1Mby1M Virtual Accelerator Investor Forum: With Naren Gupta of Nexus Venture Partners (Part 4)

Sramana Mitra: It’s not there. We hear from entrepreneurs from all of those places because we operate with a global footprint. In some ways, India is doing better. Latin America is behind because Latin America hasn’t had the technology outsourcing industry which is where the Indian technology product industry is coming from. That’s where they developed their skills.

Latin America hasn’t had that industry. Now there’s near-shoring. Technology talent is getting groomed in Latin America but it’s a very different market than the heavily technology savvy Indian market. Europe is also not a heavily technology savvy market. It doesn’t have the level of technology-trained

 pools of people. There are some interesting pockets developing. Lisbon has become an interesting pocket.

There are companies also starting to find a global footprint. We are seeing some of that. What is your investment thesis? What are you looking for? Give some pointers to entrepreneurs. In the last four sessions with investors, they provided, at least, some directional guidance on what kinds of things are exciting to you right now.

Naren Gupta: I say half-jokingly that I’d like to meet people who come up with concepts for which there is no market today. My belief is the greatest companies create markets. I would say don’t be the 10th company in the space. Try to think in original terms. What we are looking for are people who are thinking creatively and are thinking in non-linear ways and people who are good listeners.

In all the successes that I’ve had, we hit a spot somewhere along the way where things looked very tough. The great entrepreneurs made something happen out of those situations. We don’t have a top-down philosophy on investing. We have a bottoms-up philosophy. We talk to entrepreneurs and see what their thinking is. Are they going to be able to build a large company out of it? One of the entrepreneurs among the team should be a good CEO at least for the next few years. We don’t want to fire entrepreneurs and bring CEOs. Those things just never work out.

I want entrepreneurs who are thinking big and how are willing to take on the leadership role. One thing I’ll also say is that a team of two or three founder makes a good team. Look at all the big successes in the US and even in India. Most of the time, there are two or three founders. It’s this strange thing. The problem we have with founders is that we tend to be aggressive and we tend to believe that we can work through walls. There needs to be somebody around you who needs to bring you back to earth once in a while.

I would say bring somebody who’s complementary to you and somebody you love and respect so that you’re going to listen to them. It’s a very intangible thing. If I would do an analysis on what we invested in, you know in the first 15 minutes that you want to fund somebody. I feel that doing diligence is just covering your behind. You know in your heart that this is a person you want to fund. I met DD for breakfast and told him I’d write a check – of course, assuming that all the things the entrepreneur says is true. We need to be able to go with our guts. We need to think non-linearly.

Be yourself. When you’re talking to an investor, be yourself. You don’t have to be somebody else.

Sramana Mitra: That’s applicable on the entrepreneur side also. We know whom we want to work with as well. Chemistry is a human phenomenon. It’s a bit like marriage. You have to be with this group of people whether it’s co-founder of a set of investors. You have to spend a lot of time and build trust for many years. It takes 7 to 10 years to build a substantial company.

To be in that relationship for that long a time, you really need solid chemistry. I’m not going to name any names but there are investors in the industry who have reputations of backstabbing entrepreneurs. I’m not going to touch those investors with a 10-foot pole. When you make choices, don’t make choices by thinking that this is the biggest name in the industry and I have to work with this person. You have to feel good with this person. You have to feel a bit safe with that person.

Naren Gupta: The way I put it is, you can’t divorce your investor. They might be able to get rid of you, but you can’t get rid of them. Be careful with what you’re doing. There is no divorce.

Sramana Mitra: In terms of geography, are you investing in all kinds of companies? I know there is an emphasis on India. Could you explain that?

Naren Gupta: We are focused on India because we believe there’s a huge opportunity there. We are also funding companies in the US. My thesis is that a lot of the great companies are going to be built to address the global market. When we funded cloud.com, the three largest customers were all outside the US. We want to fund companies in India that can address the Indian market as well as emerging markets.

We want to fund companies in the US that have a plan to address the global market. One thing I would say is that don’t ignore the global markets. You’re not going to be able to build a big company without addressing that global market because the growth outside the US market is huge. They need technology more than we do. That’s our thesis. We don’t generally want to fund companies where the market is exclusively or primarily in the US.

Sramana Mitra: Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Naren Gupta of Nexus Venture Partners
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