Angel Investing

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.

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Silicon

Larry Ellison on stage. (Photo credit: Wikipedia)

The number one destination for tech startups on the planet today is San Francisco. No, it is not Silicon Valley which continues to be home to the top tech companies in the world like Google, Apple and Facebook. Why did the center of gravity shift? Because the engineers wanted the city lifestyle. Most engineers who work for companies like Google in Silicon Valley tend to live in San Francisco.

Guess which city really has the city lifestyle? New York.

Boston used to be number two after Silicon Valley. Not any more. New York City has wrested that number two spot. Although Boston continues to be strong. Austin and Seattle are also strong spots.

But the Silicon Valley ecosystem is to be envied. One generation of successful entrepreneurs invest their money and wisdom into the next generation of entrepreneurs. That cycle goes on. You have to have several generations of successful companies to end up with the ecosystem that Silicon Valley has.

London and Berlin are also coming along. Bangalore in India has a decently rich density of developers. Chile has experimented with replicating the Silicon Valley thing. Israel has a vibrant tech ecosystem.

Geography matters less and less. India’s answer to Amazon - Flipkart - just raised a billion dollars. They are not in the Valley, or even in the US.

In New York City the primary tech action is in the Flatiron District. There is also a pocket in Dumbo. But Long Island City also has potential, I think. When Cornell establishes its tech campus on Roosevelt Island (New York City’s own “Stanford”) LIC will be a major attraction. Rent is substantially cheaper just because you crossed the river.

Culture is supreme. Silicon Valley’s strongest point might be that failure is celebrated there. Risk taking is probably the top quality in an entrepreneur. Failing is an essential part of the process. If you did not fail, that means you did not try, you did not take the plunge.

The big venture capitalists in the Valley raise their big money in New York City because this is where the pension funds and the like are.

FourSquare, one of the most celebrated tech startup stories to come out of NYC, has an office in San Francisco because they can’t afford not to hire some of the talented developers there who don’t want to live anywhere else. On the other hand, by now Google has a major presence in New York City. They just so happen to own the largest building in the city. It is because Google makes its money from ads. And guess where Madison Avenue is! But it is beyond that. Google has a major engineering presence in the city, as does Facebook, as does Twitter.

Silicon Valley is an attitude, it is a culture. It is about moonshots, as Larry Page might put it.

I routinely go to numerous tech events in the city. If someone makes the mistake of showing up in a suit, he immediately gets labeled a “suit.” I think there is something to be said of casual clothing, but you can not capture the essence of Silicon Valley in jeans or in a hoodie. Larry Ellison, probably the most colorful character to emerge in the Valley, has been wearing suits forever, that is his way of giving the finger to those who wear the casual stuff like they were uniform. You wear what you are comfortable wearing. That could be jeans and a turtleneck, the Steve Jobs way, or a suit as worn by his best friend Larry Ellison.

Software is eating the world, Marc Andreessen, the father of the Netscape browser that launched the web era, famously said in a Wall Street Journal article. There is so much still left to do that I expect the feast to go on for decades and longer. That is my way of saying one Silicon Valley is not enough, if it ever was. My answer to the famous question if Silicon Valley can be replicated is, yes it can be replicated. New York City is as good a place as any to build a tech startup.

Angel investing is a major aspect of a successful tech ecosystem. You seek some basic funding from friends and family. You need a basic prototype to be able to take a stab from the professional angel investors. And then there is crowdfunding. I see that as a majorly positive trend.

I think doing well as an entrepreneur in the New York City environment is a necessary precondition to being able to contribute to Nepal’s economic revolution. Brain drain is a pre-Internet, pre-globalization term. Today the work is so much more interlinked that you can be many places and contribute many places. There are global solutions to many local problems in Nepal.

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NRNA USA: The Next Steps

Regions and eligible countries for the Diversity Visa lottery (Photo credit: Wikipedia)

With the newly organized elections for the first time the Non Resident Nepali Association has become a mass based organization in America, but barely so. If there are 200,000 Nepalis in America, the 2,000 people who voted for Khagendra GC are but one per cent of the target population. And so the immediate focus has to shift to a massive membership drive, much of which can be done online. For elections to be held within a year, the voter base has to cross the 10,000 mark. Even with 20,000 members the organization will have but organized perhaps only 10% or less of the target population.

I think the membership drive by now has hit an autopilot mode. There is a natural rush among the people to join the organization. That is a far cry from the ground reality only a few years back. The use of digital tools has made a major contribution to that end.

But the membership drive is only part of the story. Modern digital tools make possible for an organization to become truly grassroots, not just during membership drives and elections, but also after. A candidate with a public Facebook page that gets updated regularly allows for an election to go beyond name and face recognition to actually igniting discussions on issues. Photos and videos from events shared on such a public Facebook page draw people in, regardless of if they showed up or not, and most can’t.

