How do you find flat world VCs?
Came across this thought-provoking post by Basab Pradhan in which he talks about “flat world ventures” and how the traditional approach to VC “is leaving big underserved gaps in the market”…Although the article is largely about Indian start-ups and their approach to global markets, a lot of it is probably relevant to Chinese start-ups as well…
Basab defines “flat world ventures” as startups whose product or service is largely put together or provisioned in India for global markets. He cites his own company as an example which does research in India for the US market (there are of course others including Aranca and RocSearch - both run by friends and fellow LBS alumni, Hemendra Aran and Neeraj Bhardwaj)
Basab argues that the reason why flat world startups are underserved by traditional VCs is because of the fact that they straddle two worlds and “it is very rare that you will find a VC who is as familiar with the Indian market as he is with the US market.”
While finding such a person may well be impossible, the situation is not really as bleak as it looks…In most cases the entrepreneur (and his/her team) will have connections and network in at least one (if not both geographies)…so what they can look for is an investor who can complement their relationships and networks…reminded me of a report on the Indian VC marketby Alok Aggarwal, head of Evalueserve in which he talks about some of these issues… (see 4.3 and 4.7 of Alok’s recommendations) (also see “Another hot day…in an over-heating market“)
Another way of achieving that balance is to actively try and cultivate a network in more than one geography…this is even more critical as startups and markets increasingly becomeglobal and move beyond traditional VC boundaries…(see my earlier post on “Globalization – What’s it got to do with me?“ )
And I slightly disagree with Basab’s 4th point (re. what should VCs do?) where he says ”The reassuring handshake will get rarer, unfortunately.”…I think the opposite will be true…as global travel becomes increasingly feasible and economic, the value of personal touch in a relationship is likely to become even more salient…
