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April 22, 2010

"The Brain of an Indian VC"

Indiagames founder Vishal Gondal has an interesting post on the topic:

Being a VC in an emerging markets like India is like being a VIP. You are at a very high pay scale, constantly being pitched by smart entrepreneurs, called to give speeches at every major conference. At business plan events they are almost mobbed and receive endless amounts of emails, phone calls, SMS most of them trying to desperately convince them into liking them. They meet CEOs of top companies, are in influential company boards, and get an ego massage from everyone who meets them...Its but natural for any human who is living in an environment like this to develop a bit of an EGO. Its really complex dealing with such people and you too can easily get into the EGO massaging mode.

...VCs always tend to react to the current buzz. If the last big acquisition was in the cloud application space they would suddenly start looking at cloud investments. If a high profile investor or entrepreneur invests in a segment that becomes the flavor of the month and as most VCs react to trends and buzz its easy to assume that they are following the herd mentality. However there always seems to be some kind of strategy in this herd mentality. VCs bet on 3-4 players in any given segment and space. Therefore a smart entrepreneur would focus on catching on the buzz early on and hit the VC at the right time with his plan. The buzz has a very short life and in no time the VC would move to the next trend.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in