Summarise Indian Vc learning
Fund kids addressing high TAM
Ignorance gives confidence
The first VC funded company in India was funded in 1988 by RCTC, an arm of IFCI. Since then, VCs have created massive wealth for the country and substantial returns for themselves. The more profitable, the less visible.
The Vc industry is strewn with corpses of marquee names. Sequoia changed name and is gone. DFJ lost most of its principal and disappeared. NEA is not to be found. Tim Draper is on a tv show as if he has no concern with DFJ. For the uninitiated D in DFJ is Draper. Peter Thiel the hidden force behind OYO can write a sequel to his book with the name “how not to invest”. Intel Capital does not have one sensible deal. Then there is Google Ventures, Bill Gates family office (Capria) and tens of others making a fool of themselves (media never says so).
At the same time, there are tens of small agile GP funded funds which have generated 40, 50 or even 60% IRR over the last 25 or 30 years. They have no reason to buy media space to tom tom their brilliance. India is not for the faint hearted. We do not have an operating legal system. If you go 100 kms away from the highway, you go a 100 years back in time. We also have FDI restrictions and one way to get around them is to hide behind a VC and invest. VC investments are considered domestic investments.
99% of the VCs who have succeeded in India are from the IIT ecosystem. 80% of these are from IIT Bombay and Kanpur. India has more IIT millionaires than America. And there is pretty much no discord, litigation or failure anywhere. The two scams involving iit alumni were not funded by IIT VC funds.
These funds do not solicit proposals. They know what is to be done and how. They approach promoters to fund them. It is like a cheque in the mail. And it is almost always a freshie from the IIT ecosystem or the child of an alumnus (what we call alumni NEXT). What do they look for ?
A lot of ignorance.
One thing you don’t want to see in the promoters eye is doubt. He has to be sure he is going to beat Nvidia or whoever.
If he believes he can, he just might.
If he doesn’t believe he won’t.
Ignorance helps.
He has to be able to picture himself becoming a billionaire. Not having many options helps. Being from an unsuccessful business family but from a business community helps.
Most important you don’t want someone with years of experience in a large corporate. They make the person useless. Startups can’t have hierarchies or arrogance. They need vendors or employees more badly than they need them. They have to be friendly.
If the venture fails, no one knows who the investors were. It is the promoter who fails. If you are young, you may learn and win.
If you are a seasoned corporate executive who just got laid off, look for a job. Funding is unlikely. You could try becoming a VC though. You will know a thing or two about misery and slavery. It will help you to show more empathy.