Friday, March 28, 2014

Indian VCs(or atleast the ones I have dealt with) and Learnings

Updated: Removed the confrontational sentences as that were written in the heat of the moment and were not adding any value to the post and were written just to get it out of my system:

Based on some bad experiences with Indian VCs, following are some pointers on dealing with VCs.

In one instance, we specifically asked a VC if they were in talks with our competition. We did not want to talk if they were speaking to competition. They gave in writing that they were not. But after our discussions, it was clear they were in fact talking.

In another instance, VC was said he was interested but actually was just using us to get data points about our industry. Finally he used those data points to help his portfolio company to get direction.

Well, there is no point in naming names or crying hoarse. To take something positive out of my experience, I am listing some points you need to remember when dealing with VCs.

1. Don't tell them your client list. Especially the prospective list and the big client list. There is no point. VCs are looking at your overall traction. They are not looking at one big name. Even if it makes sense, try to avoid naming the client. Because chances are, if your deal does not go through and they end up funding your competitor, tough luck. Thats the first customer they are going to poach :)

2. Keep an eye on funding stories. If the VC ends up funding both your customer as well as your competitor, well, you are in hot soup :). Just hope you have a good relationship with your customer. Let me assure you, since the VC knows he is your customer and he has invested in your competitor and your customer, the VC will try his best to push your competitor's solution to your customer.

3. Don't tell them your secret sauce. Every company has a secret sauce. Whether it is your sales strategy, or your marketing ideas or your killer product feature. Don't disclose that until you are funded.They don't need to know this at this point of time. Once they invest and are on board you can reveal that. Right now, they just need to know that you are on a path to success.


I know that none of the VCs accept an NDA and hence you are at a disadvantage. But try to play your cards close to your chest. Try not to reveal too much unless you are asked for it.

It is also ok to ask the VCs if they are also evaluating your competitors and put that in an email and let the VCs respond over email.