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The University of Maryland’s A. James Clark School of Engineering recently featured BGV Principal Yashwanth ‘Yash’ Hemaraj as a distinguished alum in an interview:



UMD Degree: M.S. ’07, Electrical and Computer Engineering 

Yashwanth (Yash) Hemaraj is a venture capital investor at Benhamou Global Ventures. Prior to BGV, Yash was one of the first engineers and product manager at SpiderCloud Wireless, a venture-backed bay area startup building indoor wireless systems. At BGV, his focus areas are technologies that drive the digital transformation of enterprises – ranging from cloud technologies, customer centric applications, cyber security, industrial IoT, to blockchain and advanced analytics solutions. His investments include companies such as Totango, 6d bytes and OneMob. He regularly advises entrepreneurs on multiple aspects of startups, including fundraising, go-to market strategy and product development and is a mentor at various accelerators. He graduated with an MBA from the Kellogg School of Management, and MS in Electrical Engineering from University of Maryland.

Please describe a typical day or week for you as a Venture Capital Investor for Benhamou Global Ventures
As an early stage investor, we typically spend time in 4 high level areas – deal sourcing, due diligence on high priority deals, working with portfolio companies and working on the firm’s operations. In a typical week, I spend time across all these areas.

A typical week will consist of meeting about 8-10 companies on average. Once we are past the initial screening, we dig into the company details – financials, customer calls, competition, bottom-up market analysis etc. This due diligence is done only for the high-priority deals and can last several weeks. Typically, we invest in about 1-2% of the deals that we see. So, this is a very time intensive process.

Making an investment is actually the easier part in venture. Creating enough value post-investment is tough. At BGV, we approach this as a team. All BGV partners come with deep operational backgrounds, having built companies. We are continuously engaged with our portfolio companies, helping the founding teams with the challenges they are facing – sometimes it could be planning for the next round of financing, or it could be around scaling up the team or a marketing related exercise.

Running a VC firm typically involves a lot of backend operations – raising money, reporting our financials to our LPs (our investors), accounting and audits, marketing and positioning our firm. These activities consume a fair amount of time as well.

In addition to these activities, we need to spend enough time outside the office meeting with entrepreneurs, other investors and industry experts. This usually consumes most evenings. In between all this, we also spend time on understanding new technological advancements, reviewing analyst opinions, and refining our investment themes.

What was your career path that led you to your current position?
It had its roots in UMD. During my M.S. at the A. James Clark School of Engineering, I applied for a job posting made by another UMD Alum for an internship at Flarion Technologies (a NJ based startup acquired by Qualcomm.) That internship put me in the company of the people that were involved in building the team at SpiderCloud Wireless. The same alum who mentored me during my internship hired me as one of the first engineers at SpiderCloud. Being in a startup right from the early days gave me the understanding of how companies are built from the ground up. It really shaped the way I think about building teams, markets and the process of scaling up, and the challenges that come with each stage. It was truly an amazing time, we built some pretty impressive technology along the way.

After spending time in engineering and product management roles at SpiderCloud, I decided to get my MBA at Northwestern’s Kellogg School of Management. I wanted to continue to help build companies and found the role as a VC to be one where I can continue to do so across multiple startups. During my MBA, I interned with BGV and found that the team at BGV had deep operational as well as investment experience to guide me along this path. So, I joined BGV as an investor after graduation, where I have had the privilege of working with some amazing founders building innovative technologies in the enterprise space.

Why did you choose the Electrical and Computer Engineering Department at the A. James Clark School of Maryland?
I did my undergrad in India in Electronics and Communication, where I did a lot of work on image and speech processing. I wanted to augment that with graduate studies in signal processing. One of the key reasons for choosing the MS program at the Clark School was the research of Professors such as Prof. Rama Chellappa, who have been working on technologies such as computer vision.
I spoke to alums from the department, who had very good things to say about the program and the mentorship they received at the school. At that time, to be honest paying out-of-state tuition was a big concern for me. The students who I spoke with gave me confidence that we can find research positions as graduate students to cover our tuition expenses. I took the leap.

