Venture capital is about investing in the right people

Markets change. Competitors change. Customers change. Regulations change. Suppliers change. But people rarely change. What differentiates a great venture capitalist from a good one is the ability to identify and invest in the right people or ‘Six Sigma’ entrepreneurs, as we like to call them at Nexus India Capital.

1. Smart: High on common sense
2. Passionate: Really believes in the idea
3. Quick: Acts on things immediately
4. Great Listener: Understands the customer’s need
5. Adaptive: Willing to change course mid-way if needed
6. Team Builder: Can attract and retain a leadership team
7. Self-aware: Understands own strengths and weaknesses, leverages the strengths and finds ways to compensate for the weaknesses
8. Focused on Execution: Spends majority of the time on the high-priority issues. Does what it takes to achieve a task
9. Visionary: Dreams big. Spots trends in the future before anyone else
10. Ethical: Honest. Genuine. Can be trusted

More often than not, companies fail because of the wrong person the the helm. It is better to back an ‘A’ entrepreneur with a ‘B’ idea than to back a ‘B’ entrepreneur with an ‘A’ idea. Many of us venture capitalists get swayed by domain expertise and/or top tier education as that is something tangible that we can relate to. For example, we are more likely to fund someone from the travel industry to start an online travel company than someone who has worked in garment exports. We are more likely to fund an IIM MBA who has worked at an Infosys or a Tata than someone who has worked at a small software shop with a local chartered accountancy degree. While domain expertise and a decent education can be a plus, it is not what makes a ‘Six Sigma’ entrepreneur.

Identifying ‘Six Sigma’ entrepreneurs is more of an art than a science. It requires killer observation, good listening abilities, laser focus and a lot of intuition. And those who are good at spotting such entrepreneurs make great venture capitalists.

About the columnist: Suvir Sujan is co-founder and CEO of Nexus India Capital, a Mumbai-based venture capital firm that manages $320 million in funds. Sujan has been an entrepreneur who lived through and survived the difficult dotcom era as co-founder of online marketplace Baazee, now known as eBay India.

Photo Courtesy: Nexus India Capital