[{"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS504_3fwu8_C_20171021125509.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS504_3fwu8_C_20171021125509.jpg", "formatted_filename": "BN VS fwu C", "alt_text": "U.S. Revises Timeline on Niger Battle"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS434_1020cs_C_20171020174637.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS434_1020cs_C_20171020174637.jpg", "formatted_filename": "BN VS cs C", "alt_text": "A Xi Jinping Prot\u00e9g\u00e9 Rises to Stardom"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VT153_SYRSIE_C_20171023142851.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VT153_SYRSIE_C_20171023142851.jpg", "formatted_filename": "BN VT SYRSIE C", "alt_text": "Deaths of Syrian Children Signal Worsening Aid Crisis"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VR900_INDOHA_C_20171019180316.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VR900_INDOHA_C_20171019180316.jpg", "formatted_filename": "BN VR INDOHA C", "alt_text": "Mecca Swindlers Prey on Pilgrims, Testing Faith in Authority"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS763_3gJo0_C_20171023032340.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS763_3gJo0_C_20171023032340.jpg", "formatted_filename": "BN VS gJo C", "alt_text": "The Stakes\u2014and Stocks\u2014Rise for Japan\u2019s Abenomics"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS833_3gKjZ_C_20171023100242.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS833_3gKjZ_C_20171023100242.jpg", "formatted_filename": "BN VS gKjZ C", "alt_text": "Tillerson Meets Iraqi, Afghan Leaders to Bolster Fight Against Militants"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VT363_3gMFb_C_20171024003021.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VT363_3gMFb_C_20171024003021.jpg", "formatted_filename": "BN VT gMFb C", "alt_text": "Hong Kong Protest Leader Joshua Wong Freed on Bail"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VT190_CATPOL_C_20171023151816.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VT190_CATPOL_C_20171023151816.jpg", "formatted_filename": "BN VT CATPOL C", "alt_text": "Catalan Police Are Put in Crosshairs"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS755_1023PH_C_20171023013411.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS755_1023PH_C_20171023013411.jpg", "formatted_filename": "BN VS PH C", "alt_text": "Philippines Declares Marawi Clear of Militants"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VT086_RIOCOP_C_20171023131317.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VT086_RIOCOP_C_20171023131317.jpg", "formatted_filename": "BN VT RIOCOP C", "alt_text": "Rio Police Kill Spanish Tourist Amid Rising Violence"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS990_3gKyT_C_20171023120205.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS990_3gKyT_C_20171023120205.jpg", "formatted_filename": "BN VS gKyT C", "alt_text": "Argentina\u2019s Macri to Move Forward With Tax Cuts, Austerity Measures"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "https://s.wsj.net/public/resources/images/BN-VS537_1021ME_C_20171021235111.jpg", "src": "https://s.wsj.net/public/resources/images/BN-VS537_1021ME_C_20171021235111.jpg", "formatted_filename": "BN VS ME C", "alt_text": "Vigilantes Use Ladders, Sticky Letters to Rid England of the Metric System"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "http://s.wsj.net/public/resources/images/OB-IF991_isanja_D_20100422003122.jpg", "src": "http://s.wsj.net/public/resources/images/OB-IF991_isanja_D_20100422003122.jpg", "formatted_filename": "OB IF isanja D", "rendered_width": 262, "rendered_height": 174}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "http://s.wsj.net/public/resources/images/OB-JI598_iwipro_C_20100723044726.jpg", "src": "http://s.wsj.net/public/resources/images/OB-JI598_iwipro_C_20100723044726.jpg", "formatted_filename": "OB JI iwipro C"}, null, {"document_url": "https://blogs.wsj.com/indiarealtime/2010/07/23/chief-mentor-the-early-stage-mindset/", "unformatted_src": "http://s.wsj.net/public/resources/images/OB-JI639_iworke_C_20100723072601.jpg", "src": "http://s.wsj.net/public/resources/images/OB-JI639_iworke_C_20100723072601.jpg", "formatted_filename": "OB JI iworke C"}, null]



