How many investments is Chrysalis looking at? What is your strategy for these companies? Are you or the promoters looking for an exit option next year or at the time of an IPO?
Kondur: From the first fund of $65 million, we will make 15 to 17 investments by the year-end. The next fund is planned to be much bigger from which we'll do second round of funding in many of these portals before they can consider an IPO. But we are not viewing IPOs as an exit, none of us will sell our share to the public. We issue fresh shares. So the stakes merely get diluted.

You do an IPO for strategic reasons, specially for Internet companies. It helps you get visibility, helps you make alliances, gives you cash to make acquisitions. Even when we take a company public, we will stay invested in them for 2-3 years. In our companies, we may even go for a third round to build up the momentum. We have some of the best VCs from Asia, US and Europe who have invested in our fund and they will be investors in the second round as well. I feel many of our companies will have the potential to go public. In fact, Miranda will play a key role in making that happen as CFO. Khan brings the experience of taking many Asian companies public.

What is the equity stake you typically take in your ventures? Why?
Kondur: Between 30 to 40 per cent. In very few cases, even less than 25 per cent. This is because we are active partners and not just putting money and blowing away. We are going to stay with the companies.

What is the idea behind the recent expansion of the management team? What do Shujat Khan and Luis Miranda bring to the table?
Kondur: Khan and Miranda will play a very direct role in all the companies we invest in, helping Chrysalis also become more structured.

Miranda: I bring age to the Chrysalis team as I am the oldest among them. After chartered accountancy from the USA, I worked with Citibank for three years and two years with HSBC. I was part of the team that set up HDFC Bank five years back. I will be responsible for investor relationships, institutionalise this organisation, bring systems in place for us as well as our companies, and work with the team to build the portfolio.

Khan: My last assignment was with Merrill Lynch in Singapore where I was responsible for the Internet and technology investment banking covering the entire south Asia. Besides China and South Korea, India as a Net market has a huge opportunity and that is the reason that attracted me to Chrysalis. Thanks to my experience with various business models, I know what works and what doesn't. Chrysalis' unique investment portfolio means a huge opportunity to leverage that and grow.

How many of your investments will be in the B2B and how many in B2C space?
Kondur: I am not sure of the exact mix. We are complete believers in the Internet and it being a powerful phenomena. So everything we do will be around the Net. It could be B2B, B2C, Web-based services, Web infrastructure or Web technologies.

Khan: We are backing companies which will be clear leaders in their space. Our objective is to partner with leading companies, whichever segment of the digital economy they may be in.

Do you subscribe to the view that the success will be more pronounced in the B2B space?
Kondur: There are a number of B2C companies that are very successful and very valuable. It is a virgin territory in India right now. What we have done initially is, taken many of these spaces with our investments. B2B is emerging and a lot of B2C companies have created a lot of value.

What are the essential ingredients you would look for while funding a venture?
Khan: Number one element in any space is the management team and its credentials. We sit with the promoters to make sure the opportunity is large enough and that the money can be made over the long term in that business. We are very much focussed on that. Lastly, we see that the promoters are ambitious, want to become the leaders in their space and are flexible about that. In many cases, founders started of but don't mind bringing in a CEO who is more seasoned. Some people are stiff about such things. They don't want to grow the pie and want to hold on to the larger slice of the pie. We believe in people who believe in growing the pie.

Kondur: Also, there is no point in getting hung up on the business model. It often evolves. Look at Yahoo, they started as a search model and have been both proactive and progressive which helped them evolve their business model. That is what we mean by being flexible.

And of course, you insist on having clearly identified revenue streams as part of the long term viability plan.
Kondur: Absolutely! We start with a few ideas on how to generate revenue. Over time, the medium presents many more opportunities to mobilise what you have built, whether loyalty or eyeballs. When mobile phones started, they didn't think of broadband technology or wireless applications. You don't know what new innovations come up. But we have a very strong sense to begin with.

Is that what is behind your funding of e-gurucool.com?
Kondur: e-gurucool is going to make a lot of money. Education as a space is huge, specially in India. Culturally, we are willing to pay for good education. We send our kids to good schools, pay for tuition and send them abroad for further studies and e-gurucool will encash on just that. We are trying to show people how we add value to their lives in terms of education. There will be people willing to pay for online education.

Miranda: A huge amount of money is spent on tuition outside school and this entire space will be captured by us. The best way to learn maths may not be by being guided by your tuition teacher also. An interactive medium where the best maths teacher in the country provides a curriculum that everybody can access, even a person sitting in a remote corner.

Does the fear of that 80 per cent dot.coms are destined to fail bother you?
Kondur: I think a lot of successes will come if they are backed by the right people, right ideas with the right amount of capital, which is what we are in the business of providing. If 80 per cent of the dot.coms fail, 20 per cent will succeed too.

Are you saying that you will have a 100 per cent strike rate? What makes you so confident?
Kondur: We are growing our team rapidly. We recruit from only among the top 10 per cent. The companies we invest in are also the leaders in their space. The final product depends on execution, the people behind it and the whole process being very focussed. We are very much focussed on the ones which will work and are the clear winners. We are not in pure vanilla funding business. We are responsible for helping them succeed. They have access to our resources, alliances and strategic perspective in addition to the capital. So I guess, the colour of the money is key to success.

Are you fixing any clear targets in terms of return-on-investments in these companies?
Kondur: Venture investing is not like private equity investment. You don't say `here is my capital and here is how much I am willing to pay'. As long as these companies are successful, they are going to be worth many, many times more than the money we have invested in them.

Miranda: We are long term partners. We want to be sure that these are successful leading businesses and we will help them do whatever it takes to get there. In that perspective, I will be working in that role with the portfolio companies, helping them in strategy in a competitive environment.

What are the emerging trends in VC funding in view of the recent tumbling that Nasdaq scrips suffered?
Kondur: Entrepreneurs are becoming a lot more discerning because in every vertical, there are multiple portals that have come in. If you are not the first or second in your space, you are history. But hopefully, you have leant your lesson. Entrepreneurs are today looking at who can make them number one in their space, who will be the best partner, it is not just about valuation or getting the money. What really matters is the exit value: what it takes in the long run. So in that scene, the market has matured. Now entrepreneurs have many options.

Khan: What is attracting VCs to India now is the shift in mindset and attitude. Entrepreneurs are now willing to share their wealth with the employees. That is a major paradigm shift. And we've seen global models emerging out of India. Most entrepreneurs are foccussed on building their business here, but also have global aspirations.