Open Letter to Mr Narayana Murthy on starting the VC fund
Monday November 30, 2009 , 11 min Read
Dear Mr. Murthy,
Thank you for your noble work of starting a VC fund for India and Indians, however as a probable investment seeking entrepreneur (am awaiting to be funded for the past 2 years after innumerable presentations and demos and VC meetings and all) I would like to highlight the following points to your goodselves which I hope you will consider and not negate like the rest of VCs or shall I say “Vulture Capitalists!”
1) Product / Service should be a niche and not generic – Who say generalist ideas do not work? If we have 7 million SMEs to serve, why can a SME related product not succeed? Why does a product which has day to day use not succeed if backed with proper innovation, research, service, support and ready customers? All VCs just want to focus on the Niche, they just want something which no one else has done before and if they get a generalist – they just say, “its too crowded”, “not our fund focus”, “we are already full with our investment portfolio”, “we will refer you to someone else or some other fund” and all bla bla bla….With this negative attitude good companies are being left behind. No one encourages, no VC funds a company or an entrepreneur who says “I have a plan to make a better OS than Windows?” Why is such an idea not funded? Why is such an idea not allowed to be groomed? Is Windows the end? Is it the ultimate thing on this planet? Why don’t VC’s allow entrepreneurs to take risk? Why this hype and hoopla on all this niche and stuff? Why not fund generalist companies with unique model and mass appeal?
2) Customers should be well known and if possible branded – If there is a product focusing for example on the Indian SME, how will that customer be branded or well known? If they were that well known will they not be branded? Just think about this! I request you, Sir to focus on companies who have customers, invest in real running sweat and blood companies and not just paper companies with an idea or a concept. VCs here do not even talk to companies who have meager sales, reason being they do not have branded customers. How the hell does a small time entrepreneur get branded customers without proper support and capital? It’s a chicken and egg situation and not one which anyone wants get into !!!
3) You have to be in the Sexy area or be the blue eyed entrepreneur for the Funder – Like for example, if you are going to build a software product which competes, for example with Google or SAP or Microsoft – No VC will even touch you in today’s world! Reasons? Competition is too stiff, you can’t beat Microsoft…You can’t beat Google etc. The so called Angel funding or risk capital funding is missing from our country. Mr. Murthy, please consider funding companies who have the hunger and commitment to take on the world. Please consider funding companies who will make the west sit up and take notice, buy our genuine products and services and not just purchase our time and effort and pay us for that. Let’s become more tangible rather than being intangible and service oriented. Let’s get aggressive. Rather than all company profiles being shown as a Microsoft Partner or a SAP Partner or an IBM Partner. Let it be the reverse with western counterparts claiming they are partner to such and such Indian company. That’s when we can say we have arrived, that’s when we can say its “MADE IN INDIA!”
4) Plain Jane Idea companies given a choice over running enterprises – Most VCs don’t like balance sheets which are small in size, sales which are less or are bleeding. It’s our experience that they will fund an idea more than an existing running poor setup. Please consider companies with an existing set-up, or bleeding set-up as these are the entrepreneurs who have the guts to run things on their own by putting in their own capital. A person who can risk his personal wealth is a sure shot bet to succeed and manage the investors’ wealth better.
5) Presentations / Business Plan Summaries in those killer 10 slides – This has been the worst experience for me. All investors ask for presentations of 10 slides, 200 words, 1 slide on product, 1 slide on financials, 1 slide on team etc etc. I agree that if they are checking 100s of proposals they should have a common format to make the process simple. So have a common format but why the cap on the number of slides? If you read 10-15 more slides will heaven fall on us??? How do we explain a multi vertical and horizontal Software Product in 2 slides? How do we show and convince you on the feasibility of a product huge and complex like an enterprise wide solution, an ERP or a Business Operating System? How? I would request Mr. Murthy to please allow the Entrepreneur to speak / write his heart out. Give a format but do not cap on the slides / words etc. I mean, how can you decide to invest in someone in 2 minutes? Is it a gut feeling or whatever? Investment is like a marriage; do you deicide to marry someone in 2 minutes even if your gut says it? Does love at 1st sight work in today’s so complex materialistic world? 1 or 2 off-hand meetings and you decide the worth, fate, future of that company / entrepreneurs? How?
6) Herd Mentality Investment – When DOTCOM was in, all VCs invested into dot coms. When Social Networking, Mobile Advertising, Green Technology is in – all are investing into it. Who will invest into companies thinking out of the box? Why does a VC not encourage someone who thinks against the current? Why does everyone just want to play safe? WHY?
Mr. Murthy, I humbly hope you will consider my letter and have a human touch so that the right Entrepreneurs, Companies and Products / Services are funded to take INDIA to the next level!!!
Whatever you decide, Mr. Murthy keep in mind millions of enterprising Indians are looking forward to your help and support as always. Like you created Infosys we hope you create your VC fund as a benchmark in the Indian venture investment landscape. We all are waiting, all of us – INCLUDING ME ?