A national organization necessarily has to hold its regular meetings over conference calls. International meetings can be held over Skype. There are still conferences people show up for, but digital meetings allow for broad participation.

But the most cutting edge thing the NRNA could do would not be digital at all. Encouraging ordinary members to organize monthly home meetings would go a long way to turning the organization truly grassroots. In person is still supreme, and will continue to be.

Those monthly home meetings could be about discussing agenda items sent from the central committee, but also about suggesting agenda items that the central committee should discuss. The communication has to be two way. But the primary thrust of such meetings has to be the upward mobility of members. Most Nepalis in NYC make less than 10 dollars an hour. How can more and more members be guided to possibly making more than 10 dollars per hour? There has to be brainstorming, there has to be note sharing.

The local NRNA has to build formal vehicles to encourage more and more people in Nepal to apply for the diversity visa lottery, and make it smoother for lottery winners to transition their way into America, whether they personally know someone or not. But once here most Nepalis stay stuck in where they started for a decade or more. I think the monthly home meeting could help steer people to look beyond where they stand right now.

A lot of socioeconomic mobility is about exercising the muscles between your ears. There is so much to learn online for free or cheap that can help people move up the income brackets. And being organized helps. There is a clear social component to learning.

Shared wifi can cost as little as $10 per person. You can get a Chromebook for $250. And that is all you need to go to university. We live in an era of lifelong education. No Nepali I know is too educated to learn some more.

So far NRNA membership drives feel like an exercise to help a few dozen people get their fix of politicking and for abstract far flung concepts like dual citizenship. NRNA membership has to be made of month to month immediate relevance to its ordinary members. Beyond taking the membership of the organization past 20,000, that push should be the real thrust of the association.

Keeping all book keeping transparent online, keeping all meeting minutes transparent online would go a long way to making the organization truly grassroots. Heck, in this day and age it should be possible to produce and share video minutes of meetings on Facebook. You get a minute here, a minute there, and edit and share.

If there are two million Nepalis outside South Asia, and if 200,000 of them are in America, the country’s share comes to about 10%. Funny that the top country on the planet has been the last to get organized to some extent as far as the Non Resident Nepali movement is concerned. Perhaps some day NRNA USA might even aspire for global leadership. Going decidedly grassroots and being number one in the use of digital technology is how you get there.

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Democratic Fermentation: NRN Style

Nepali architect - Arniko in Miaoying Temple (Photo credit: Wikipedia)

For the first time in its history, the Non Resident Nepali Association has become a mass based organization in America. This is a major milestone. Once the elections are over in a month, and people have the option to become members again, it is estimated the number might hit something like 10,000 to the current 4,000.

This makes the NRNA the largest Nepali organization in America, and now there is no more need for another umbrella organization. There must be a few hundred Nepali organizations across America, big and small. And that is all good. But there was a need to have one organization that brought everyone together from all parts of the country. That void has been filled.

Other than a large membership base, and perhaps more important, the basic democratic process seems to have taken root in the organization, starting from the election process itself. When an organization has 4,000 members spread across America, you have no choice as a candidate but to wage a decent campaign. You have to go out there and ask for votes, or go online.

I like to joke, which is the most socio-economically backward ethnic group in NYC? Is it the Nepalis, the Tibetans, or the Bhutanis? Considering Nepal is the poorest country outside of Africa, if Nepalis are not number one from the bottom in NYC, the crowd has got to be close to the bottom, there must be a pool of such ethnic groups.

How do you organize such people? Is it possible to buck the trend? As in, could Nepal continue to be the poorest country outside of Africa, but Nepalis in NYC organize themselves in such ways that the community makes major advances as a group over a period of something like 10 years?

I think that is possible. And turning the NRNA into a mass based organization is key to any such attempt. It is not just about dual citizenship. It is also about making socio-economic advances here itself, right here in New York City. Being better organized as a community helps, and that is to do with applying the basic democratic process.

For the longest time it felt like the minuscule ANTA had more members than the giant sounding NRNA. All that has changed. 2014 is proving to be a watershed year for the organization.

When you move from 200 members to 4,000 members, that is a move in the right direction. When members can register online, that is good. When members can vote directly for those running for office, that is swell. Online voting is a tremendous idea. A candidate creating a public Facebook page elevates the conversation.

The issue of dual citizenship remains the top item on the agenda, as yet the perennial unfulfilled goal. Politicians in Nepal are scared shitless that if they were to allow the NRNs dual citizenship, some of them might show up in Nepal to run for office, and then where are we? I remember one Holi in the 1980s when all planets in the solar system came to form one straight line, and that was supposed to be the end of the world. Nothing happened. At the end of the last century, all computers of the world were supposed to go haywire. Nothing happened. There is nothing to fear and everything to gain from the dual citizenship idea. In today’s globalized world Nepal has to think of all members of its diaspora as its ambassadors. Like I like to say, you can bring in Foreign Direct Investment (FDI) or you can keep sending your workers out to Malaysia, Qatar, and where have you.

