“..best companies are created in tough times” – Suvir Sujan, Nexus India

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Continuing with our series on Economic Downturn and Startup Survival, here is a quick QnA with Suvir Sujan of Nexus India Capital (earlier co-founded Baazee which was acquired by eBay)

Early and start-up stage funding is getting difficult to raise – what would you suggest as sources of capital for someone who has not been able to so far raise funding

Friends and Family is one option. Investment by an anchor customer is another option.  Creating a business line that can generate some early cash flow is the third option.

For someone raising a series A round, what mistakes can they make in the current funding environment

Strong founding team and a large market is what most VCs look for. It is a mistake to not have either.

For someone raising a series B, what do they need to demonstrate to justify their valuation and funding needs.

They need to justify that there is enough traction in the business and the money is being raised for growth.

VC investing goes through the fear and greed cycle and VCs often follow the herd. What are you doing in the current fear cycle – are you doing lesser deals, are you waiting/watching?

We continue to invest in A grade entrepreneurs that are trying to build large companies.  We are not doing any lesser deals.

What will demonstrate that you are taking leadership in building India’s next generation of companies?

We are one of the few VCs that truly invest in early stage companies. We have invested in over 15 companies in 2 years. Hope that is signals our leadership intent

Have you have been through such a slowdown before and have invested in companies during such a slowdown that turned out to be huge wins for you? Please share.

We are one of the very few Indian VCs that have been through a downturn. Naren as an personal investor and Sandeep when he was at eventures have been through economic cycles before.  Sandeep incubated Makemytrip.com out of his office in 1999/2000 which today is one of the most successful internet companies in India.

Which industries you are most bullish about? Extension to the question – which industry do you feel would be strongly hit by recession?

We are long term investors and don’t worry about the current recession. Having said that, outsourced services will be the most impacted in the short term.

Why do you think is now a good time to start a company?

We always say that the best companies are created in tough times. It gets the entrepreneur to really focus on what is important.