This saturday i attended a event organized by Tie-BoA . Agenda of this event was to announce a collaboration /Alliance bitween Tie and Band Of Angeles as an initiatvie to nurture a Silicon Valley like Eco System in india.
I am writng this post to highlight one aspect of this eco system which i have seen in all such events . sometime under the surface sometime discussed openly .
Its the Silo or Communication gap bitween Investor and Enterprenuer .
Be it VC or Angel , Institutional or Individual there is always a conflict of interest bitween both of the parties . As a matter of fact this phenomena is not confined to this country . Even in developed economies tales of VC-enterprenuer conflict is commonplace.
This used to baffel me when i started attending such gathering around a year back . by every logic i can think of , VC and Enteprenuer should work togther and it should be a win-win deal . but after one year and 10-12 such gathering i can safely say that this is hardly the case .
what is suppose to be a “Meeting Of Minds ” often Turns into a “Clash of Heads” . why ?
As an aspiring enterprenuer i have a significant interest in exploring answer to this Question.So that when i approach potential investor in my venture i can avoid all that . so here is my analysis of this phenomena . I wanted to post the complete text here but the post was a bit too long so i published it on my blog .
You can read the complete text here .
Your Comments /Advice is awaited and greatly appreciated .
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Hi Alok,
Thanks a lot for the response.
Again to understand the VC’s perspective better,
If you are investing in a company at a start up stage then i am sure its not just the returns you are looking at (atleast at the startup stage). It must be next rounds of funding and similar things.
Is my understanding wrong ? If yes, then can you please correct me and if no, then can you please tell us what are the things a VC is looking at when he invests in a startup ?
(Let me define what i mean by startup. I guess it is a very subjective term, so i want to be clear from my side)
Startup: Market research done, value proposition tested with customers and has positive feedback, some agreements with suppliers entered into, but final launch and brand building needs external capital. The current team does not have experience of running or building a company (but is passionate about it) and is open to taking in (sharing equity) a CEO with experience and proven past records.
Alok, it would be really great if you can please continue this discussion further.
It would help us understand your perspective.
Look forward to your reply.
Alok!
What applies to the rest of world, doesnt apply to India. Everybody – Indian Entrepeneurs, Indian VCs, Indian Angels need to think and act differently. If you guys think about your country and strive for a pride that comes from having a Sony or a Google, you would find yourself spending more time with young guys nurturing and mentoring them, rather than than just chasing fund targets.
Whats missing in India is Idealism, Romance and long term vision.
Anon, one that comes to my mind is Mphasis — Barings had invested in BFL when it was a $5m revenue company, and helped grow it over 8 years to the point where they made a 10+ times return. I am sure there are a few others. To be honest, 10x returns are not made everyday, but that one deal makes the fund.
Rad, I agree with you that VCs and Angels want their money — they are not around for charity. I dont know if that necessarily means they are not committed! The primary onus of building companies rests with the entrepreneur — In India, and anywhere else around the globe.
Look Prashant. Your idea/dream/company is your baby. You alone are responsible for making it a success. Dont waste your time attending too many TiE – BoA meetings. If these people were really commited to the country, we would have had our own SONYs and DELLs today.
Treat VCs, Angels with not an ounce more of respect they deserve. They want DEALS. They want money. Work on your business. Be brave and get started on your own. If you show enough potential, these lowely forms of life will chase you to hell.
Krish and Alok,
I have heard a lot of VCs talk about 10X returns. Given your knowledge and experience in the field can you name a few companies in India where the VCs have made 10x returns. I just want to get a sense of the growth of companies which have given VCs 10x returns and the stage at which the VCs entered such ventures. It would really help me a great deal.