Do You Have The Right Capital Mix?
One of my favourites from all the meetings I have, is my monthly morning coffee with Mr Narendra Karnavat. Mr Karnavat is one of the most active and passionate angel investors based out of India. Moreover, he is an entrepreneur turned investor, which gives him the privilege of looking at investment opportunities from the entrepreneur’s perspective. For obvious reasons, I also feel like this quality makes him more admirable and charismatic to me. He quickly identifies if an entrepreneur understands the true meaning of dhanda and debunks the “wannabe” entrepreneur or as my favourite shark calls it, wantrepreneur.
His entrepreneurial zeal and energy are such that every meeting with him is a lesson in itself. We have invested in multiple companies together and he was also one of the first people to come onboard as an LP in Artha Venture Fund-I.
Yesterday, we met at my office to discuss some deals that
Venture capital is expensive $$$ and can be measured from its high expectations of returns. It is (or should be) the first lesson in finance: one should deploy capital only when
In my opinion the 2 worst places to deploy venture capital are:
- Heavy capital expenditures like constructing a factory etc.
- Working capital requirements
Capital for these requirements is best borrowed from banks and NBFCs and that too, only if the interest rate is below the ROI/IRR that the deployment is offering. This would be a prudent financial decision even if the interest rates were substantially higher than what is generally available but only until it is below the ROI/IRR that that capital deployment is offering.
It is imperative for founders with start-ups in execution/
As for Narendraji, until next time!