Sunday, August 03, 2014

Angel Investing

English: Diagram of the typical financing cycl...
English: Diagram of the typical financing cycle for a startup company. (Photo credit: Wikipedia)
Angel investing is a beautiful thing. The person who put the first 100K into Google saw it become a billion and a half in eight years. You couldn’t win a lottery and see that kind of money. Peter Thiel put 500K into Facebook for 5% in its first Silicon Valley round and I believe second round overall and saw it become almost two billion dollars in six years, I think. Granted companies like Google and Facebook are rare.

Predictably there are fewer multi billion dollar companies than there are hundred million dollar companies. And there are far more companies that get bought in the tens of millions. A client of mine turned around and sold his app for a cool million. He had total ownership and so got all the money. That transaction was not covered by any of the tech blogs. There are far too many of those to hit the headlines.

A million might be small compared to a billion, but it is no small sum, objectively speaking. Considering a million could give 100K in annual return without getting used up, you could retire if you had a million dollars. I think it is very possible to live off of 100K a year.

Say you invested 50K in a company valued at a million for a five per cent stake, and the company had a 50 million dollar exit four years later, your 50K will have become 2500K, or two and a half million dollars. That would not be a bad return.

Post-IPO it is hard for a company to show wild growth like from inception to the IPO. Most VCs will cash out soon after an IPO for that reason. They know the wild growth is in the early stages.

Let me ask you a trick question. If you had 50K to invest, and you had the option to get 5% or 50% of a tech startup, which would you rather go for? Most people make the wrong choice and say they would like 50% of the company. Getting 5% is better. At 50% you will likely kill the hen that lays the golden egg. You will scare away round two investors. You will not leave much room for the company to be able to attract top talent. Chances are you will also have squeezed the founders of the company. Not being able to raise round two money, the company likely will die. And you will have lost your 50K. Because 50% of zero is? Zero.

A healthy tech startup is one that has plenty of equity for the founders of the company, for various rounds of investors, and for the entire team as it might build up over years.

IPOs are rare, but then it is a good thing that many other forms of exits are possible. Getting bought is a decent enough exit. Most tech startup founders dream about getting bought, and many do get bought.

It would be hard, probably impossible, to raise two million dollars for a tech startup in the New York City Nepali community. But a startup could possibly raise 100K or 200K. If the idea is great, and if the work with that initial seed fund is great, that startup could then go out into the larger market of professional investors and hope to raise two million dollars. A New York Nepali community that can not produce millionaire entrepreneur after millionaire entrepreneur is in no position to lecture the homeland Nepal on economic development issues. Practice before you preach.

Patel Brothers is likely the largest business in Jackson Heights. On an express train Jackson Heights is but 20 minutes from Times Square. As in, you are very much in the city when you are in Jackson Heights. And the place has a great selection of bars and restaurants. Jackson Heights is the only place in the city with garden apartment complexes. I think it would be possible for tech startups based out of Jackson Heights to surpass Patel Brothers - which is an old economy company - in a few swift years. Silicon Valley used to be apple orchards.

Angel investing is when you have the money - maybe 10K, maybe 20K, maybe 50K - but not the ideas, or the time, or the expertise to work on a tech startup. A lot of old economy professionals in the local Nepali community could afford to angel invest. Actually, I don’t think they can afford to not invest. You should harbor the fear of missing out.

The democracy movement is over. The Madhesi movement is over. Now for the next 20 years Nepal has no other business than rapid economic development. The local Nepali community will have to prove itself locally before it can hope for a significant involvement back home. Entrepreneurship is it, and tech entrepreneurship is the crown jewel.

Friday, August 01, 2014

Kanak Mani Dixit: Flawed On Federalism

king birendra.JPG
king birendra.JPG (Photo credit: lieber_matthew)

Kanak Mani Dixit has come out swinging - not the first time - for what can aptly be called the King Birendra Fake Federalism in a Kantipur article a few days ago. Basically he is proposing about five North-South states for a federal Nepal. I wish to make the point that such a proposition is fundamentally flawed. It is akin to foisting King Gyanendra as the first president of Nepal. Good thing we did not go for that.

Federalism and Tarai-Madhes
The Madhesi people have been historically disadvantaged, both through economic marginalisation and their exclusion from national identity, which developed historically as hill-centric. Even as the Madhesi people have succeeded in demanding their place on the table as equal citizens following the Madhes Aandolan of early 2007, we are creating conditions where they will lose access to the resources of the hills, to which they have a right as citizens. ..... The argument of the ‘Madhesbadi’ leaders is that only separate provinces can extricate Madhesis from Kathmandu’s (upper caste) hill domination. One or two Tarai-based provinces would allow Madhesis to run their own affairs while wielding more influence on the national stage. ........ This argument is certainly worth pondering but research shows that the closer you go to the Indian border, southward from the East-West Highway, the weaker the local economy and the poorer the people. The prosperity seems to flow all the way south only when there are arteries leading to the Indian border, as in Biratnagar, Bhairahawa and Birganj. This does seem to indicate a need for hill-plain integration, especially at a time when north-south highways are finally connecting formerly neglected areas of the Tarai. ..... With the largest volume and density of poverty in the country to be found in Madhesi-inhabited areas, it is vital that federalism holds out the promise of both political and economic emancipation to Madhesis. .... The matter is also complicated by the refusal of all Tharu and plains Muslims to accept the ‘Madhesi’ identity, and by the presence of a large population of the Pahadiya in the plains. ....... While there is agriculture in the Tarai, a large human resources base and great possibilities for industrialisation and processing, these alone will not deliver sufficiently improved livelihoods for the massive number of the Tarai poor. We must ensure that the promised bounty of the hills and mountains—through agro-forestry, herbs, tourism, hydropower, service industries, stored water for irrigation, entrepot trade (vis-à-vis China/Tibet), etc—is available to the people of the plains as a right. ...... some Kathmandu politicians may be harbouring visions of achieving the per capita wealth of Bhutan, which has mountains but almost no Tarai. ...... A prosperous Tarai is good for the plains people of Nepal and will also provide an economic boost to the highly populated and marginalised border regions of Bihar and Uttar Pradesh.
Federalism Does Not Break Up The Country