How did your education in ECE at UMD help to advance you in your career?
The school was instrumental in developing my core skills across not just the theoretical aspects of signal processing and wireless communication, but also practical aspects around hardware software co-design. My research assistantship at the joint program between the UMM school and the ECE department gave me additional practical experience in designing systems. These experiences were critical in my growth at SpiderCloud, where we architected new paradigm of indoor wireless communication.
To be honest, at the end of the day, your success is highly correlated with the people you build good relationships with. I was lucky to have met with a great group of UMD alums, who have been with me across multiple stages of my career.


What are the benefits of attending UMD?
I think the location of UMD is underappreciated. The school is surrounded by great companies, government research organizations and is well-connected to Washington DC. The school has a long history of research advancements that few other schools in the country can match. I am equally excited about the new initiatives the school is undertaking around innovation and entrepreneurship. I think with greater collaboration between the different departments, such as computer science, ECE, aeronautical, business, we have an opportunity to foster innovation at a faster pace.


What was your favorite memory of your time at UMD?
My favorite memory was when our research group at Accelign won the Annual Startup competition at UMD. Our research group, led by Prof. Raj Shekar, was working on a hardware-software component that accelerated image registration to fuse CT Scans with MRI scans to aid better diagnosis of cancer. We presented this technology at the annual competition and were able to beat several other great companies to win the $50K prize.


What advice do you have for current ECE Terps?
My advice to Terps is to take adequate risks in their professional careers as they graduate from school. This is the time where students can experiment by starting new businesses, trying out new concepts and exploring. Only through exploration do you learn. These experiences will definitely help you later down the lane.
I also advise them to make use of internships with the companies around DC, both during the school year and summers. This will provide them practical experience in real-life settings that will make classroom learning more meaningful. I am sure the school runs a lot of internship programs to facilitate this.
Finally, I advise students while at school to spend a lot of time building great relationships with fellow students and faculty. This is a long-term investment in you and your network.

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Source: http://ece.umd.edu/news/news_story.php?id=11026

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By: Richard Lefebvre | CX Partners programs Director

Many customers, struggling with contacting vendors through unfriendly answering machines or unresponsive emails, are at risk of shifting to the competition… Dial-Once, an Oracle ISV partner, is addressing this threat by providing an augmented Visual-IVR that helps companies redirecting customer contacts to an Intelligent Contact Hub!

The Dial-Once solution is capable to qualify the customer request, promote existing self-serve content, guide to the right contact channel (chat, call-back, etc..) and, only when required, transfer the context to a live agent. By being accessible from every point of contact (call, web, social media…), Dial-Once is reinventing customer experience by improving the customer care, reducing call-handling costs and boosting digital transformation.

Deployed in many companies across several industries, Dial-Once fits with all Oracle Customer Service solutions.

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Source: https://blogs.oracle.com/emeapartnercx/innovation-in-customer-service%3a-dial-once-invents-the-intelligent-contact-hub

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BGV recently moderated a panel hosted by Marcus Evans on the challenges faced by LPs in constructing an alternative asset portfolio around the Venture Capital asset class.  The panel members included Matt Stepan with CFM, a financial advisory firm with $11Bn AUM, and Freeman Wood with Mercer Sentinel, a leading investment advisory consulting firm.  The full webinar can be accessed at:

https://vimeo.com/marcusevans/review/233650620/3d1129d2c3.


This entry is the second and final part of the blog focusing on the topic of sustaining returns in the Venture Capital asset class over time.

 

Context & Key Trends


One of the myths about Private Equity is that private equity does well in good markets and does worse in bad markets. The data below shows that private equity performance has outperformed public markets in both good and bad markets.

     











 




As we look into the venture capital asset class, we find a similar story.  Since the recovery from early 1999-2000s the venture capital asset class has outperformed the S&P 500, with a constant increase in IRR and multiples across recent vintages (see charts below).



                    



The chart below from Cambridge compares gains in their cohort of top 100 investments. They concluded that “success comes in all sizes”, meaning the group of top performers includes both large and small funds – ranging from small funds- less than 250M, to mid-size funds, and to larger funds – funds more than 750M. In recent years, funds of less than $250M have accounted for a good portion of value creation.

 



Cambridge has also looked into the performance of top quartile US venture capital funds by vintage years across new funds, developing funds (funds that are in their 3rd or 4th fund), and well-established funds. The cohort of top quartile venture funds contains a good mix of new, developing, and well-established funds.




