India Journal: September 15, 2000
Philstone.com Incubating Startups in Partnership
By Amelia M.
REDONDO BEACH, CA- It's got nothing to do with Plato, Socrates
or Aristotle. That was ancient Greece. This is the year
2000. So, encountering a name like Philosopher's Stone Ventures
is a bolt from the blue. Further, these solutions are not
answers to the eternal enigmas of Life but solutions for
struggling startups. Philstone.com is a technology incubator,
which offers solutions to entrepreneurs and investors. President
and Chief Software Architect S. Ramesh is a multifaceted
personality - a poet, playwright and a sportsman with a
good sense of humor! "We get many queries about our
name," Ramesh says. "The search for the Philosopher's
Stone Ventures is a mystical substance with astonishing
power. It can transform every day objects into gold, and
it produces the Elixir of Life that makes the drinker immortal.
As Philosopher's Stone Ventures is a technology incubator,
we wish for it to have a similar transforming power. It
should turn the innovative ideas of our entrepreneurs into
successful, groundbreaking, moneymaking businesses.
Of course, if we do uncover a business plan that turns
lead into gold, or guarantees immortality, we have our patent
attorneys standing by," he laughs and says.
Explaining what the company does, Ramesh says it's basically
three things. For energetic high tech entrepreneurs, it
provides seed funding, office space, and assistance in finance,
accounting, operations, legal matters and marketing.
Seed funding is provided by the company or through its
associated funds and investors. "In addition we provide
our entrepreneurs with VC introductions and help with further
rounds of funding. Many of our co-investors in the seed
round are associated with venture groups that can provide
future rounds of funding, which is an added advantage, "
he says.
But the special emphasis is on technical development. "We
have a highly talented technical team and we often take
a CTO role in our portfolio companies. In some cases we
oversee the entire implementation of the software,"
he says.
Philstone.com also provides pre-investment technical due
diligence for investors and investor groups. Being investors
as well as technology experts, the team can provide a due
diligence perspective that is hard to find elsewhere. "We
can also contribute after the investors invest, by monitoring
the progress of the startup, often assuming a temporary
CTO role, or becoming an implementation partner. Our implementation
is especially cost effective because we do the design and
project management in California, but usually outsource
the implementation to our affiliates in India." Ramesh
adds.
"We also have our own investment fund that allows
investors to invest along with us in our incubated companies.
Together with these partners, we invest in a basket of new
technology companies vetted by a seasoned group of business
and technical experts," he says.
About the kind of companies philstone.com is giving priority
to, Ramesh says, "We focus on distributed enterprise
companies, wireless software companies, and internet infrastructure
companies. By distributed enterprise companies that solve
problems for a particular industry or vertical market. These
companies often use the Application Service Provider (ASP)
model as the way they distribute their solution to their
business customers."
Jenny M. Sakhrani is a business partner and CFO of the company. With her extensive background in finance, accounting, valutaions, and management consulting, she is the one who watches the cash and crosses the t's.
About how long it takes to incubate a startup, he says,
"Normally we expect to intensely incubate a startup
for three to nine months, but this depends a lot on the
startup - what it needs, and where it is when we begin.
We don't believe one size fits all. We tailor our services
to what the enterprise really needs. When we provide technical
services, we continue working with the startup after the
launch, helping to bring in their technical team, and continuing
to support them, as long as they need our help. We consider
ourselves truly partners."
Ramesh, a Canadian citizen of Tamil ancestry, was born
in Calcutta. His family migrated to Ontario, Canada when
he was 4 years old. With a B.Sc. in Biology and Chemistry
from the University of Western Ontario he has been the CTO/VP
Technology for a couple of Internet startups and has also
worked with companies like IBM, Sprint, Goldman Sachs, among
others. He also has experience in the environmental chemistry
and molecular genetics fields.
With so many incubators around, what edge does Philstone.com
have over others? "Our edge is in the experience we
bring to the table. We have one of the best technical design
teams in the, which is very important for a startup. Most
startups change their business plans five times before becoming
successful, and with out a well designed application, they
would have to start from scratch every time. We can help
our entrepreneurs turn on a dime as business conditions
change. Our ability to outsource the implementation in India
makes the whole thing very cost effective, as well, though
that may not be important to our portfolio companies because
we normally do our implementation for stock and not for
their scarce cash," Ramesh explains.
And doesn't he know all about 'scarce cash!' He recounts
the story of how he spent some time in Canada as a starving
poet when he published poetry, wrote and produced plays
and even authored a novel. Wanderlust is another dominating
force in his life. He spent four years, shortly after University,
traveling and backpacking around Europe and Asia. "I
have gone sky diving, and spent a number of months in Buddhist
monasteries. I am a strong Go player (5 dan) and a chess
player. I lived in Japan for two years, and speak passable
Japanese, along with French and Tamil," he says. And
now it's surfing. But due to lack of time and poor co-ordination
he regrets that he's not much headway.
As for the future plans, he wants to witness the growth
and expansion of Philosopher's Stone Ventures, turning many
startups into gold.
