One of hot topic being discussed on Techsauce Global Summit 2017 was about “Trust” and relationship between venture capitalists (VCs) and startups. Paul, Polapat Arkkrapridi, Managing Director of Corporate Venture Capital (CVC) at Digital Ventures, was on the panel to share his rich experiences through the eyes of CVC along side Sheel Mohnot, partner and founder of San Francisco-based VC and accelerator, 500 Startups.
The idea of CVC is derived from strategic investment, The bank has realized how fast technology is shaping the way humans live in the next decadseeking the right startups to fill the gap that big corporates are missing, especially technology expertise. e. The advent of AI and VR is likely to disrupt conventional ways in financial services. Therefore, end-to-end financial innovations should be able to facilitate changing customer needs in a timely manner, fuelled by startups. Bank will help startups to become successful with in-depth industry knowledge, access to potential customers as well as capitals.
Seeking the right startups is difficult, but making internal champion to make a deal is even harder. Investing in startups is totally different from traditional perspective of investment, merger and acquisition (M&A), resulting in taking control of startups or companies. But it is “collaborative model”, building trust and relationship between two parties - startups and its corporate parents.
Like what Sheel’s opinion, he said what skills startups should possess is the ability of communicate, telling what they do, what they are good at. The deal will not be happened if they lack communication skill, even their products are highly innovative. Moreover, he also considers to invest in startup from human quality. He never invest in startup which they contains a couple of founders.
From his perspectives, Sheel sees startups are supposed to come up as a team, mostly comprised of hustler, hacker, designer, CMO, CTO and CEO. Diversity is truly a factor of startup achievement. With a key role of CV, however, number is taken into consideration. Business trend and growth are the key factors for VCs investment.
In contrast with VC investment, Paul described that he pritoritizes in human chemistry that is aligned with the bank. They will be able to transfer their knowledge, showing their determination even facing regulatory or marketing hardship as well as humility to learn. These are the key of building relationship with CVC, while financial return is the last thing he considers.
“Transparency and honesty are currencies of building trust. If you (stratups) are struggling, just let me know. Don’t be afraid to speak up. We’re here to help you become successful in any possible means,” said Paul.
The entrepreneur and the VC need to balance the level of control and trust building mechanisms so that the optimal level of confidence in partner co-operation can be achieved.