But then basic democracy is not enough. Recently I jotted down some ideas as to what a new Madhesi organization in the city might look like. Even with its recent love for basic democracy the NRNA will remain an organization where ordinary members have nothing much to do after they have paid their membership fee of 10 dollars and voted for somebody. Then all activity shifts to the few dozen active ones. I am not a big fan of that arrangement.

The basic building block of organizing Nepalis in the city has to be the Home Meeting, perhaps once a month, about 10 member strong. The emphasis has to be on helping more of the Nepalis who wish to come over to the US to come over, to help with the first phase of seeking lodging and a job. Most of that gets taken care of informally right now. Maybe there is room for something more organized. And then there has to be major emphasis on people making $10 per hour or less to help them get past that barrier. A lot of that might be to do with education and training, much of which can be done online for cheap these days. And there the social element can be a huge factor between someone moving upward, or staying stuck in third gear.

I think the same basic model of organizing can also work for Nepalis in the higher income brackets. In case you have not noticed, most of the top earners among Nepalis meet regularly, and compare notes, and help each other out.

The NRNA in NYC and in America should not just focus on the distant, seemingly abstract goal of dual citizenship, important as it is, but should primarily focus on helping its ordinary members advance socio-economically locally. Part of that also is about being efficient. Don’t get in the way of these Nepalis and the city itself and all that it has to offer. When you put together disorganized events that don’t have much focus or direction, you are basically inviting people to show up and waste their time. They work crazy hours for little pay. On their day off, they’d rather do laundry, or go visit Times Square, than show up for your event.

Can you blame them?

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5,000 Members

The United States possibly was one of the last countries for the Non Resident Nepali movement to enter. It flourished on all continents except this one for years. And finally when it arrived it had managed to accumulate 400 members in four years.

But looks like those days are over. A recent membership drive has put the membership past 3,000. And that is in large measure because you can get your membership online. Estimates of Nepalis in America put the number at 200,000. I think to expect the NRNA will get at least 5,000 members is modest. The NRNA deserves to become the largest Nepali organization in America.

The organization suffered because the democratic process was disallowed. But some recent changes are welcome. You should be able to get your membership online. Any member should be able to contest for Officer positions, and all members should be able to directly vote for those Officer positions. The committees that run the association should organize online meetings. You put those basics into place and the next thing you know you have a truly pan American organization. Geography is no longer holding you back. All book keeping should be kept transparent and online.

The empowerment of the community comes from the organization’s commitment to the basic democratic process itself. Such a commitment to democracy and transparency will jack up the membership base to consistently large numbers. People running for Officer positions would engage in membership drives to boost their chances, and that would be swell.

The annual ANA Convention has a long tradition, and it deserves to continue with it. That convention is as good a platform as any for the NRNA as well.

The dual citizenship issue remains the unfinished business of the NRNA. And that mystifies me. Because making dual citizenship possible for global Nepalis is the easiest and the single biggest step the government in Nepal can take for Nepal’s rapid economic growth. Nepali politicians who oppose Foreign Direct Investment, either through active opposition or, more likely, plain inaction, and those who stand against dual citizenship for global Nepalis are directly responsible for Nepali women ending up in the brothels in Mumbai, and Nepalis landing in body bags from the Gulf states. Those politicians are standing in the way of job creation inside the country.

Only a mass based NRNA in America can help with the cause of dual citizenship. A NRNA with 200 members simply does not have legitimacy. At 5,000 members you are finally talking. At 10,000 members you matter. The membership drive has to be ongoing.

There are more than 30 Nepali organizations just in New York City. There are tens of Nepali organizations in most major urban areas across the country. The NRNA could be that umbrella organization that brings Nepalis together across this country. And it is a good thing the association asks for individual and not organizational membership.

There is power in numbers. For the first time I have some respect for the NRNA in America. 5,000 has been that magic number for me. The membership number has to go past that for me to take the NRNA seriously. Leaders contesting elections and winning after massive membership drives have legitimacy. Enough of backroom deals and undemocratic appointments and shady court actions.

Once the NRNA in America gets the basics of democracy and transparency right and goes past 5,000 members, it will become a serious national chapter of the global NRN movement for the first time. And it might even claim leadership of the global movement at some point. It will be able to add muscle to the dual citizenship debate.

In a culturally diverse country like America, and especially in cities like New York, a well run NRNA will bring up opportunities for alliance building with organizations that represent other countries. Transparent and online book keeping will create opportunities for massive fundraising and creating new programs.

