What Indian Investors Can Learn From Silicon Valley Counterparts? Move FAST.

[Editorial Notes : The Indian startup ecosystem is growing and while we don’t see any point in comparing the ecosystem with any other part of the world (comparison leads to nothing), we definitely believe that there needs to learnings from the established ones.

Read this guest piece by Pranay Srinivasan, cofounder of Sourceeasy. Pranay raised money in Silicon Valley (and tried raising funding in India as well).]USA.jpg

Since I’ve moved to USA to build Sourceasy, I’ve had significant learnings about what matters and what doesn’t matter while building a startup, while raising funds from Investors, what is reality and what is perception, especially being part of a larger cohort like 500 Startups.

Here’s a few things I’ve learnt:

US Investors:

  1. The majority respect founders; nobody insults entrepreneurs unless provoked. they respect your time; they apologise if they miss an appointment.
  2. Time and talent > money.
  3. Unless your business is truly bad, they will not deride your startup. thats because they’ve been proven wrong multiple times.
  4. They’re far more upfront about their dealflow, their failures, and their ability to pick winners.
  5. They are hard as nails, contrary to public perception. they have strong intelligence, great networks and will drill you with great questions.
  6. VCs move fast: usually under 2-4 weeks to get a decision.
  7. Angels usually commit because they like you, the founder. the business must tick the boxes, but the founder is as important.
  8. The first contact needs to be a warm intro from either a portfolio founder or an existing investor in your company. There is no 3rd credible way.
  9. Investors will respect the connection introducing you at first. Not you.
  10. Outbound cold call emails on angellist, linkedin, fb, events, etc have ZERO conversion rate if they don’t already know of you.
  11. A verbal commit is rarely reneged. a written commit is almost as good as money. standard terms are respected.
  12. Investors who play games, waste your time and string you along are labelled, and marked in accelerator private lists. there are investors no one will do business with.

Indian Investors

  1. Most do not have an appreciation for startups. especially because they benchmark them against other non liquid forms of investment: real estate, shares, jewellery.
  2. They do not understand the implications of failure. Capital guarantees are not part and parcel of startup investments.
  3. Because time and talent is valued below money in India, investors typically feel like they deserve an exalted position.
  4. They will typically never explain a basis for their decision. and most will never communicate a Yes/No to the founder unless pressed to do so.
  5. A lot of indian investors / VCs in the valley behave the same way because thats how they’ve been used to working.
  6. Often the associate, the principal and the partner will ask you the same questions.
  7. There is absolutely no guarantee to a verbal commitment, and even a written commitment has a lot of ifs and buts in it.
  8. Its a wonder but tranched investments are still suggested in india.
  9. Indian investors dont like deal terms being fixed. they love negotiating.
  10. Indian VCs have too much pride in admitting they know nothing about your market. Most indian VC investment thesis are validations of anecdotal discussions rather than really data-driven analyses.
  11. Most indian VCs still entertain investment bankers to broker deals. its really rare to have VCs accept brokered deals. In most cases here, they care about building a relationship with the founders.
  12. Partners are not decision makers here. Just buck passers.

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