What will you like for lunch today Mr. Entrepreneur: BBQ Wings or Sambal Chicken?
I know this sounds like a culinary post, but it is not. It is about much more serious stuff and sadly not as tasty. Countless people talk about the Silicon Valley ecosystem and venture capital everyday. Much has also been talked about the Asian counterparts, be they in India, China, Indonesia, or the little red dot where I currently live. But, I haven't seen too many people compare the two. I have already interacted with so many VCs in India and Singapore thanks to TommyJams. Last month, I also got a chance to visit New York and North Carolina for a Venture Capital competition (more about that in another post), and rubbed shoulders with some of the more influential VCs from the Valley. This is what I found:
1. Easy Say Easy Do
US VCs are much more willing to take the plunge, even further than the entrepreneur, as long as they see a good deal. Asian VCs think, parry, take a step forward, take a step backward and then finally jump. Imagine a lake with crystal clear waters and fairly deep. A US investor will strip off and jump. Whereas an Asian VC will bring out his thermometer, check the temperature, check his own blood pressure, wear an oxygen cylinder on the back and then jump. Not saying that this is good or bad, maybe the Asian system is just not built enough for the investors to take easy risk, but here the difference lies.
2. A friend in need is a VC indeed
to just deal with his/her idiosyncrasies, whereas in US, the investor is fighting against so many other players that all he can do is to put on a friendly-chap mask, cross his fingers, and hope that the entrepreneur chooses him. Hopefully, the rising deal competition in Asia will drive similar results here too.
3. Get your hands dirty before you bake a cake
Barring one small VC firm from Delhi, none of the investors ever talked about how they can help us with our company. It was a shock to me that EVERY and I repeat EVERY investor from the US started investment conversations with this topic in my mind. Again a result of the higher competition, but the difference is striking. The concept of "Smart Money" is yet to evolve, at least in India.
4. Cool is the Word
Refer to this tweet from Jason Mendelson (one of the more talked about VCs from Foundry Group) and you'll get a summary of what the VCs in the US are typically like. Compare that with this channel from a typical Asian VC firm. I am sorry to say this, but only one word: BORING. Bring out the humour guys, entrepreneurs are fun people, and they want fun people around them, especially after a hard day at work. US VCs have learnt this the hard way and Asian ones will have to too.
5. 30 Seconds to Fame
So what is it that the US investors are after? I believe after a few decades of investing in startups, they have come to realise that it might not be just about the returns that they make on their fund, but also about the journey that they go through with the entrepreneur. As an investor, you are the passenger in the back seat, admiring the landscape, and yelling out at the entrepreneur driver when he hits a rut. But in the end, what you want is a fun ride, good music on the radio, and finally reach your destination. US investors, at least the ones I talked to, seem to have learnt this lesson, and asian ones will have to too, sooner than later.
So as you can see (and I just realised this myself while writing this post), I seem to be biased towards the US VCs and with some reasons for it. Does this mean I'll look Westwards for my next fundraising? Probably not. Does this mean I'm in a better position to find the right investor back here in Asia? For sure, yes.
Disagree? Don't like something I said? Feel free to drop your comments or write to me at nikhilkapur@outlook.com.
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