Monday, February 23, 2009

Gayathri Radhakrishnan Talks about Her Experience with International Venture Capital

What university did you go to?

My undergraduate studies were in Electronics & Communication Engineering at Bharathiar University in India. I then moved to the US for my graduate studies and obtained a Masters degree in Electrical Engineering from the Ohio State University. Later, due to my strong interest in business and in particular the entrepreneurial ecosystem I decided to pursue an MBA from INSEAD in France.

How did you get to Austin?

Well, this is my second return to Austin – the first one in 2001 right after the telecom and dot com bust. Looks like I have an affinity to move to Austin when the economy is in tatters! Both times the move was for family reasons. The first time around I got to work for a start up and this time I hope I can contribute and help building fundamentally strong and innovative companies for the future.

What did you do at Earlybird Venture Capital?

At Earlybird, I was responsible for sourcing new deals and deal screening in the technology sector across Western Europe. I conducted due diligence on prospective companies and led the process through to our initial investment. Post investment I was a board observer for one of our portfolio companies and assisted other portfolio companies on an as needed basis.

What kind of deals did the group fund?

As the name suggests, Earlybird is focused on funding early stage technology both ICT and medical companies, typically pre-revenue – series A investments and occasionally seed investments as well. Earlybird typically takes a lead position with initial investments ranging from € 1 - € 5 million and subsequent rounds up to a total investment of € 10 - €15 million.

How is the European VC market different from the US VC market?

Considering that the history of Venture capital investments in Europe is relatively younger than that of the US, the investment philosophy can tend to be a bit more conservative in Europe compared to that of the US. Considering that there are not as VC firms across Europe as in the US, there is a stiffer competition among start ups for VC dollars and the shock from the dot com bubble is still fresh - making valuations tend to be more grounded.

Should early stage companies consider going international?

While it is not critical or reasonable for a start up to think international expansion from day one, I do believe that it is something that they should at least spend some time thinking about early on especially if it is in the web based services category. In the current global market, consumers of several web based services span geographies all over the world providing startups with significant growth potential. Let’s take the example of Facebook, for a company that was founded here in the US, a significant number of their user base currently resides outside the US and in fact that is where there biggest user acquisition growth rates have been coming from recently.

When should they go international?

A company that wants to have a global presence needs to start thinking about its international strategy as soon as they see strong traction in their regional market. Another indicator is also tracking the website’s visitors. If there seem to be more visitors from a particular country that was not initially targeted, it might make sense to look deeper in to that market early on and see if the business model fits that market and if it is economically attractive to pursue that market.

What are the product development issues they will face?

Product development issues can be as simple as having the website translated to a regional language and having the site’s appeal be customized for the region to dealing with regulatory hurdles. This largely depends on what kind of services the company is trying to sell to the local market.

What are the financial issues they will face?

On a fundamental level, if a company is offering any service that has web based financial transactions then they need to have the proper tools in place to accept different currency denominations. This is not necessarily a difficult task they would just have to partner with the right financial service provider to add this feature. Other issues for example range from dealing with exchange rates to tax and regulatory implications.

What is your next step here in Austin?

My hope is to continue working with entrepreneurs and share my knowledge, passion and my network to help build something bigger than ourselves.

Best regards,
Hall T.

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