Two Indian VCs share some ‘learning’ and ‘unlearning’ from their investment journey

Leadership and learning are indispensable to each other, said John F Kennedy. Good leaders never stop learning, from their peers, from experience, situations, and from their mistakes.

As you learn, you also ‘learn to unlearn’ – it’s a continuous process that spans a lifetime and as the saying goes, “Good leaders are not born but made.”

In the same way, I believe a good investor can be a great teacher for an entrepreneur. The right investor can inspire hope, confidence and help entrepreneurs on the path to success.

I got an opportunity to have an honest conversation with Inventus India's Managing Directors - Samir Kumar and Rutvik Doshi. Here are some excerpts from the conversation.

Shradha Sharma: What have you learnt about investing in India, and Indian entrepreneurs over the years?

Samir Kumar: One of the things to learn about Venture Capital investing is that it is a patient game. One needs to look at things from a long-term perspective.

Rutvik Doshi: The biggest thing is to be able to understand that there are up-cycles and down-cycles. Not being swayed by either is probably my biggest learning. And if I look at history, be it in Silicon Valley or India, I think some of the best companies have emerged out of the downturn, and that’s been my biggest learning. It’s important to stay focused.

SS: What are some of the common mistakes Venture Capitalists make?

SK: One is that we follow the fad of the day; what is cool! So, in 2014-15, B2C was cool. We forgot about B2B. Now when B2B is cool, we forget other things. I think every business has a place. If you take a long-term view, you’ll stop following the fads of the day. The other big mistake we make is we follow what’s happening in China. We are not China or America. We need to look at our own problems and build unique solutions. [Opting for] copy-cat models is also a mistake we commonly make.

RD: A mistake we make is sometimes over-analyzing situations. The reality is that as VCs, I think we are two steps away from the market. The entrepreneurs are the ones who are closer to the market, running the business or building the products. They know more about the product than anybody else, and I have seen more than often, that VCs tend to feel they know everything, and give too much Gyan on what entrepreneurs should be doing, while it should be the other way around.

SS: Did you unlearn by investing? What has been the biggest ‘unlearning’ for you?

SK: I came into venture capital after spending 15 years on the operational side – in sales, marketing and product management and that too, totally by chance. And one big unlearning was this tendency to ‘do it yourself’ – (imitates, no, no, no, you are doing a marketing campaign, don’t do it this way, do it that way!) And then you realise this is what are doing, but not what the entrepreneur is doing or needs or wants to do. So stepping back, not giving him the freedom, not becoming the operational hands-on guy, was the biggest unlearning that I had to do. And it took me time.

RD: I am a relatively new VC compared to Samir, it’s just been five years. For the first two years, I used to think that the biggest job of VCs was to invest. And all my energy, time and focus was on investing. At that time I did not have a portfolio. But now I learn that ‘investing’ is actually the easy part of the job, anybody can do it. You know the theory, that even if a monkey throws darts, that will also work, it is true. The real job of VCs is actually to see the companies through. Once you have made the investments, you build your partnership with the entrepreneurs, spend five-six-seven, or even eight years sometimes in India, and ride the journey along with the entrepreneur. So the unlearning is that my job is not to invest but become a partner and to see the company through. It took me two years to unlearn and learn this.

SS: Can you throw more light on this ‘unlearning ’?

RD: I am talking of unlearning in the sense that the focus is not only on investing but also the partnership.

SS: That’s true.

RD: As a VC, it’s very hard for me to tell you how to start a business. If you (entrepreneurs) get something from your heart, observe things in your life, see certain problems and come across a solution around it, just jump into it, take risks and be willing to fail at the start. At some point in time, you will know what you are trying to do is working. And if you know that, and you need the resources to scale it up, come to us!

SS: If you had to do a reverse pitch, what would you pitch to entrepreneurs, why should they choose you over others?

SK: I think we are an entrepreneur-friendly firm, and that is the reputation that we’ve built. Being entrepreneurs ourselves, we’re able to put ourselves in our entrepreneurs’ shoes and look at things from their perspective. This does not mean we always agree with our entrepreneurs – we have strong views, and often have disagreements and strong arguments with our entrepreneurs, but since we can empathize with them, we almost always end up with a consensus that makes long-term sense for all concerned.

RD: We respect our entrepreneurs for their vision and hard work, and will support them through the ups and downs of their journey.

SS: Who has been your most inspiring teacher and why?

SK: I’ve had two sets of inspiring teachers – one is other VCs; when I got into a venture 16 years ago, I had no clue what a VC’s job was all about. A lot of VCs of that time were generous with their time and taught me the ropes of this business.

At IIT, I had an inspirational professor -- Prof. Juzer Vasi -- who was young then. Apart from teaching me his courses (and he taught very well), he also taught me to be iconoclastic, not follow the herd, but tread your own path.

RD: Personally, I’ve have been most inspired by the founders of our ecosystem. I’ve been fortunate enough to interact with thousands of them as a VC – I learn something new in every meeting, every pitch session and every board meeting. My job is to take these learnings and synthesize it into best practices for myself.

SS: What is that one trait in an entrepreneur you admire the most?

SK: Persistence is something I admire most. The entrepreneurial journey is a tough and lonely one – it has its ups and downs. Keeping the faith and powering on in the inevitable downturns, and working hard in adverse times to make sure the boat reaches the shore, is something that serves entrepreneurs well, and is a quality I really admire.

Even though this is out of context, the poem “IF” by Rudyard Kipling is something I feel can keep entrepreneurs going in the toughest times. It is my all-time favorite poem.

RD: I respect intellectual honesty among entrepreneurs. It is a hard journey, and for several times the market reacts very differently from what the entrepreneurs or the investors would have anticipated. The best entrepreneurs can identify it, be honest about what is working and what is not and eventually adapt to it.

SS: If you had to tell one thing to entrepreneurs who come and pitch to you what would that be?

SK: (Nothing to add)

RD: I’ve heard several pitches where entrepreneurs are presenting a plan which they think is “fundable” based on fads or success in other markets. However, they do not necessarily understand the nuances of that business or fully believe in it. My advice to all entrepreneurs is that they should start ventures which they truly believe to be a big opportunity and are willing to risk everything for it. Do not treat funding as a goal but as an enabler to achieve something bigger. We will be glad to partner with such founders and help them realize their vision.