IDG Ventures, Sudhir Sethi, Founder, Chairman & Managing Director
By Shonali Advani
Conventions I commoditized software services, machinery building, manufacturing, contract manufacturing, energy generation.
WHAT ARE YOUR FAVORITE IDEAS?
We look for strong teams before anything else. We prefer venture-funded, early-stage startups and entrepreneurs who can lead them.
HOW HAVE VALUATIONS CHANGED OVER THE PAST 12 MONTHS?
It used to be low… now, it is lower.
WHAT KIND OF COMPANY IS THE BEST BET FOR YOU?
We typically invest in early-stage companies that are less than 5 years old and have a disruptive technology that can be patented. The company should have the potential to dominate the market share in India, grow globally, and have a strong entrepreneur behind it. We prefer product-based companies as opposed to service-based ones. It should be the first or second company in the space, or else it will become commoditized.
BEST WAYS TO NEGOTIATE WITH A VC FOR MORE
Be upfront and straightforward. Entrepreneurs should look at VCs as a value-added source of capital and a trusted mentor. Don’t be too hung up on valuator. Also, approach the right person. And try to gun for sale valuations. VCs want entrepreneurs to be supremely motivated.
WHAT IS THE BEST FUNDING OPTION?
It depends on the criteria. VC funds raise risk capital (investors or customers). Our capital should get transformed and replaced by customers. The possibility of debt is zero at this stage. We go for risk equity once we get customer revenues: then, we go for debt.