DARE talks to VCs and Angels to find out what kind of entrepreneurs make them say yes
Ask any seasoned investor, whether angel, VC or PE, they will all tell you how important the team is. Unlike the outsider’s impression of risk investors as people always on the look-out for the next big idea, a large part of investing is about the plain old business of assessing people.
While some investors put the team or the person on par with the idea or the concept, most put it over everything else. As Bharati Jacob, the Bangalore-based early-stage investor and one of the few women in the business puts it, “Out of our top ten considerations before investing in a company, the top seven are team, team, team....,”“One of the truths of venture investing is our total reliance on the management team,” says Dan Sandhu, a UK-born rocker turned radio station owner turned BPO-entrepreneur turned angel investor. “Every other part of the business can be disposed off later on if you don’t like it, but the team you have invested in stays with you,” he points out, rather matter-of-factly. “A bad management team can make a good business do very badly, but a good management team can take an average business and make it a star”.
So what is this elusive being called the ‘team’? What do investors look for in the people they invest in? What are those magical ingredients that make them say ‘yes’, and what makes
their eyebrows go up? DARE brings you a sneak peek into the thoughts that occupy the brains on the other side of the table.
Conviction, Commitment and Communication
The first, and perhaps the most common thing, that investors look for in a team is passion and commitment towards the idea. Of course, along with having the passion, the entrepreneur must also be able to communicate it, inspire his team and get the best out of them, feel many.
“Passion is the most important factor for me. If you are not insane about what you want to do, you can’t make it,” says Rajan Anandan, who, besides being Dell’s India manager, also invests in start-ups in India and the US. Mahesh Murthy, the Mumbai-based early-stage investor associated with Seedfund, couldn’t agree more. “If I was forced to choose, I will always bet on a very passionate person than a very knowledgeable one. If someone is passionate, he will also be confident. Too often I find people too ready to give up and agree with me. If both of us agree on everything, one of us is redundant,” he rues.
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But passionate about what—money, fame? “A very good entrepreneur has a desire to create something out of nothing,” says Bharati, “When you start off, there’s no organization,
no employees. It is the need to create and share something where there was nothing that motivated the great entrepreneurs”.
Of course, it is not enough to be just passionate. Our investors want more that just passion—you should also be able to convey it. “You should be able to sell your dreams, your desires and your thoughts to every stake-holder, so that they buy into it. From the first employee that you hire, to the first investor you take on, to the first supplier you talk to and the first customer you get, you are constantly selling yourself and your vision. While it is not enough to just have passion, no matter how good a communicator you are, you cannot communicate what you don’t have,” he points out.
Perseverance, Hard Work & Mental Toughness
Closely related to passion, our investors believe, is perseverance and the ability to work hard and make sacrifices. Many investors take great pains to ensure that the person they are backing has “real staying power” and will not desert them and the company when the going gets tough, almost an inevitability in the life of every start-up.
Alok Mittal, founder of jobsahead.com (acquired by monster.com in 2004) and now with Gurgaon-based Canaan Partners emphasizes the need to distinguish between those who are excited by the short-term opportunity and those who stick around for the whole ride. “There may be a short team opportunity that people want to exploit, but that doesn’t mean that they will stick around. It is important to see how the person or group has performed through adversity in the past,” he points out.
Kanwaljit Singh, the 20-year veteran of India’s top private sector companies and partner with early and mid-stage investor Helion Venture Partners has his own ideas about how to spot the ‘serious’ entrepreneur. “Is he the type who thinks of a car, a driver and a secretary when you mention the term CEO? The only reliable way is to judge whether someone has perseverance is to look at his or her personal or professional life. Has he or she faced adversities in his or her personal life? If so, how did they react?”
Mahesh too shares his tips on finding the ones that don’t give up easily. “One of the guys who applied to us said that he had driven all the way from Dharvad to Hubli naked on a bike to win a bet, when he was in college. In such cases, you at least don’t have to worry about the guy deserting you when the going gets tough,” he exclaims. Another tip of his is to watch out of confidence. “A good sense of humor indicates strong self confidence and it denotes intelligence. Only those who are able to maintain their cheerfulness under pressure are the ones who can be a good leader. In reality, building companies is a lot of fun, and we need people who can appreciate that,” he explains.
Venkatesh Rajendran, owner of Billionways and serial entrepreneur explains how he gets a feel for the metal. “In a new venture, everything that can go wrong will go wrong. I have also come across people who said, ‘I have a house that I purchased on loan when I was in my last job.’ or ‘I have a wife and children and of course, I cannot spend all my time in the office.’ To such people, my reply has always been, ‘don’t even think of it.’ To be an entrepreneur you need a blind, fanatic belief—a spirit that never gives up.”
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written by funny fashion, May 31, 2010
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written by M A J Jeyaseelan, May 21, 2009
However, I do believe that none of the above are substitutes for a good product / technology.
As the current global crisis has proved beyond doubt, even the best people cannot sustain a bad business idea. The market would recoil sooner than one would imagine
I am saying this based on personal experience in painstakingly developing a software product over the past 10 years. It is only after development and redevelopment based on field testing, I believe I can now take on the competition, however formidable it is.
I believe the team can be hired, provided the product / technology is powerful enough to create its own market spaces. I believe it is the monopolistic market advantages and the length of period up to which such advantages can be sustained is critical to the success of companies. I believe most start ups perish because they rush to fast in the name of achieving quick success.
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