Vijay Anand | The Startup Guy.

Befriend an Investor.

Posted on: May 8, 2008

When should you go meet an investor, say hello and buy him a cup of coffee? Anytime, and hopefully at a time when you arent bootstrapping a company.

An entrepreneur in residence today asked me how come most companies in the valley, and even a few companies here in India manage to raise millions of “dollars” in funding for their first round when I keep advocating on raising not more than what is required, raise valuation and then go for their second round.

Well, that advocacy and advice depends on a lot of things, the vertical you are in, and the nature of the business (some require huge upfront investments, while others could be grown organically, while others need to be grown on steroids).

Coming back to his question though, my answer was that, if you do a case study of all those entrepreneurs you will definitely find something in common with all of them. It is most probably a case that either they built a fabulous product (were the creators of Gmail or something on those likes), or were known to the investors much earlier than the time when they start knocking doors. There is also the case that being married to an investor works, but I suppose that would fall under the second category anyways!

I am sure you are giving me the evil eye right now asking, “If I am not looking for funding, why would I go waste time with an investor?”. Well, all things said and done, if someone has access to all those Gartner, McKensie and all the trend analysis, and spent countless hours of debate and discussions with some very smart people, its the venture capital firms. And as much as its taken to their negative persona on their number crunching skills, if you sit with them without an agenda of asking them money, you would be quite impressed with the depth that they possess – ofcourse I am talking about the ideal VC here (there are too many fake ones also roaming around dressed as Venture capitalists).

There is a very recent story floating around the web, that the founder of Disqus the weblog commenting system had known the investor for ages. He met him some very long time ago, and they shared a discussion about the investors blog and what all can be done to make somethings efficient. On signing off, they shared some urls, and had been in touch ever since. A few months ago, the founder bumped into the investor and gave him the link to disqus to try it out. When the investor came to know that they were trying to raise funds, he didnt spare much time to call them up and write a cheque. If the credibility is established towards deliverables and clarity, everything becomes much easier, and that is something that is only built over time.

So My advice. If you are thinking about starting a company, just retiring, or want to go catch a movie and want company, call up a VC and see what he is upto. The relationship with the right investor is one that is built over a period of time. This is a long term investment you will not regret.

Advertisements

8 Responses to "Befriend an Investor."

Valuable points, totally agree that this would make a world of difference. The other question that i have is how do you break into the world of the VCs, it seems to be a closely knit group and i don’t know how open are they to be spend this kind of time. Especially in India they sort of look like an elite lot with a lack of accessibility.

vijay,
in many senses, this goes back to the old saw, build relationships – whether with future prospective customers, employees or as you state in your article with potential investors. Especially, if you thought you are pressed for time now, after starting up, you’d have even less time and as you state that would not be the time to start building a relationship. That being said, VCs in India at present, have far too much money and far too few deals so what you say would work (and well) – I have very little or no experience with Indian VCs however in the Valley, I have found that the VCs are so busy (or certainly claim to be) that casual networking or lets get together for coffee is mostly impractical. Besides marriage (or we went to high school/college together), events/org like TieCON or SVASE help. I agree with your assertion to build relationships up front – also feel its easier said than done for both time, and access reasons. But then again do we have an alternative? Keep ’em coming.

Wonderful and Worth spending time to read the blog. A lot of valuable information is provided. Thanks! for the Great post. I will back to read your blogs again.

Kausik: VCs In India are quite a friendly lot. Actually they are just about everywhere as long as you make some sense. I dont think its much of an issue. Drop them a mail and ask if they’d like to meet sometime. Most are up for it.

Srikrishna: Well, everybody is busy in the real world. But if need to, everybody can also make the time.

This is a gem, goes a long way. Entr’pnrs think that fund raising is the only time VCs are worthy of chatter.

It’s like dating (the Indian style :P)
1. You eye the girl
2. You exchange pleasantries (She may not reciprocate, but you keep trying. Right?)
3. You exchange notes (if she happens to be in your class/school)
4. You ask her out
5. You get into a relationship

Indus: You sure you didnt try a hand in stand-up comedy? 🙂 Well put mate.

[…] Must Read: Befriend an Investor Possibly related posts: (automatically generated)Rant on Investor ExpectationsBest performing fund […]

Stand-up comedy? Sure. I’ll chase that as a next gig 🙂

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: