Investors should take a bet on the founder Invest in the driver, not the bus or the destination
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Paytm founder and CEO Vijay Shekhar Sharma spoke to Raju Narisetti, senior vice president, strategy, News Corp, (parent of VCCircle) at the fireside chat conducted at Tech Circle Summit in Bengaluru. Sharma, who is also an active investor in the startup space with 37 investments till date, spoke about what are the criterias he thinks are important to check before taking the final call on funding.
The first and foremost thing I see when somebody is pinging me is if they talking in fewer words or many words. I believe if people can say things in lesser words they have a far more clarity. Sharma said one of the problems he and his team often notice is that companies which are build because there is another company that has got build. "I am a fan of entrepreneurs that build companies and trends and not their ideas," he said. Sharma added that incredible companies are often built out of self need of entrepreneurs and he has a lot of respect for people who are building a foundation ecosystem.
Stressing on the need to evaluate entrepreneurs Sharma said, "You have to invest in the driver, not the bus or the destination, what will happen on the way will change." Sharma said there is a layer of investments for which he has a lot of respect and he would put any amount of money despite what his cash flow suggests. "There is also the other kind of money that I give to entrepreneurs that are otherwise not getting funded but they are really resort."
Funding environment in India
Sharma said that in the U.S. big cheques are written by Goldman, Silver Lake and others who are more or less a public market fund. India on the other hand, did not get large sovereign or market funds as fast as the other Asian markets understood that India will be a big market. He said that it takes Alibaba, Tencent or a SoftBank to understand faster that India is a big market and that India is one of the rarest countries on the world map where Asian funds are determining valuations.
Talking about the down round in funding Sharma said, "If we give too much attention to what the world will say then you are in the wrong business." He said that the key to being an entrepreneur is to have a thick skin because they get punished no matter what they do. Sharma emphasized that a down round is not bad if one has the right business model.