encourage you to listen to the full interview. A few highlights follow:
· Internet-reliant applications. NMVP has investments across the internet industry landscape (content & media, applications and merchandising, as defined by 2i). They particularly like application companies that reformulate a “heavy” technology requiring moderate to deep technical skills into an internet application that reaches large populations with little or no technical skill.
· Capital efficient companies. Many of their portfolio companies leverage the internet to migrate customers, scale their business models, improve margins, and gain competitive advantages. Highly capital efficient companies are a main theme running through their portfolio.
· Mobile trends. NMVP is watching carefully and seeking investments in the mobile application space, particularly location based services.
· Valuation. Large pre-money valuations for internet companies are over for now. “Let’s get to a million users and then figure out a revenue model” will not attract investors.
· Intangible Property. It is worthwhile for cash-strapped and time-crunched entrepreneurs to take a step back and evaluate their intangibles. Legally protecting IP is important for future investors if the property is meaningful and core to their business. Patenting for the sake of owning a patent is not advisable.
· Advice to Entrepreneurs. In these tough economic times, investors are interested in companies focused on basics — providing value to an identifiable target customer, building a scalable business, growing a paying customer base, becoming profitable with minimum burn rate.
Rajesh Rai is a Partner and a Co-founder of New Markets Venture Partners. He brings over 10 years of venture capital, corporate and entrepreneurial experience to his position. Raj teaches graduate level courses in technology entrepreneurship at the University of Maryland, College Park. He participates on review committees of National Science Foundation’s Small Business Innovation Research program, Maryland Industrial Partnerships, and Maryland Technology Development Corporation. Raj serves as a board observer for FortiusOne, Artifact Software, and Innovative Biosensors.
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