less humans, more robots

First time, (not-so-educated-by-vc-blogs), entrepreneur may think that the transaction to be completed between the company and investor is a simple exchange of money for some number of shares of stock in the company.

A venture investment is really an exchange of many things; where values come first. Some of you spend some time in investment banking knows ‘buy side ’ and ‘sell side’. Basic English. Now, What the entrepreneur is “selling” and what the investor is “buying” are actually quite different. The inverse is true as well. What the entrepreneur is “buying” is not the same as what the investor is “selling.”

The Entrepreneurs Mind:
The first-time entrepreneur often has an emotional bond to his business (cliche’ lines?) that is impossible to translate into dollars and cents. It’s almost like putting a value on his first-born child. While he knows that he needs capital to grow his business, he is reluctant to put his “baby” in those terms.

All I need is to raise some money to grow my business. That’s it! All those value added things don’t apply here at this point of time. For me it’s all bullshit, extra baggage! What the investor and his firm going to do? Sit and sniff over my shoulders?

Oh common’ - Why I quit my last job is because I was fed up with my boss

My bank said, no, coz my business is too early for them. I ‘know’ that my business is worth a lot. My friends said check those Venture Capitalists. I’ve read about them. Sounds like they are ‘Vulture Capitalists’!

And I’m not going to let them take advantage of me. - Give me your money and get out of my way. Down the road, you’ll be very happy that I allowed you to invest in my venture.”

They say “Dude, I put my whole heart into it, I invested my life savings, I’ve taken all abuses from my parents and friends, including my girlfriend, I never cared. Now I got a business, which is on the cusp of being an amazing success. And that VC guy is sitting in front of me and talking how much ‘MY COMPANY’ he wants for cash! Stupid, they are comparing my hard work to some silly cash? That’s an insult!”

“And hey he’s talking about financial projections? How much money I’m going to make in 3 years time? Breaking down into per quarter plans? These freaking MBAs! I have spent an extraordinary time on my business plan and I’m convinced that it’s rocking. I know there are going to be surprises when we move forward, but I’ve adequate contingency plans to cope with anything that comes our way. “

“We’ve been so conservative in assumptions, that I am sure that we will out-perform the plan. And those people blackmailing me saying this is the first time I’m doing it! Bullcrap! I’ve been part of many startups, I attended many seminars - I’m absolutely ready!

Team? We have all Rock stars available, ust look at our founding team! Perfect!

The mind:
1. As an investor, I believe in Schwartz’ Law. Schwartz said, ‘Murphy is an optimist.’
2. When the day is done, I’m looking to make investments that return a lot of money
3. I do early stage investments, like any other professional, I’m an expert in it.
4. Deal flow will NEVER end, so if I don’t do this particular deal, another one will be coming tomorrow.
5. Shit happened. Happens!

[This is a fun article, not an educational piece. get inspired :) It’s Friday!]