Jul 23, 2010 3:38 pm IST

By Sanjay Anandram

Early stage venture-capital investing in India appears to be the flavor of the season. There are funds being set up from $5 million to $30 million. Some are being established by angel investors, some by former executives and investment bankers, others by successful entrepreneurs. Some are likely to be supported by government-linked institutions, some by international investors and high net-worth individuals. Sanjay Anandram

I recently met with some of the fund managers of these proposed funds. Clearly, they had done their homework: on the state of the Indian private equity and venture capital market, the various participants had been identified and categorized. The state of the Indian economy, the performance of existing venture-backed companies, valuations, exit opportunities, the pluses and minuses of existing funds – all had been analyzed. The inevitable “gaps,” “spaces,” “blue oceans” (choose your favorite piece of jargon!) had been identified. And the findings appeared to point conclusively to early-stage investment opportunities in India being the Holy Grail, or the akshaya patra if you will.

All the presentations, however, sounded similar if not identical. They all talked about how attractive the opportunity was and how money could be multiplied. They all planned to source deals by networking; by associating with the same set of organizations and institutions; by having business plan competitions. They all anticipated “adding value” as a differentiating feature: having high-powered advisory panels; incubation centers; connections with various corporations and the like.

But there was one thing seemed to be missing: An appreciation and an understanding of the early stage Indian entrepreneurial situation. In my over 10 years of active involvement with the early stage sector in India, here are some of my learnings, in no particular order, that may be of interest:

–It is a relationship not a financing business. Building relationships and trust with the entrepreneurs and the management team is crucial.

–Spending a lot of time with the team is therefore a pre-requisite.

–Emotions and egos will play a big role in decision-making especially in matters of ownership, control and people management. Be prepared to get involved in personal matters of the team as well. Learn to empathize with the (almost always first-time) entrepreneur.

–Negotiations can re-start after a contract is signed!

–Appreciation of the role of an investor and many of the “standard investor clauses” is low. Invest time and effort to explain the role and terms of engagement.

–Patience is important. Help think through various strategies and sometimes even participate in the implementation. Companies will take seven 7 to 10 years to mature and create value. Pumping in more money isn’t going to accelerate growth.

–Have a company-building mindset as opposed to a financial-engineering mindset.

–Hiring isn’t easy. Helping find talent, advisors and mentors is a great “value-add.’ Compensation discussions involving stocks can be another contribution.

–Ready-made deals and ready-made talent aren’t available. Therefore, finding good deals requires being in the “people flow” rather than a banker- or consultant-led “deal flow.” Travel all over to meet people from various sectors and in all kinds of businesses.

–Very direct and blunt communication can be construed as being rude and unnecessarily aggressive.

–There are no proven models. Try everything and stick with what works. That’s the strategy!

–There are no pure digital businesses. Be prepared for strong offline activity.

–There are opportunities in deploying technology to drive “faster, cheaper, better” solutions. Appreciate that business model innovation, as opposed to technology innovation, will be the theme.

–Because something has worked in the U.S. or elsewhere doesn’t mean it will work in India!

None of this, of course, is very unique to India. It is what the top VC funds in the U.S. used to be known for the early days (when fund sizes were in the low to mid-double digit millions.) These kinds of early stage funds are making a big comeback in the U.S. Given the “opportunities,” “gaps,” “spaces,” “blue oceans” (!) here, the same mindset that helped create globally recognized companies there needs to be applied by early stage investors to opportunities in India as well.

–Sanjay Anandaram has over 20 years experience as a corporate executive, entrepreneur, venture capitalist and advisor-mentor. He co-founded JumpStartUp in 2000, one of the earliest U.S.-India cross-border early stage VC funds. You can read his mentor bio here. Previous Wipro's Market Beating Ways Next Delhi Offers Bonuses, Dry Cleaning to Motivate City Workers







Chief Mentor: The Early Stage Mindset


