 "Is venture capital killing start-ups?")
Just the other day, I had the somewhat unpleasant job of presiding over the shutdown of one of our investee companies.
As always, we had documented the demises to our investors in our funds – the Limited Partners or LPs.
One common reason was ‘too early for the market’. And the next most common was ‘couldn’t raise the next round because the market turned’. Anecdotally, other causes were odd ones like ‘promoters didn’t get along’ and we also had a couple we categorised as ‘governance issues’ – officialspeak for ‘we caught them with their hands in the till’.
Nowhere among the reasons was that us VCs (venture capitalists) were to blame. While there certainly is much blame to go around our lot – one investor I know asked a friend’s company to morph into a copy of a US start-up and then blamed the entrepreneur when it imploded – I’m sure I could write a long piece just on how misguidance by investors has killed many a start-up – but the bigger issue is simply this:
That the VC fund structure simply isn’t good for start-ups – especially in emerging economies like India.
No Indian firm of any stature has had any real IPO exit within 5 to 8 years of starting up.
This is an excerpt from Tech in Asia. You can read the full article here. Mahesh Murthy is the founder of Seedfund, India's best-performing VC fund & Pinstorm, a digital brand firm. He's also the most followed Indian on Quora
