VCCircle's speculation on "investment apartheid" is objectionable and misplaced

Vivek Sinha of VCCircle writes that investors in India appear to have a bias towards entrepreneurs with privileged educational backgrounds and labels entrepreneurs who don't qualify as "have-nots". His piece argues plausibly that, based on recent deal statistics, the lack of a name-brand educational institution on an entrepreneur's CV makes it much harder for that entrepreneur to raise capital. He provides some amount of detail to substantiate this, which I encourage you to read and judge for yourself.

I have no problem with this line of thinking.

What irks me though is the use of the word "apartheid" to describe this situation and the objectionably prescriptive way he ends his piece:

[The] breed of ‘have-nots’ need to shrink if the Indian startup ecosystem needs to take flight.

Why should this be? I have several objections to this statement.

• Who says the Indian start-up ecosystem has not taken flight?
• If we pretend that it has not, how do we know that it necessarily will take flight if the mix of funded entrepreneurs changes?
• Every investor, whether angel or VC, is perfectly entitled to their own opinion as to who constitutes a fundable entrepreneur.
• VCs have an obligation to their own fund investors, not an obligation to society at large or to "have-not" entrepreneurs.
• "Apartheid" is an extremely objectionable term. It should not be used in this context.
• Perhaps most important of all: if Sinha (or anyone else) has objections to taking entrepreneurs' educational background into consideration before providing funding and believes that this leaves many equally good companies without funding, then let them put their money where their mouth is. If there is a missed opportunity here, surely someone will exploit it? Armchair advice not needed.

Possibly none of my objections above really applies and Sinha's only intention was to deliberately say something provocative to attract readership to VCCircle. I don't know why he would need to though -- VCCircle is an established source of information on entrepreneurship and venture capital in India.

To be clear, some of my own portfolio companies have entrepreneurs who would be considered as having gone to some of the best schools around. We have also funded entrepreneurs who have taken a different path. I don't see what any of this proves.

Comments

[Vivek Sinha]

First of all, let me assure you the objective was not to sound provocative to drive traffic. One post doesn’t maketh VCCircle’s traffic :)

The personal opinion was based on some empirical finding and something which sounds probable based on my, howsover limited, interaction with investors and entrepreneurs. When I heard what Deep Kalra had to say on it, it sort of validated my thoughts.

# From the little I can fathom, even as the origin of the term apartheid probably traces back to a derogatory racial practices, in general usage it is used (maybe not too often) if something is a no-go area. But if the post conveys that investors treats non Ivy League entrepreneurs as native people were treated in South Africa during those days, it was not intentional and I would be surprised if most of our readers think that was the export of its usage in the post.

# whether the Indian start-up ecosystem has taken flight or not is subjective but I would say we might be getting stuck in semantics here. The idea was to depict if it needs to grow faster/accelerate/rocket etc. Let me admit startup ecosystem is thriving but putting it in relative terms as Silicon Valley which is in flight, I am not too sure if they are in same plane. Taken flight or on the runway? To each his own.

# Nowhere does the post says a change in mix by itself would build the ecosystem. All it conveys is that if it has to accelerate/grow big et al, others would also need to be funded. The empirical funding suggests a disproportionate share of VC funding is going to a set of entrepreneurs.

# Sure. Every investor is entitled to his/her own opinion as to who constitutes a fundable entrepreneur and I state in the post a good chunk of my set of ‘have-nots’ are not even employable let alone be trusted with others money. Nobody is arguing to bring affirmative investing to the fore. The post also says this could be signal of VC firms picking the low hanging fruits..

# If a lesser mortal journalist has the money to turn an angel investor the world would be very different my friend. I differ whether the post even borders on armchair advice. It only depicts a fact of life. Oh I stand corrected just one quarter of the life.

# Glad to know you consider VCCircle as an established source of information for entrepreneurship, though I would personally love if we are able to get you make that source of information ‘& opinion’.

# Good to know at your own end you have a mix of non Ivy-League entrepreneurs. Maybe the whole quarter I looked was some statistical anomaly, as one of my professors used to caution while spinning our minds in structured modelling exercises.

PS: On hindsight, I just chanced upon your tweet, would have helped me clarify if we had this in our comment box to show other views on the blog.

[Murli Ravi]

Thanks for the response. As I said, I have no problem with the line of reasoning in the article. But the spin imparted with phrases like "dice loaded against them" seems quite unnecessary.

Quote: If a lesser mortal journalist has the money to turn an angel investor the world would be very different my friend. I differ whether the post even borders on armchair advice.

That sounds like a cop-out. Ok, you don't have money to spare to be an angel investor. But then how do you know enough to opine on what investors should or shouldn't do? Can't have it both ways, right?

Anyway, if you don't have personal money to invest -- most of us don't, self included -- you could do something else to help out "have-not" entrepreneurs who you think deserve the help. "Money where your mouth is" doesn't have to literally mean money. It can also mean volunteering two hours a month with a budding start-up to help them with a specific task or coaching an entrepreneur on PR strategy or whatever else, and gaining insights, business connections, even friendship in return.

Please do feel free to link to this post from your article.