We've all heard about why it's important for entrepreneurs to be passionate about what they're doing. But passionate investors?
Mark Suster explains why entrepreneurs should seek out investors who share their passion. Investors who will go the extra mile and give your company more patient long-term support than would be rationally warranted.
I've written about this myself as part of larger topics here, here, here and here. I have fallen in love, as Mark says, with a few entrepreneurs in my time, and in all those interactions, there was always something special that went beyond just the numbers, and that relationship continues to this day.
At the same time, entrepreneurs in Asia should be wary of placing too much emphasis on this. Not because passion is somehow an unnecessary ingredient in Asia. Quite the contrary. Most Asian countries are difficult markets and you want every bit of support you can get.
The reason for my caution is that the number of VC firms in countries like India, Singapore, Australia, Indonesia and so on is at least one order of magnitude smaller than in the US. This necessarily means fewer potential investors who're going to be truly passionate about you. If your #1 criterion for picking an investor is someone who passionately believes in you and your mission, then I'm afraid you are going to find yourself restricted to a tiny handful of prospective investors, perhaps as few as 1 investor (or even none) depending on where you live. The investor who's passionately interested in, say, tackling market inefficiencies in the media industry (me!) may not be as passionate about the next Flappy Bird app. Some other investor may have exactly the opposite perspective.
A related reason is that many investors here are, as one entrepreneur disparagingly said to me, "Excel VCs". By which he meant, accountants, bankers and spreadsheet mavens. So let's say you've actually hit upon a VC firm that's made a few investments in your sector and seems to understand what makes your company tick. That still doesn't guarantee passion. This can be true across stages and across investor profiles -- it's not only the growth stage guys (Series C and beyond) as you might think. One reputed investor once said something to the effect, "Why should a successful entrepreneur with an exit to his name become an angel investor? Far easier and less risky to just invest in real estate."
Finally, VCs in this region are faced with a huge surfeit of investment opportunities in sectors as diverse as logistics, manufacturing, hospitality, healthcare, non-banking finance and so on, apart from tech. This means that they probably haven't decided what it is they are truly passionate about... mostly because they don't need to.
All of which means that when you do come across your dream match, grab the opportunity with both hands. Don't be shy.
I write this because I know how difficult it can be to find a potential investor and to decide with whom you’d like to try to work. You may not have a choice – many don’t. But if you do – or if you’re simply deciding which VCs to put in super-human effort to targeting as potential investors, I would encourage you to think about their core beliefs and interests.