There is very little that makes sense about the venture capital business these days. India is witnessing an abundance of capital for the very first time. Everyone is in a hurry. Promoters were always in a hurry. But for the first time, VCs are trying to outdo them.
Venture investing is a “gut feel” business. There is’nt much logic or rationale to it. Many years ago, I passed on Byjus and Cred. They were too far physically. I did try to meet the promoters in their town. They wanted to do a call. That made them culturally distant for me. On that same trip, I missed my meeting with Nithin Kamath because I wanted to continue another meeting beyond schedule. Inspite of it being my fault, he took a flight to Delhi to have the meeting, a couple of days later. He knew very little about anything then. Yet, one could see, he was a winner. Distances are more in the mind than on land.
I learned many years ago, that the likelihood of success was inversely proportional to the distance from the investee. So I try to find investees who are near – not just physically – but also in other ways. Cultural compatibility, intellectual compatibility, social compatibility, spiritual compatibility etc. I find it hard to work with a cricketer or actor for example. Or with an american. For me, these are aliens. Indians, IITians, intellectuals, nerds, academicians, fundamen, geniuses ……… this is my playground. I am not a good judge of most things. I try to make up by taking longer to decide.
Startups in India fail primarily for two reasons. Either they cant find capital. OR they get capital from the wrong VC. It takes years to know someone. How many of your school classmates did you know really well ? And just because you know someone does’nt mean that you will like them. A VC has to both know and like his investee. You need to walk a lot to find them.
Last week an eminent banker introduced me to a young VC. “We humble VCs try to optimise by doing calls,” said the lady in charge. I was horrified. I had specifically and unambiguously asked for a meeting in person, one at a time. With an expectation that I would need a couple of years to judge them. And here they wanted a slot fixed one week in advance so that the three of them could do a joint-call to optimize their time. I thought I was the investor. Was I imagining things. How will they treat their promoters ? Funds go bust because the promoters go bust. And few realise, the role of Funds in the failure of startups.
Venture Capital is not a “work from home” business.
The question posed in this post is a rhetorical one.
Walk. Don’t talk. Leave your phone at home and work.
You don’t need wi-fi. You need to walk and meet.
If you are a promoter, be wary of such VCs.
If you are an investor, be wary of such VCs.
If you are a VC who thinks they need to talk without walking.
Look for another profession.