Contributed by: Neelabh Mishra and Kailash Nath
The Bangalore Chapter at Indian Association of Investment Professionals (IAIP) hosted a thought-provoking session on “VCs are from Venus, Entrepreneurs are from Mars” by Shubhankar Bhattacharya on October 8th 2016. Taking a cue from the International Best-seller ‘Men are from Mars and Women are from Venus’, Shubhankar Bhattacharya, Venture Partner at Kae Capital, an early stage Venture capital investor, has provided a great perspective towards the complicated relationship.
Financial transactions are timeless – buyers and sellers have always shared a bittersweet equation for millennia. The conversations take a different twist when we consider a longstanding relationship – what better example than that of a financial investor in a venture.
Since the beginning of this decade, the Indian economy has entered a steeper trajectory of its growth curve – flow of capital towards investment into the startup space is one proxy to confirm this trend. With technological advances seeping into every industry and their sectors, investors are vying to get a share of the upside of this growth story. Capital flow into the venture ecosystem has grown multifold, in particular through the Institutional investment space. It has led to Venture Capital investment into startups turning into a much-discussed topic, even over coffee tables.
An entrepreneurial journey is far from being easy; already laden with uncertainties of running the day to day operations, today’s CEO has to deal with the arduous process of raising capital from equity investors. In his new book, VCs are from Venus and Entrepreneurs are from Mars, Shubhankar delves into the seemingly inexplicable dynamics between these two vital cogs of the start-up machinery. His core message is simple; just like men and women, the two subjects of his book, have very different perspectives and communication styles. Even though their goals are aligned, and the prospect of a match could lead to handsome returns and a “Happily-Ever-After”, they often get entangled in a web of misunderstandings during the period of their “courtship”. He tries to bring the nuances through several examples and provides bytes of wisdom from his years of experience being on both sides of the table (though he explicitly warns us that his book shouldn’t be viewed as a guide for fundraising):
- Like in romance, the VC-entrepreneur relationship takes a time to fructify. Venture investors, unlike individual angels, have a structured process of engaging and evaluating opportunities before they commit their time and capital
- As one would expect from Venusians and Martians, each side speaks a different language and has differing needs and motivations which they try to fulfil. This is made complicated by varying investment outlook among the various VC firms – after all, one-size doesn’t fit all
- Unlike what different media and sources of news make it seem, it is important to understand that each party needs the other equally
- Investors want their entrepreneurs to be decisive and confident. The founding team of the ventures that seek investment from VCs should be clear about their Vision and Mission
- Venture investors need to play a role of nurturers of great businesses and not controllers of the founding team. Like every successful relationship, each party should allow the other enough time and space.
- The decision-making process for an investment team at any VC firm is slow and deliberate. Even if the initial response from an investor is NO, Entrepreneurs shouldn’t view it as an outright rejection. A denial today might become a mutual YES a few weeks/months down the line.
- The courtship never ends – the relationship between an Entrepreneur and a VC firm is ongoing and lasts beyond a single conversation. Each party should view their interaction to be more than that of a stand-alone financial transaction and something that can potentially change the face of the industry for the better
The need to solve a mystery often gives birth to myths. Recognizing this need, Shubhankar proceeds to debunk a lot of those myths and sheds light on various aspects of Entrepreneur-VC romance. He even suggests the rules of engagement that both parties could follow to keep their diverse perspectives from clashing. A relevant and engaging topic, especially in today’s context and Shubhankar does justice to both sides of the aisle. We thank him for taking the time to spend half a weekend with us and look forward to many more insightful pieces of wisdom from his pen/keyboard.