The word of a venture capitalist is important. And when it comes to a venture capitalist who has spent nearly 35 years being an entrepreneur, an angel investor and worked in both of the world’s biggest Silicon Valleys, every advice given is gospel.
Kanwal Rekhi, a venture capitalist angel investor who currently serves as the Managing Director at Inventus Capital Partners needs no introduction. He was the first Indo-American Founder & CEO to take a venture-backed company public on the NASDAQ.
Rekhi has invested in more than 50 startups of which he led the initial financing and was a member of the board of directors for 23 companies. He has co-founded built TiE, a global network of Indian entrepreneurs along with The Indus Entrepreneurs, a non-profit support network to provide advice, contacts, and funding to Indian Americans hoping to start businesses.
Focus on Entrepreneurship Not Sectors
I never invest in sectors, I invest in entrepreneurs says Kanwal Rekhi. I need to know this entrepreneur understands how to solve the problem. Rekhi believes ndia has a massive, unlimited opportunity. According to him, India is a very unproductive society compared to China and US and the Indian opportunity is almost unlimited in every sector.
When you start a company, there is no value there, you start an idea. So you go to a VC or an angel investor and you say hey, I’ll sell you 20 percent of for X million dollars. What you have sold to him is the risk you have diversified 20 percent of your risk and taken the capital.
If you don’t create value more than $2 million you have wasted that money. Now you go back and raise more money, you are going to dilute even more. It’s when you create money that your valuation goes up and a chance of raising capital goes up says Rekhi. So what happens in this environment is that capital efficiency is at the heart of a successful startup.
Don’t Waste Capital
Ownership stays with you when you don’t waste capital believes Rekhi. ‘You think of capital as the life blood. When you start to raise billions of dollars of venture capital, any damn fool can burn that money and why should ownership stay with you,” says Rekhi.
Failure is Essential
Failure of startup is absolutely required. Companies see why they failed. So learning comes from failures. If everything works well, there is no learning.
Over the 14 years prior to co-founding Inventus, Kanwal was a full-time venture-angel, investing his own capital in more than 50 startups, leading the initial financings for 23 of them and playing an active role on their Boards. These prior venture investments resulted in 21 exits including 6 IPOs to date.
Enter When Others Are Leaving
The best time to start a company is when everyone else is leaving the marketplace. Recessions are absolutely required in a startup ecosystem believes Rekhi.