Chennai-based Veda Corp. Advisors Pvt. Ltd is a boutique investment bank that helps start-ups raise venture capital. C. Venkat Subramanyam, founder and director of Veda, spoke to Mint about the bank’s business and the changes he has seen in the last dozen years in this space. Excerpts:
How do entrepreneurs today compare with those in 2000?
They seem to be a lot more prepared and patient. I think in 1999-2000, the whole thing was about raising money as quickly as possible on an idea, and not really working on the commercial viability. Today they are far more prepared to face a VC investor.
What is happening in Chennai versus other parts of India?
The southern market, particularly the Chennai, Coimbatore, Kochi belt, is traditionally a market that is comfortable with debt, not equity. But this is changing. We have seen a new generation of businesses that are a lot more open to private equity investments.
Why would an entrepreneur come to you versus go on their own to VCs?
Some for our negotiation skills, or because they feel the process will distract management and they want to outsource it. Some come because they believe they are not fully cooked, they need more hand-holding in strategy and how to position a deal.
What would you advise entrepreneurs seeking VC funding?
One important piece of advice would be not to just look at valuations. I think if entrepreneurs focus on the business plan and the commercial viability of growth, valuations will automatically follow.
What would you advise an early stage start-up?
Putting together a good team is critical. In buoyant markets like this one, it is not possible for a start-up to hire on conventional salaries. Entrepreneurs, who don’t have the cash to hire people and don’t have the heart to share, end up neither here nor there.