Dear Mr. Murthy,
Thank you for your noble work of starting a VC fund for India and Indians, however as a probable investment seeking entrepreneur (am awaiting to be funded for the past 2 years after innumerable presentations and demos and VC meetings and all) I would like to highlight the following points to your goodselves which I hope you will consider and not negate like the rest of VCs or shall I say “Vulture Capitalists!”
1) Product / Service should be a niche and not generic – Who say generalist ideas do not work? If we have 7 million SMEs to serve, why can a SME related product not succeed? Why does a product which has day to day use not succeed if backed with proper innovation, research, service, support and ready customers? All VCs just want to focus on the Niche, they just want something which no one else has done before and if they get a generalist – they just say, “its too crowded”, “not our fund focus”, “we are already full with our investment portfolio”, “we will refer you to someone else or some other fund” and all bla bla bla….With this negative attitude good companies are being left behind. No one encourages, no VC funds a company or an entrepreneur who says “I have a plan to make a better OS than Windows?” Why is such an idea not funded? Why is such an idea not allowed to be groomed? Is Windows the end? Is it the ultimate thing on this planet? Why don’t VC’s allow entrepreneurs to take risk? Why this hype and hoopla on all this niche and stuff? Why not fund generalist companies with unique model and mass appeal?
2) Customers should be well known and if possible branded – If there is a product focusing for example on the Indian SME, how will that customer be branded or well known? If they were that well known will they not be branded? Just think about this! I request you, Sir to focus on companies who have customers, invest in real running sweat and blood companies and not just paper companies with an idea or a concept. VCs here do not even talk to companies who have meager sales, reason being they do not have branded customers. How the hell does a small time entrepreneur get branded customers without proper support and capital? It’s a chicken and egg situation and not one which anyone wants get into !!!
3) You have to be in the Sexy area or be the blue eyed entrepreneur for the Funder – Like for example, if you are going to build a software product which competes, for example with Google or SAP or Microsoft – No VC will even touch you in today’s world! Reasons? Competition is too stiff, you can’t beat Microsoft…You can’t beat Google etc. The so called Angel funding or risk capital funding is missing from our country. Mr. Murthy, please consider funding companies who have the hunger and commitment to take on the world. Please consider funding companies who will make the west sit up and take notice, buy our genuine products and services and not just purchase our time and effort and pay us for that. Let’s become more tangible rather than being intangible and service oriented. Let’s get aggressive. Rather than all company profiles being shown as a Microsoft Partner or a SAP Partner or an IBM Partner. Let it be the reverse with western counterparts claiming they are partner to such and such Indian company. That’s when we can say we have arrived, that’s when we can say its “MADE IN INDIA!”
4) Plain Jane Idea companies given a choice over running enterprises – Most VCs don’t like balance sheets which are small in size, sales which are less or are bleeding. It’s our experience that they will fund an idea more than an existing running poor setup. Please consider companies with an existing set-up, or bleeding set-up as these are the entrepreneurs who have the guts to run things on their own by putting in their own capital. A person who can risk his personal wealth is a sure shot bet to succeed and manage the investors’ wealth better.
5) Presentations / Business Plan Summaries in those killer 10 slides – This has been the worst experience for me. All investors ask for presentations of 10 slides, 200 words, 1 slide on product, 1 slide on financials, 1 slide on team etc etc. I agree that if they are checking 100s of proposals they should have a common format to make the process simple. So have a common format but why the cap on the number of slides? If you read 10-15 more slides will heaven fall on us??? How do we explain a multi vertical and horizontal Software Product in 2 slides? How do we show and convince you on the feasibility of a product huge and complex like an enterprise wide solution, an ERP or a Business Operating System? How? I would request Mr. Murthy to please allow the Entrepreneur to speak / write his heart out. Give a format but do not cap on the slides / words etc. I mean, how can you decide to invest in someone in 2 minutes? Is it a gut feeling or whatever? Investment is like a marriage; do you deicide to marry someone in 2 minutes even if your gut says it? Does love at 1st sight work in today’s so complex materialistic world? 1 or 2 off-hand meetings and you decide the worth, fate, future of that company / entrepreneurs? How?
6) Herd Mentality Investment – When DOTCOM was in, all VCs invested into dot coms. When Social Networking, Mobile Advertising, Green Technology is in – all are investing into it. Who will invest into companies thinking out of the box? Why does a VC not encourage someone who thinks against the current? Why does everyone just want to play safe? WHY?
Mr. Murthy, I humbly hope you will consider my letter and have a human touch so that the right Entrepreneurs, Companies and Products / Services are funded to take INDIA to the next level!!!
Whatever you decide, Mr. Murthy keep in mind millions of enterprising Indians are looking forward to your help and support as always. Like you created Infosys we hope you create your VC fund as a benchmark in the Indian venture investment landscape. We all are waiting, all of us – INCLUDING ME J