This data runs contrary to the common notion that only well-established billion dollar funds provide good returns to investors. As investors look to deploy into this asset class, there is an argument to be made in having a basket of investments across big and large, new and established funds.  

 

Q&A


The topic we are going to discuss is the best practices our panelists and their clients have used to sustain returns in the venture asset class after they have made the manager selection decision.  

  1. Matt, at CFM what has been your experience with key variables that led to sustaining performance over time with your VC fund investments?
  2. We have seen a few patterns that contribute to persistence of returns over time. These include: a) Relatively modest fund size – Smaller funds focused on a fewer number of portfolio companies with a thoughtful approach to how they deploy their capital.  Larger funds tend to become less nimble.  It is important to be nimble in the VC world because the startups are often going at a sprint and firms need to be able to react to that while being thoughtful; b) We have also seen consistent success from funds where the teams are focused within markets or sectors where they have a deep understanding of the trends transforming them.  Our prototypical funds are ones with 3 GP’s, a team size of 10-15 people, a fund size greater than $100M but sub $300M with a focus on 3-4 sectors that the team knows well; c) From a portfolio construction basis, funds that have a mix of companies that are both solutions oriented and disruptive do well.  Solution oriented portfolio companies with a good operational track record can often get to good M&A exits on an all cash basis.  We have found that a balanced portfolio between disruptive IPO track startups and solutions oriented startups leads to a persistence of returns over time; d) Finally we believe that the personal character of the VC’s is also a determinant.  Often times when companies begin not to perform to expectations, sometimes VCs step away too early instead of taking corrective action.  While it makes sense to spend time with winners, we also believe that fund managers should be thoughtful in sticking with what they have invested in by taking corrective action instead of settling for a suboptimal outcome.

 

  1. Freeman, what are some of the best practices around risk control to protect the sustainability of returns over time that you suggest to your clients when they invest in Venture Capital?
  2. We have a strong belief that establishing transparency is important – in what is being invested in by the managers as well as how those investments are performing over time. Sometimes our clients fall into the trap of a “set it and forget it” mind set because they are dealing with committed capital but we believe that being proactively involved is critical after making the investment allocation.  We advise our clients to perform on-site diligence as frequently as they are comfortable (at least once every 12 or 18 months) to see how the manager is controlling their risks and how the portfolio is performing.

 

  1. Matt, we have seen cases where investors have used various techniques to get to know the manager team using direct or co-investments. Can you comment on how CFM has scaled its venture fund relationship? Have you done direct and co-investments?
  2. We have had the opportunity to do both and have found that co-investments that are follow on investments (Series B and C) work better for us. These opportunities give us the time to get to know the company, the management team and track progress over time before making a co-investment decision.  We have led a few direct investments but we feel that this does not align as well with our expertise and that VC firms are better suited to make such investments.  Finally, we want to be viewed as a partner by VC firms and not as competitors.  For all these reasons we have found co-investments to work better for us than direct investments.

 

  1. Freeman, what is the best way for your clients to get to know a GP at a fund?
  2. It is a combination of upfront diligence before making the investment decision and post investment relationship building. Often a combination of meeting the manager, understanding their expertise/edge, ensuring that there is an alignment of incentives and getting to know the supporting teams, the key processes (beyond the GPs).

 

  1. What has been you experience with trying time investments in the venture capital asset class.
  2. CFM – While industry data over time reveals that vintage year does play a role in investment performance, we have found that a sustained effort over the long term (ten years or more) results in consistent performance. If this is done well then distributions from earlier years end up funding current and future capital commitments.  We have found the optimal strategy is to be patient, invest in the asset class for the long term and apply the best practices that have been discussed today to deliver good returns.  VC investment is a marathon even though at times the VC markets may feel like a sprint but applying a consistent framework can lead to a persistence of returns.  It is important not to get caught in the day-to-day sprint and stay focused on the long term.
  3. Mercer – I agree, timing is a double-edged sword – do it well and it can be lucrative, do it poorly and it can be very painful. Having a commitment and a process for an asset class for the long term enables LPs to smooth out timing differences and get to know the fund managers well.  This is important.  We have found that LPs who invest in different asset classes some times uncover best practices that can be leveraged to help their fund managers improve their performance.  These types of long-term relationships are a win-win for both LPs and fund managers.  
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