The fun in entrepreneurship is about dreaming, brainstorming ideas and finally setting up something and struggling through the earlier phases. As company grows, slowly and succinctly those fun times start fading away and one is forced to look at real numbers, quarter on quarter progress, worrying about your next big customer or next big product. These are still OK and good to have. Along the way you would have your early stage angel investors and employees holding stock etc., The angels are the best investors you will ever get. The angles investment is really risky and they generally do not mind, if we do our best and fail.
Then comes a time, when you start raising money from VC/PE, one should at all cost avoid government or government funded entities. They are the worst in decision making and commercial sense is not one of their core forte's. These days with CAG Reports / SCAM's and Anna Hazare campaigns, the decision making of even upright and professionally inclined government officials have come to a standstill, with the dual focus on saving their skin and making financial gains in their investment to ensure they have exceeded their mandate, which are sure recipe for disaster for any entrepreneur trying to raise additional funding. They are the least bothered if their investment really goes down the drain, even if it is tax payers hard earned money, for there is never any penalty for inaction and the penalty is only if one do not go by the book, which is a tough call in an equity investment.
So never go anywhere near the government when it comes to taking investment in share capital what-ever be your compulsions. The worst among them are state financial institutions. They are the least to interfere in your business and other than the occasional request for giving employment to their favorite people, but are the worst when it comes to you wanting to usher in a new investor or look for an exit. And these saviors who initially invested can become your worst nemesis when your are in a corner, because that is how our system works. For the same reasons, sometimes it makes sense to take loans from governments or public sector banks / development institutions, for then the same reasons kind of works in your favor.
Then comes a time, when you start raising money from VC/PE, one should at all cost avoid government or government funded entities. They are the worst in decision making and commercial sense is not one of their core forte's. These days with CAG Reports / SCAM's and Anna Hazare campaigns, the decision making of even upright and professionally inclined government officials have come to a standstill, with the dual focus on saving their skin and making financial gains in their investment to ensure they have exceeded their mandate, which are sure recipe for disaster for any entrepreneur trying to raise additional funding. They are the least bothered if their investment really goes down the drain, even if it is tax payers hard earned money, for there is never any penalty for inaction and the penalty is only if one do not go by the book, which is a tough call in an equity investment.
So never go anywhere near the government when it comes to taking investment in share capital what-ever be your compulsions. The worst among them are state financial institutions. They are the least to interfere in your business and other than the occasional request for giving employment to their favorite people, but are the worst when it comes to you wanting to usher in a new investor or look for an exit. And these saviors who initially invested can become your worst nemesis when your are in a corner, because that is how our system works. For the same reasons, sometimes it makes sense to take loans from governments or public sector banks / development institutions, for then the same reasons kind of works in your favor.
