Tag Archive : founder

The passionate vs the obstinate founder

Recently, I had a long conversation with someone about the challenges I faced working with an obstinate founder that they referred to me. The person countered that the founder was passionate about their business idea, and I misunderstood their passion. I disagreed with their assessment.

During the week, I have contemplated the difference between obstinate and passionate. I realize that it was difficult to separate the two. Obstinate is often misunderstood to be obsessive; a term often used to describe Mark Zuckerberg, Jeff Bezos, Brian Chesky, Elon Musk or Jack Ma.

I love obsessive founders. I considered myself an obsessive founder. I am probably even more obsessive as an investor. Why VCs love obsessive founders is well explained by Mark Suster in this Medium post titled Why I Look for Obsessive and Competitive Founders. If you are a VC investor, then you should read this post.

Moral: Obsessive is good, but obsessive is not obstinate.

Obstinate is what Oxford defines as stubbornly refusing to change one’s opinion or chosen course of action, despite attempts to persuade one to do so.

Obstinate founders can take a fantastic thing and reduce it to rubble because their need to be right is more important than their need to win. It is the classic winning the battle but losing the war syndrome.

Gordon Tredgold wrote a wonderful article explaining the difference between stubbornness and determination, aptly titled Don’t Confuse Stubbornness with Determination.

In it, he provided a list of signs that can warn a founder whether their stubbornness is becoming an issue.

  • If you never win and you never quit, you’re an idiot
  • Will power vs. Won’t power
  • Remember that your goals must be measurable
  • Think about results
  • Consider adaptability
  • Your goal will remain the same, but your plan for achieving it will be different

His suggestions are absolutely banging on. I encourage you to read the article if you constantly find yourself butting heads with prospective and/or current investors.


On whose advice should you pivot?

A founding team must (not shall) display a strong belief and deep commitment to their business. The teams that constantly shift their business model on the feedback of funders eventually find themselves lost at sea. So, there are many times to pivot your business – but a failed attempt at raising a round of capital just isn’t one of them!

As Investors, we evaluate businesses with a limited vision periscope and often, “tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

At Artha, we remind ourselves and founding teams through the disclaimer in our rejection emails.

Please note, these are only recommendations and as venture capitalists, we are only required to be right 20% of the time to be amongst the top VCs in the world. We can be (and are) wrong 80% of the time in our investments, so please do not consider this as the final word for your business.” 

Therefore, it is sane advice to any founding team out there that is currently raising capital.

  • Utilize the funder’s feedback to alter your business’ investment pitch.
  • Utilize the pitches that didn’t result in a sale to alter your business’ sales & marketing pitch BUT
  • Only take your customer capitalist’s (read: paying customers’) feedback into account, to pivot your business

39/2019 v36.002

The Investment Banker Pandemic

Time and again, I have warned early-stage founders to steer clear of using the services of a banker to help raise money but unfortunately, that pandemic has overrun our ecosystem. Many bankers have made a comfortable lifestyle out of fleecing unsuspecting founders. The false dream that these 1-star bankers promise founders make my skin crawl, as many of the business models that they push to me aren’t even eligible for venture capital, and the bankers are aware of it.

I would also like to acknowledge that there are many bankers that are doing some excellent work and every penny paid to them is worth their weight in gold. Some of these bankers have worked with our portfolio companies and I have interacted with a few for fundraisers, but NONE aka ZERO were for raising amounts below $5 million (Rs. 35 crores).

Then there are angel networks that reach out to us about their portfolio companies and while I am disillusioned with the concept of angel networks, the angel networks do not (or should not) charge their portfolio companies for connecting them to funds; it is a part of their duties.

Raising outside money is the toughest and most gruelling of exercises (I had to endure this myself while raising $6 million for my fund) and no banker is going to make it easy for you. I too have had investors drop out or reduce commitments at the last moment and while I understand that it can be frustrating, the cold-calling, the rejections, the ‘getting close’, are all part of the process. FYI, I reached out to over 5,000 people for the first close and will be reaching out to 5,000 more for the next one. Every founder must do this; persistence is key.

If you still feel that you need the services of a banker, I have compiled a few articles that could help with the selection process. Eventually, it is up to the founders to decide to ‘banker’ or not but choosing an advisor to delegate the fundraising process without doing the required due diligence to select them is truly just “abdicating” the responsibility, which is simply unrewarding in every sense of the word.

How to Choose the Right Investment Banker

By David Mahmood, Founder, Allegiance Capital

The Art of Selecting an Investment Banker

By Katie May, CEO of ShippingEasy

7 things to consider when choosing an investment banker

By Martin A. Traber, Chairman of Capital Markets Group of Skyway Capital Markets

10 Questions to Ask When Choosing an Investment Banker

By Dan Lee


3 Things to Learn About Investing from a Founder that Sold his Company for $465 Million in 2013

On Friday, AIMWI  invited me to be a panellist for their 6th annual Family Office Summit India 2018. One of the perks of being a panellist is the opportunity to listen to the speakers scheduled before my session. I can point out many instances where the nuggets of wisdom imparted by speakers have led to impactful changes in my entrepreneurial, investing and even personal strategy and/or views. Today was one of those occasions.

