Things your VC won't tell you
AdvertisementVCs need entrepreneurs and vice-versa. However, the mystique around them can get inexplicable. Ever thought why these guys play hard to get?
Venture capitalists (VCs) call themselves ‘relationship capitalists’, but the relationship between the VC and the entrepreneur is often a strained one. Why do they act cold, send curt emails and pretend not to be paying attention. Are they even listening?
Shubhankar Bhattacharya is a Partner at Kae Capital, a leading Indian venture capitalist (VC) firm investing in early stage start-ups. He has browsed through thousands of pitches and met hundreds of startups. His recent book, ‘VCs are from Venus, entrepreneurs are from Mars’ busts some of the biggest myths around VCs and entrepreneurs.
Business Insider asked him to list the least known facets of an Indian VC’s life.
There is emotion in a decision
As much as you’d like to rationalize the process, there’s an emotional side to the way a VC evaluates opportunities. Sacrifice and determination are very attractive qualities.
Secondly, humility and politeness are respected. Maintain decorum during the pitch and after it. The ability to rally peers to the cause is a turn on. There are some proxies for it. Imagine a smart guy leaving his job, then convincing a friend/colleague who had to sacrifice his high-paying job.
Somebody who writes passionately for their cause, and has a loyal group of customers is also a big turn on.
Never chase VCs
A lot of entrepreneurs have the impression that they have to keep chasing. That has a very negative effect. Excessive following up feels pushy and negative.
However, it may work in cases where it’s a hot market, and investors have the fear of missing out. They may think the entrepreneur following up repeatedly means he is in advanced talks with other investors.
Having said that, that’s not usually how it works. The best way is to make an impressive pitch, be assertive, and never chase VCs.
They know pitching is difficult
It’s way more taxing to pitch. We VCs often claim ours is a tough job.
Imagine your company is at stake. You’re trying to make ends meet and are still expected to look assertive and confident. You keep pitching to 100 investors, and each one rejects you. That’s extremely hard.
VCs aren’t the enemy
It’s not an unequal relationship, and shouldn’t be looked up as one.
Many entrepreneurs think it’s not in the VCs interest to invest. We’re put up on a pedestal. That’s not true.
Nastiest things a VC hears
‘What makes you think you know any better than me!’, ‘With a vision like that you would have never recognized a Facebook or WhatsApp!’ and 'do you know who I am!’
Fortunately we don’t deal with people who swear deliberately.
VCs make mistakes too
Any investing behavior comes with a herd mentality. Anything done differently is perceived as risky behavior.
There’s a distinction between the VC and the firm as a whole. VCs with entrepreneurial background do come with a better understanding of this relationship dynamics. On a unilateral level, it might not be possible for them to vouch for the firm or an entire industry.
Some VCs may be partial
We sometimes think if an entrepreneur reaches out, and no investor makes him/her an offer in the first few weeks, he/she is not worth it. This alienates a lot of people.
Sometimes, we also unfairly judge a ‘nice guy’. We think they would finish last. We come with this mindset that entrepreneurs must be extreme, and if someone’s mellow or soft-spoken, we think he’s not forceful enough. That need not be the case.
The last is a bit of an open secret. While VCs tend to be reasonably holistic in terms of background, we do have a soft spot for degrees from premium colleges.
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