Future Generali

How do you convince VCs to fund your idea?

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Rakesh Wadhwa:

How do you really go about building or getting conviction from VCs to fund your ideas? And, if you have a bright idea, what would be your advice to somebody on this?

 

Arjun Malhotra:

People don't fund ideas. Let me ask you the question. If you had the money, would you find an idea and if you wouldn’t, why do you expect the VC to fund?

People fund two things. They find passion. You got to want to change the world in some way. You got to have a team and you've got to address a large market. Because as you start a company and you have an idea that you want to go after something when you start going after it, you may realize that that's not really what you thought it was. And so you got to deviate from there and you have to have a large market to deviate into. If you're only working in a niche and it doesn't work out for you then you are stuck. And a lot of people hate funding you because they don't want to get stuck.

And the other thing is you've got to build a barrier to entry. You can't say I got the idea first and my first-mover advantage is going to drive me or I'll do it more efficiently than someone else. Would you fund someone who says that to you, who you don't know? Just think about it. And I always say put yourself in the other person's shoes and see what they would want to see.

I always tell people to try and recruit people who are smarter than you now. It's not that they aren't there. They are there. You want to find them. And when you recruit them, please listen to them, don't recruit smart people and then tell them what to do. Then they leave. They'll get out of there because they are smart. So listen to them. Actually companies grow because of teams and because of smart people, at least initially. Once you grow then processes and other things become important, but they're not important in the initial stage. In the initial stage, it is the people, right.

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