Technology, Venture Capital, Private Equity

Perspectives from an Indian VC

Archive for July, 2008

Entrepreneurship, venture capital and quantum mechanics

Posted by Arun Uday on July 30, 2008

Okay, that (I mean the title) was a ploy to catch your attention! Actually, this is the second part of my drivel on successful investing. Amongst the six factors for successful investing listed in my previous post, “insight” stands out from everything else in a distinct way in that it is “non procedural” as against the rest, which are “procedural”. Let me explain that.
In the study of logic, there are two approaches – deductive approach and inductive approach. In the former, there are tenets or premises, which are accepted as a given and conclusions are drawn on that basis. An inductive approach, on the other hand is the process of building a coherent thesis based on numerous observations (akin to a bottoms up analysis). For example, the reasoning – “All men are mortal. Joe is a man. Therefore, Joe is mortal” is a deductive line of reasoning since it is based on the *irreducible* premise that “All men are mortal”. On the other hand “I have only observed black crows and never observed a crow of any other colour. Therefore, all crows are black” is an inductive line of reasoning since the conclusion is drawn from a set of verifiable observations.
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What it takes to be a successful investor (Part 1)

Posted by Arun Uday on July 17, 2008

Taking off on my previous post on some ideas for industry specific funds, wanted to share my $0.02 of learning gathered in my (very) short history in the investment profession about some key success factors for successful investing.  Though these will be mostly applicable to PE investing, it could also be relevant to other forms of investing such as the public markets. In my next post, I will link these with some interesting concepts in human cognition and other ideas from pure science (which may come as a surprise to most readers).
1. Insight: This is perhaps the hardest skill to acquire (if it can ever be “acquired” at all) or even measure. Ultimately, it is also what differentiates a John Doerr or a Warren Buffet from other ordinary investors. Insight – the ability to visualize a reality that other mortals don’t normally possess. And it is distinct from all other success factors in a fundamental way, which will be further elaborated on in my next post.
2. Social capital: By this I refer to your people networks. It begins with something as basic as being connected with investment bankers and other agents, who will show you “deals” and opportunities. To make an investment, you need to learn about the opportunity in the first place – as simple as that. It could also extend to your ability to make relevant introductions to your portfolio companies (to potential employees, partners, customers etc.) post investment.
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