Thursday, June 21, 2007

Flat World Venture Capital

Krishnan Ganesh is a successful Indian entrepreneur. His current charge is TutorVista, a 24-7 tutoring service aimed at the market in the developing world. The Economist reports that funding a venture such as TutorVista in India is much easier now than 10 or 15 years ago:

Whatever he does next, starting a new firm will be a lot easier than it was back in 1990. Financing is more widely available: TutorVista's backers include the Indian arm of Sequoia Capital, a stalwart of Silicon Valley. Employees are more willing to consider joining start-up firms. Regulation is lighter, too. The paperwork required to set up TutorVista was completed in two weeks. But the improved business climate also has drawbacks—rivals are better funded and there is more competition for talented people.

That's a big blue ocean for Silicon Valley venture capital to cross, but the Indian Diaspora network is up to the task. Exporting that close proximity trust over long distances opens up the opportunity landscape, allowing venture capitalists to explore the new markets required for sustainable growth.

Also, TutorVista is another example of personal outsourcing, part of the trend that (and apparently Mave) is riding. Again, from The Economist:

A new report from Evalueserve, a research firm, estimates that annual revenues from “person-to-person offshoring” by individuals and small businesses will top $2 billion by 2015, up from some $250m now. In addition to [tutoring], other services that are suited to this model include tax planning, interior design and administrative support. Mr Ganesh says that TutorVista will not be his last venture in this area.

That's impressive growth, and an indication of how well positioned Pittsburgh's Guru and Mave are. Mave is new to me. If it is new to you as well, check out their blog. Freelancing is a form of entrepreneurship and both Guru and Mave can help Pittsburghers in that regard. Of course, I'm sure they wouldn't mind lending a hand to the Burgh Diaspora while they are at it.

1 comment:

A Touryst said...

Just a few thoughts. Hope to hear other view points.

There us no way TutorVista can make money with their current business model. They need to maintain tutor/Student ratio at a number that will provide full utilization of their full-time tutors that are employed by them. Do the math. They claim to have 25 full time non-tutor employees at their IT maybe at $2000-3000 salary per month. They have 300 tutors whom they pay $300/month and 1500 students around the world. They need all the 1500 of them being actively enrolled in their monthly program all the 12 months, at $99/month for full tutor utilization. They don't have the revenue scalability unless they have reduce their tutor salaries or increase their student fees. They are currently burning up their VC money marketing the US students. They obvious have to have other costs as well!