The opposite is true. Federalism strengthens national identity and unity. Hitherto marginalized people - in Nepal's case 80% of the population - feel a sense of belonging.

The Central Government Does Not Go Away

The MPs from the two Madhesh states will still assemble in Kathmandu. They will still become Prime Ministers and ministers. They will still vote for and against issues that impact the entire country. All major highways will be under the jurisdiction of the central government. All big (and by big I mean anything bigger than 10 MW) hydro projects will still - or should - come under the jurisdiction of the central government. People from the Terai will have equal claim to the money the central government might make from the big hydro projects.

The Kanak Mani Dixit mindset fits my definition of Bahunbad. It is just fine for someone to be born a Bahun, but Bahunbad is an evil ideology, a worldview, that puts everyone else down. In this article Kanak Mani Dixit comes across as downright patronizing. The tone of the article is disrespectful. It is as if he is saying to the Madhesis, you don't know what's best for you, let me tell you what's best for you.

The big Bahun conspiracy right now is to make sure no ministries are eliminated or downsized, that the Nepal Police stays the way it is right now, that the Nepal Army remains intact in its current form. Dividing Nepal into five North-South states would do precisely that.

It is known that in a federal setup policing is a state function, not a central government function. When you create two states in the Terai, you basically are going to have to create new police forces in those states that will be primarily Madhesi. And people like Kanak Mani Dixit detest that idea.

Little has changed since the Madhesi Movement of 2007, primarily because the rulers in Kathmandu sign agreements with agitating Madhesis that they don't then adhere to.

Creating two states in the Terai is going to speed up the blacktopping of the Hulaki Rajmarga, the Postal Highway, and that highway is going to form the backbone of the Terai's economic transformation. Madhesis attaining equality in Nepal kills the false nationalism that is based on an irrational distrust and hatred of India. That will finally bring forth Nepal-India cooperation in the hydro sector, and that is what will finally eliminate poverty in Nepal.

The November 2013 elections were not an anti-federalism mandate any more than Kamal Thapa doing well was a pro-monarchy wave. This was an anti-incumbency wave against the Madhesis and the Maoists. The NC and the UML will also face that anti-incumbency wave when the next national elections are held. Neither the NC nor the UML faced the people saying they were for North-South states.


Thursday, July 31, 2014

मधेसी पार्टी एकीकरण: पार्टी अध्यक्छ के लिए चुनाव हो

Description unavailable
Description unavailable (Photo credit: lecercle)
छे महिने के प्रयासोके बाद भी अभी तक मधेसी पार्टीयोकी एकीकरण नहीं हुई है। पार्टी अध्यक्छ कौन बनेगा इस बात को लेकर एकीकरणकी गाड़ी किंचर में फँस गई है, ऐसे सन्देश आ रहे हैं। हृदयेश त्रिपाठी और राजेन्द्र महतो कह रहे हैं कि हम तो साधारण सदस्य बन्ने को तैयार है, हमें दोष मत दो। महंथ ठाकुर और उपेन्द्र यादव की ओर उंगली दिखा रहे हैं।

पार्टी अध्यक्छ तो सिर्फ पार्टी कन्वेंशन चुन सकती है। 10-20 मधेसी नेता के मानने से भला कब कौन पार्टी अध्यक्छ बनने लगा? एक मधेश एक प्रदेश तो गई। बन्दर रोटी खा गया। एक मधेश एक प्रदेश पच्चीस मधेसी पार्टी का नारा मेल नहीं खाता।

अब एक मधेस दो प्रदेश एक मधेसी पार्टी के नारे पर आइए।


MJF(D)  2,66,276
MJF, N  2,12,733
TMLP   1,80,435
SP         1,33,521
NMSP      79,264
Terai Madhesh Sadbhavana Party  64,299
Tharuhat Terai Party Nepal           62,889
Dalit Janajati Party                        47,696
Nepali Janata Dal                          33,186
MJF(R)                                        32,004
Federal Sadbhavana Party              26,463
Madhesh Samta Party Nepal          23,960
Federal Democratic National Front (Tharuhat) 21,519
Tharuhat Tarai Party Nepal           13,811

सिर्फ तीन पार्टीयोको एक करना है ऐसी बात नहीं है। मैं तो १४ पार्टीयोको गिन रहा हुँ। उन सबको एक करना है। अगर ठाकुर और यादव दोनों को अध्यक्छ बनना है तो बहुत अच्छी बात है। एकीकृत पार्टी का कन्वेंशन हो और उसमें दोनों उम्मेदवारी दे। उस होड़बाजी में दोनों कमसे कम जमके मेम्बरशिप ड्राइव तो करवाएंगे।  उससे पार्टीको फायदा होगी।