If the Officers of NRNA America will hold online meetings, that means the gulf between the NRNA chapters in the 60 plus countries is going to be zero. Everyone can come on Skype. It is amazing how Viber has taken off. The NRN movement was always meant to be global. But lack of robust coordination has kept the movement in the doldrums. I am for more skyping and less air travel. Use social media to the max. Keep all interested members in the know. Publish meeting minutes and money details on Facebook groups.

5,000 members spread across the country might mean those running for Office might also have to conduct primarily online campaigns. That would be interesting. That would also be cheap. Which means anyone could participate, and that would be a good thing.

I have wondered out loud many times in many places as to why the top global Nepali entrepreneurs are not out of America but rather Second World countries like Russia. If America is the ultimate country, what gives? One of the things holding the community back has been a lack of large, mass based, democratic, transparent, robust organizations. Minus that the community has been nimbling along with some sort of an inferiority complex.

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A Global Citizen

Globe (Photo credit: Joe Shlabotnik)

Globe showing Asia - Satellite image - PlanetObserver (Photo credit: PlanetObserver)

(written for Vishwa Sandesh)

A Global Citizen
By Paramendra Bhagat (www.paramendra.com)

People who attempt and succeed at global endeavors, all else equal, will make more money than people who are based entirely either in Nepal or in America. There is enormous money to be made in the Nepali market, in the South Asian market, once there is political stability in Nepal, which should happen soon. As soon as the country has a constitution and regular elections, the law and order situation surely will improve. The beauty of a democratic arrangement is if the people demand law and order, they will get law and order. If they demand political stability, they will get political stability.

When there are elections in America, you can follow the polls and have a pretty good idea of how the horse race is shaping up. But there is no poll taking in Nepal. I have no idea how the various political parties will fare. My wild guess is the parliament will be even more fractured than last time. On the federalism issue as well, the people will give a fractured verdict. Neither the identity federalists nor the geographic federalists will garner the two thirds majority needed to push through, and so a grand compromise will have to be forged out, which means the last assembly was just as good for the purpose as the next one will be, which means the country just wasted billions of rupees on a second election.

A few years back when I was the only full timer among the 200,000 Nepalis in America working for Nepal’s democracy movement, it cost me money. But contributing to Nepal’s economic revolution to last decades is to be a money maker.

I am a network marketer with ACN. A few days back I spent a few hours one fine morning reaching out to some of my friends outside America for the business. I sent out Facebook emails to about 50 friends spread across the United Kingdom, Australia, Switzerland, Norway, Sweden, Belgium, Netherlands, Italy, Germany, Denmark, the Czech Republic, and Finland.

One of the challenges for me in the business has been how do I reach out to people in my personal network who are spread across the United States who I don’t have the option to bring to a meeting in New York City. Looks like digital technology can go a long way. Emails, phone calls, and videos shared can go a long way. The basic premise behind the Internet is that geography ought not matter.

When Mike Maser, the top performing Senior Vice President with ACN, was at my house a few weeks ago – the guy makes 80,000 dollars a week – I told him if we could do NYC right, we could go from a presence in 24 countries to a presence in 124 countries. Nepal is the poorest country outside of Africa, and quite literally every town in Nepal is represented in NYC. That means it has got to be the case that literally every town on the planet has somebody from that town living in this city. A few weeks later his brother Patrick Maser relayed that same thought on stage at Hotel Pennsylvania when he addressed over a thousand people.

A big part of tech consulting is to do with techies in India for me. That really speaks to the Indian in me. But that is also tremendous in terms of business efficiencies. I also bring the home ground advantage of not getting tripped by cultural nuances when communicating with my engineers. They can be subtle, but I have had friends who went on to raise millions for their startups who have been tripped by the same, to the point they plain gave up.

Nepal hydro as I see it has a major role for the investors who are based in New York City. You necessarily have to get investors from India, China and America excited if the sector is to take off like it deserves to.

But then globalization can also go the other way. The inter mixing of peoples can feel dizzying for some, and they look for symbols and people to clutch to. NYC is very diverse, but it also has ethnic enclaves. People who are alike congregate. You can see that in Jackson Heights. The various country groups maintain strong inbound bonds.

Globalization and the Internet bring enormous opportunities. For the first time in human history, it feels like poverty can be eliminated. That is going to be the biggest achievement of my lifetime. But those same forces also put pressure on people’s traditional sense of being. I for one feel very comfortable crossing the lines, and mixing things up. I am known to visit various places of worship in the neighborhood. And I will take absolutely anyone of any background into my network marketing business. I am not trying to be the master of some ethnic ghetto. I want the members of my team to be typical New Yorkers bound by the city’s subway system. Screen time as time spent staring at the laptop and the phone has to be matched with face time: time spent networking with people, building teams. And so I mean to point out health benefits to networking.

For a guy like me who has been to every nook and corner in America, my choice of NYC as my base is some statement. This is a city I have chosen. I am a New Yorker and a global citizen.

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