I had the privilege of listening to Hexaware Technologies’ founder, Mr Atul Nishar, who shared the wisdom of putting to work, the wealth he gained after selling his stake to Barings PE in 2013. There were 3 key points that will remain etched in my memory:

  1. Putting money into fixed deposits is the riskiest investment one can make
  2. A part of one’s investment portfolio should be earmarked for investing in start-ups
  3. People that believe that 99% of start-ups fail are misinformed


6 Books I’d Recommend to Every Entrepreneur

An entrepreneur’s primary role is to sell. At any given point the entrepreneur is selling whether it is

  1. Selling himself on why he is pursuing this idea.
  2. Selling his employees on why they should join or stay at this venture
  3. Selling his friends and family on supporting him in his new (and often crazy) endeavour
  4. Selling his customers to try out the new product or service he has developed (and to pay for it)
  5. Selling his business as an investment opportunity to potential investors
  6. Selling mentors on why their valuable time will be well invested in him
  7. Selling to investors to continue supporting his business

The list of selling activities can go on for pages… and I still would not have even scratched the surface of the number of selling activities that an entrepreneur is actively involved in. Therefore if there a skill that an entrepreneur should learn is the skill to sell.

I have found that the following 6 books made the maximum impact on my sales, investment and entrepreneurial careers as well as the careers of people whom I have mentored and helped to grow in their respective sales and entrepreneurial roles.

Ideally, you should read these books in chronological order since the level of complexity increases as you progress down the list.

  1. The Greatest Salesman in the World by Og Mandino
  2. How to Sell Anything to Anybody by Joe Girard
  3. The Four Agreements by Don Miguel Ruiz
  4. How to Win Friends and Influence People by Dale Carnegie
  5. How I Raised Myself from Failure to Success in Selling by Frank Bettger
  6. Unlimited Power by Tony Robbins

Have any books helped YOU shape your entrepreneurial career? I would love to know so do share them in the comment section!


Investor Alert: Founders are Using Investor Math Against Us!

Two weeks back I was sitting in on a pitch wherein a healthy snacks company was looking at raising its seed round from us. The company was yet to launch its products in the market, but the team had the requisite experience and plan to get the venture off the ground. The company checked all the boxes on why we should take the deal forward until they opened their “Valuation” slide.

The company expected itself to be valued at an eye-popping Rs. 16 crore ($2.5 million). Now before you point out my Marwari heritage for balking at the valuation this is a company that does not manufacture its own snacks and (as of that moment) hadn’t sold a single chip. Therefore, their expectation of how much they should be valued at was jaw dropping. The founder claimed to have two funds backing that valuation, making the unbelievable situation become completely ridiculous.

As is the norm in a situation like this, we got in touch with the fund managers and inquire on the rationale given for valuing a group of entrepreneurs with huge plans a valuation of a midsized hotel. Their reason – the company wanted to raise Rs. 4 crore and since the fund manager wasn’t comfortable diluting them more than 20%, he reverse calculated the valuation which worked out to the awesome figure of 16 crores.

I agree that this reverse calculation methodology is very often used by us angel investors to come up with a valuation for an early stage start-up, since it is very difficult to decide on a value created in Excel, especially for a venture that is in the pre-revenue or early revenue stage. However, at that very moment I realized that founders have caught on to this methodology. They are using this formula against the investors by increasing the ask, so that the valuation increases for them!

Is it smart? I don’t think so.

When a company asks for a high valuation, the expectation of performance increases multi-fold. As I have mentioned in the past, there is a mathematical logic with which early stage investors invest. If the company gets a high valuation in the first round, the next round will be expected at an even higher number.  To reach that “high” number, the company must perform at a scale which gives them very little room to conduct experiments, make errors and pivot, if needed. Taking away those privileges from early stage founders is seriously detrimental to the health of the venture. That investment (then) is a complete gamble on the founders to find the product market fit and achieve scalability, with an almost-zero chance for errors.

Now armed with the knowledge that founders have caught on to the lazy math utilised by early stage investors, we have decided on a range that a venture should raise based on where it is in their journey to becoming a business.  When their requirement is beyond that range (above or below), we look at the expenses sheet to figure out why. If the expense is justified, we do not raise the valuation but are offering the founders a clawback based on hitting a number that will justify the expenses they need. This in turn, has helped us tamper down the valuations.

However, that healthy snacks company got the “we pass” email because not only was the valuation very high, but also the two well-funded backers of that valuation were committing just 25% of the round, thereby putting the onus on lead investor to make the math work… and I knew that I couldn’t do it.

The importance of disagreeing with your team!

I was at the VentureCatalysts HQ last night heading a workshop on a subject that I love talking about – “So you have raised funding… now what?”

