Session 3. Ins & Outs of Venture Funding
- CEIBS MBA Entrepreneurship Bootcamp
October 21, 2016. Shanghai — “Do you want to be a part of a great enterprise or the 100% shareholder of a small- to medium-sized company?” Professor of Entrepreneurship S. Ramakrishna Velamuri asked CEIBS eLab Bootcamp participants today, referencing the “Rich or King” entrepreneur dilemma popularized by Harvard Business School Professor Noam Wasserman.
Prof. Velamuri’s lecture focused on how early stage start-up companies should approach negotiations with potential venture capital partners and other stakeholders. He defined negotiation with stakeholders as the management of inter-dependence, and encouraged the group to understand both the expertise and needs of all stakeholders.
Citing renowned venture capitalist Vinod Khosla, he advised participants, “Search for creating a team whose members complement each other. Be generous in sharing the upsides with stakeholders who are valuable additions”.
For early stage startups, the team is one of its most valuable assets. “There are very few tangibles you can see in a startup, and the only criterion is the quality of the team,” he said. “Many entrepreneurs make the mistake of saying, ‘I have an idea, I want to raise the capital, and then I will build the team’. This sequencing is wrong. You need to have a credible and committed team first, and then investors will have much greater confidence to invest in you.”