Venturing for finance? No fear

Most aspiring entrepreneurs see venture capitalists as sharks with loads of money, waiting to snap up a good business if it turns profitable or steal the idea and kick them out.

Rakesh Rai        Print Edition: March, 2010

Most aspiring entrepreneurs see venture capitalists (VCs) as sharks with loads of money, waiting to snap up a good business if it turns profitable or steal the idea and kick them out. This, as the book (Smooth Ride to Venture Capital) explains, may not be true. VCs can be good business partners not only because they provide financing, but also due to their expertise in nurturing businesses. This is one of the few books on the venture capital industry that specifically addresses Indian entrepreneurs.

Divided into five sections, the book takes the reader through the various stages of approaching a VC and negotiating with him. It discusses critical issues such as the things VCs look for before funding, how hiring advisers helps, ways to create a funding plan, negotiating the term sheet and managing a profitable exit. As to why one should go to a venture capitalist instead of the umpteen financial consultants in the market, the author says, "Financial consultants tend to treat the exercise of raising venture capital in a manner similar to raising bank loans or project finance."

While the book addresses the 'how' of venture capitalism, it doesn't tackle the issue of getting funding. So, even though the author mentions that VCs are looking for 'scalable' business models, he fails to talk about the projects they have funded in the past few years. Listing out some companies that have successfully managed to get VC funding would have made the book a more credible and interesting read, more so because the author himself is an 'entrepreneur coach, mentor and adviser'.

Another irritant in the book is that most of the critical numbers and illustrations are referred to in US dollars and the examples consist primarily of blue-chip American companies. Some tables, such as those illustrating the probability of VC funding, are inadequately explained. In fact, going through the initial chapters is akin to reading a college textbook on the venture capital industry without any reference to funding. The flaws notwithstanding, this book is a good source of information and is worth a venture.

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