The Powerhouse: Inside the Invention of a Battery to Save the World by Steve LeVine Page B
Authors: Steve LeVine
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in Fremont, California, he telephoned a college classmate of his wife’s.
Atul Kapadia was a principal at Bay Partners, one of the Valley’s oldest venture capital firms.
“RockPort is funding me, but I don’t understand the term sheet,” Kumar said. “Can you help?”
Mumbai-born Kapadia had an MBA from Stanford and a bachelor’s in biomedical engineering from the University of Bombay. He had gone to work at Sun Microsystems straight out of school, assigned to a design team that produced the Spitfire, a chip that later would be called the fastest in the world.
Kapadia had questions, starting with why Kumar was seeking money on the East Coast when the biggest VC firms were in the Valley. He suggested that Kumar and Sinkula drop by his Palo Alto office with their slide deck.
Two hours later, after hearing out the pair, Kapadia rang Kumar’s cell:
I
will fund the idea, he said.
Kapadia offered essentially the same terms as the Boston group—$3.2 million for half the start-up, a standard offer in Silicon Valley venture capital. But as a demonstration of goodwill, he was prepared to cut Kumar a check immediately for half a million dollars so he could start working right away. Kumar could consider it a loan until the details of the equity investment were arranged.
Looking back later, Kumar had the feeling that he could have raised much more—$5 million or even $6 million—for the same equity share. His idea clearly was solid—after just a few calls, he and Sinkula already had two bites. But that was hindsight. Now he had to create a company. He accepted Kapadia’s rival offer.
He and Sinkula called their company “Envia Systems” and opened their lab in a small, new industrial park in an East Bay suburb called Newark, tucked amid a hive of tech start-ups. The company name was Sinkula’s idea, combining “en” from the word “energy” and “via,” from the Spanish for “way”—the way to energy.
Kumar called Chamberlain. “I’m ready to license again.”
Kumar’s agility surprised Chamberlain. He had orchestrated the deal based almost solely on an idea: he had no prototype in hand. As for intellectual property, he had only a written offer from Chamberlain for a nonexclusive license. “How did he pull it off when these VC guys are so cutthroat?” Chamberlain wondered. One lesson again was the timing—Kumar and Sinkula had struck precisely when the market demanded someone like them. But there was more to it. Venture capitalists did not say so explicitly, but technology, while important, was not their primary concern. They looked closely at a venture’s management. Their key question was, “Have they done this before?” Meaning, had the entrepreneurs involved carried out a prior venture deal that resulted in a big return? If they had, the investors would be exceptionally courteous and forthcoming with their cash. Chamberlain acted out the repartee in such a case:
You have already made my fund hundreds of millions of dollars. You are here to ask permission to do it again for me? Yes, please. How much money do you need?
Kumar had not earned anyone hundreds of millions of dollars, but he had “done it”—he had helped to lead three previous start-ups, which again was the core credential. It was what made the difference. He could approach VCs and say, “Look, here is a new opportunity. I don’t have the license deal yet, but you have to act fast. Here are the terms we’ve agreed on with Argonne.” “And, bang,” Chamberlain said, “you have three million dollars. He got it immediately.”
By comparison, Chamberlain had crawled Sand Hill Road just a couple of years before. When asked about his prior experience, Chamberlain replied that he “absolutely” had built a business from scratch—at Cabot. But venture capitalists felt differently about achievements within a big corporate setting. It wasn’t the same as success on a tight budget with a small staff and the risk on your own
Atul Kapadia was a principal at Bay Partners, one of the Valley’s oldest venture capital firms.
“RockPort is funding me, but I don’t understand the term sheet,” Kumar said. “Can you help?”
Mumbai-born Kapadia had an MBA from Stanford and a bachelor’s in biomedical engineering from the University of Bombay. He had gone to work at Sun Microsystems straight out of school, assigned to a design team that produced the Spitfire, a chip that later would be called the fastest in the world.
Kapadia had questions, starting with why Kumar was seeking money on the East Coast when the biggest VC firms were in the Valley. He suggested that Kumar and Sinkula drop by his Palo Alto office with their slide deck.
Two hours later, after hearing out the pair, Kapadia rang Kumar’s cell:
I
will fund the idea, he said.
Kapadia offered essentially the same terms as the Boston group—$3.2 million for half the start-up, a standard offer in Silicon Valley venture capital. But as a demonstration of goodwill, he was prepared to cut Kumar a check immediately for half a million dollars so he could start working right away. Kumar could consider it a loan until the details of the equity investment were arranged.
Looking back later, Kumar had the feeling that he could have raised much more—$5 million or even $6 million—for the same equity share. His idea clearly was solid—after just a few calls, he and Sinkula already had two bites. But that was hindsight. Now he had to create a company. He accepted Kapadia’s rival offer.
He and Sinkula called their company “Envia Systems” and opened their lab in a small, new industrial park in an East Bay suburb called Newark, tucked amid a hive of tech start-ups. The company name was Sinkula’s idea, combining “en” from the word “energy” and “via,” from the Spanish for “way”—the way to energy.
Kumar called Chamberlain. “I’m ready to license again.”
Kumar’s agility surprised Chamberlain. He had orchestrated the deal based almost solely on an idea: he had no prototype in hand. As for intellectual property, he had only a written offer from Chamberlain for a nonexclusive license. “How did he pull it off when these VC guys are so cutthroat?” Chamberlain wondered. One lesson again was the timing—Kumar and Sinkula had struck precisely when the market demanded someone like them. But there was more to it. Venture capitalists did not say so explicitly, but technology, while important, was not their primary concern. They looked closely at a venture’s management. Their key question was, “Have they done this before?” Meaning, had the entrepreneurs involved carried out a prior venture deal that resulted in a big return? If they had, the investors would be exceptionally courteous and forthcoming with their cash. Chamberlain acted out the repartee in such a case:
You have already made my fund hundreds of millions of dollars. You are here to ask permission to do it again for me? Yes, please. How much money do you need?
Kumar had not earned anyone hundreds of millions of dollars, but he had “done it”—he had helped to lead three previous start-ups, which again was the core credential. It was what made the difference. He could approach VCs and say, “Look, here is a new opportunity. I don’t have the license deal yet, but you have to act fast. Here are the terms we’ve agreed on with Argonne.” “And, bang,” Chamberlain said, “you have three million dollars. He got it immediately.”
By comparison, Chamberlain had crawled Sand Hill Road just a couple of years before. When asked about his prior experience, Chamberlain replied that he “absolutely” had built a business from scratch—at Cabot. But venture capitalists felt differently about achievements within a big corporate setting. It wasn’t the same as success on a tight budget with a small staff and the risk on your own
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