1Mby1M Virtual Accelerator Investor Forum: With Ashmeet Sidana of Engineering Capital (Part 3)

Sramana Mitra: The public market, though, is not in a bubble. The public market is reasonably sane these days. Most of these companies who are getting these ridiculous private market valuations would not be able to go public because they don’t have the numbers to go public.

Ashmeet Sidana: I agree completely. It’s on a case by case basis. There are also great companies that get created. As an entrepreneur, what we have to keep in mind is, markets come and go. Markets are cyclic. Economies are always cyclic. Businesses don’t have to be cyclic.

If you can build a company that has true technology innovation and a true sustainable barrier to entry and a competitive advantage where you are creating value for people, it doesn’t matter. It doesn’t matter what the markets are. It doesn’t matter what the regulatory environment is. You can succeed if you have those core ingredients.

What I’m very excited about is the change and the innovation that I have been seeing in the data center space, in the cloud space, and in the infrastructure space. That change is so dramatic. There is such a large disruption which is about to occur over there, which is why I started my firm and focused on that space.

Sramana Mitra: We want to talk about that in a lot more depth. I just want to underscore what you said for our audience. I was recently in Europe. I went to see Bernard Shaw’s Pygmalion. There is a point where this man who makes no money and is free. He has this great off-the-wall philosophy of life. He drinks and does whatever he wants.

Suddenly, he is given this £3,000 stipend. He’s intimidated. He cannot refuse this money even though he loses his freedom in the process. There are these great lines that Bernard Shaw delivers through him about that process of somebody losing his freedom to middle class morality as he calls it. The reason I bring this example up is, many entrepreneurs in our world are being offered irrational amounts of money.

First-time entrepreneurs and even serial entrepreneurs get intimidated by those huge sums of money being offered and they lose their heads. You need a very serious level of internal compass to be able to withstand and turn down these kinds of overtures, which are actually, in the long run, not healthy for you.

My very recent Facebook post is on how Mark Zuckerberg retained 26% equity in Facebook after raising so much money. Take a look at how much money was being thrown at Zuckerberg and how he managed to navigate through that. In the process of writing this post, I went through every single round of financing. For somebody so young, there’s this tremendous amount of steadiness in how he has navigated through that.

If you are faced with this scenario where you don’t really have the fundamentals to support the kind of funding that you are being offered and you are losing control of the destiny of the company through rounds of financing that are reasonable, please pause. It is okay to turn down huge amounts of money and work within reason. Your chances of success are actually going to be a lot higher if you act with discretion.

We know of entrepreneurs who have been associated with our program who are going through this process of huge amounts of money being thrown at them and they’re not able to keep their heads really cool.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ashmeet Sidana of Engineering Capital
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