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Saturday, May 27, 2006

How to staff an Indian VC Office

I have been scanning the Indian VC ecosystem for the past 5 years and find that most of the US VC funds appoint some General Partners / Associates for their Indian VC office who have absolutely no idea of how to grow their business in India. I would suggest them to look for the following traits besides their regular checklists and selection methodologies.
Background : Candidate should be trained in the relevant field in India besides having earned his spurs overseas. Normally Indian nationals holding an Indian Passport who have studied in the US universities ( are mistaken for great visionaries - in fact, some of them were just lucky enough to have a rich dad ) get appointed as General Partners / Associates out here. What follows endorses the conviction that they are hopelessly inefficient in their selection of investments. Some of them can’t find anything better to invest other than in B-grade Travel Portals or C – grade brokerages. This in a country which is one of the leading emerging market economies and boasts of an entrepreneurial history of over 200 years.

Always look for people with dyed in the wool Indian ( Operational / Financial / Legal / Corporate ) experience. They must have worked in Indian Companies and have done a thing or two here. That’s what would make them a good judge of an investing opportunity in India. Qualifications should merely be their vision of an opportunity. Ask them the parameters they follow before selection of an investment. That should reveal the real candidate you are looking for.

Attitude : Entrepreneurs are what they are because of their fibre. They are way above the VC general partner / associate who assume that they own what they are asked to invest. If the VC crony thinks that he’s a royalty, they’d get whacked all over the place. Get rid of this pest, at once. And don’t blame India(ns) if you don’t. The right attitude to be a good VC in India is to be humble, mild mannered and not jingoistic. Learn to respect an entrepreneur for his original idea and his commitment. You might reject him very well if you don’t like his presentation, but do not ever ridicule him. His plan could be a success with some other VC and then you’ll look like a horrible orifice.

Talents : This is the hardest part. Just look for someone who has been tracking Global and Indian Businesses for the past 5 years. If he can list out 10 sensible merits and demerits of both the categories, you’ve got your guy. You can trust this guy with your investment mandates.

Get the real him : Ask this guy what he would do when he realizes that he made a mistake. The answer would reveal the real guy inside.

When hiring an experienced guy, just ask him how many seed stage funding he had recommended and what parameters he followed. And of course see what happened to the ideas that he had rejected outright. If it has been taken up by someone else and it really did work, Junk this guy at once. He’s a sure loser. Most of the current folk would not survive this test. They don’t look at good seed stage proposals and the really wired entrepreneurs take this rejection as a challenge and get it up on their own. This happen with 95% cases.


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