One of the points I brought up during the session was the importance of setting boundaries with the team by using the word “no”. The squeamish attitude of the founders made it clear that the act of giving rejection was a new experience for most of them and while it was good to hear it is dangerous to implement!

It is common for new entrepreneurs, managers, leaders, etc to agree to the team’s or team member’s suggestion so that they are well liked as the leader of the team. That strategy may work for a short while but it can quickly become fatal for the organisation if the team looks at the leader as someone without a backbone i.e. who will agree to anything.

The leader’s duty is to make decisions that are in the best interest of the organisation and not in his/her selfish interest to be well liked. Instead of trying to win a personality contest the leader should be interested in the leading the team to the promised land by rejecting an idea that isn’t in the interest of the organisation. Secondly, a well intentioned rejection gives a good idea of the equation the team member receiving the rejection, has with its leader.

As a founder, entrepreneur , manager and even in their personal lives, a leader is frequently rejected, the promotion they didn’t get, the investor who wouldn’t agree, the client who wouldn’t sign and the list goes on. The leader picks himself up from the rejection dusts off the hurt and gets up to face up to his next challenge – why then do you treat your understudies with kiddie gloves?

Well rounded teams, well funded organisations and the best of intentions have been destroyed by their leaders becoming “yes” man. A leader should be as comfortable rejecting someone as they are agreeing with someone and if saying no puts the fear of losing the team, then team has an unhealthy equation with its leader.

Rejection is as much a part of life as is acceptance so get in the habit of saying “no” and start it off like I did to the room full of founders by.. yelling NO at the top of your voice!

6 ways a founder can get our attention

On a given day there are at least 10-15 investment proposals in my inboxes at LinkedIn, Facebook and Office365. Dhiral and Nikheel have almost the same (or more) flooding their inboxes and in fact even our recently added superstar, Apurva, has her hands full with sifting through the proposals in our pipeline. The team tries very hard to give due justice to each application and each founder wants their venture to be looked at with priority.

If we made everyone a priority, then no one would be a priority! So, until now we typically screened and sorted the applications using an internal scoring system but the flood of proposals has made that system redundant.

I would like to provide some method to the madness by making it open to everyone how we rank for priority the applications that come to us for funding so a founder can help us help them.

A referral/recommendation is the best way to walk into a sale whether you are selling widgets or shares in your company as the buyer is warm lead instead of a cold call. A warm lead brings down the customary wall of distrust and makes the job easier for the seller.

Right below, you will find (in order of preference) the referral (or recommendation) waterfall to get our top priority.


  1. Founder referral

A founder’s referral is gold to us… we take them very seriously!

When we have backed a founder to buy shares in their business and then they vouch that you are the next big thing, we are going to give you a priority pass to the top of the pile. With 51 investments (and 3 in closing) there are over a hundred founders that know us. The founder ecosystem is small so find out how you know them and get them to write an email introducing you to us and why they recommend you.

Our list of investments is updated regularly at this link


  1. Co-investor referral

The next person we trust after our founders are our co-investors. These are the people that been with us on multiple safaris of the startup amazon where we were the hunted or the hunters so we trust their opinion of you and your venture idea.

Our co-investor list runs into the hundreds so there is a good chance that the investor you are speaking to knows us and all you should do is convince them to write an email introducing you to us and you will make it to the top of the pile!


  1. Incubator/Accelerator Referral

Incubators and Accelerators play an important role in our ecosystem by nurturing napkin stage ideas into coherent business models. We respect their opinion and are in regular touch with many incubators and accelerators. If you were part of one of their programs, then you should ask them to recommend you to us and we will be all ears!


  1. Fund Referral

There are many funds that find ventures that do not fit their investment mandate because they are too early or too late for them (or a host of other reasons). In my opinion an entrepreneur is a salesman selling shares so he/she has to make a close at every sales call.

Therefore, if a fund gives you the shaft, ask them to give you a recommendation to Artha… we will gladly nurture you till you are ready for the big boys!


  1. Business Partner or Family referral

Within our extended family and their various businesses, you may find a link to get through to Artha. Be advised that coming through such a referral puts all three of us (you, the referrer and us) in a very awkward situation.

Whilst it isn’t the most preferred avenue for approaching us, it isn’t the least preferred road. If you cannot find favour amongst the top 4 options, you can always bank on our extended family and their business partners! J


  1. Come through an angel network

There was a time where a deal recommendation email from an angel network would make me drop everything. The proliferation of angel networks, the conflict of interests in their recommendations and founders opting to stay away from networks have reduced our reliance on angel networks for deal discovery.

There are still a few good angel networks who we trust so get a good network to recommend you to Artha… it is better than coming in cold!


If you don’t know any (really!) then you can apply to us directly by clicking “Apply Now” on our website but when you claim that no one knows you (or will recommend you) then you can imagine how difficult it would be for us to take you or your sales ability seriously.

Getting a referral is a big deal so take it seriously, get your sales cap on and get someone to recommend you to us!