Do Local VC Firms Offer Stringent Term-sheets And Valuation To Startups In Dhaka
BD Venture Limited founding Managing Director Shawkat Hossain explains the common complaints whether an imbalance exists between VC and founder relationship in Dhaka.
Enter Shawkat Hossain:
I don’t think this sort of complaints is unique to Bangladesh market. Even in mature markets, VC investors keep a conservative attitude during valuation. So, an expectation gap always looms around between the entrepreneur and the investor. I don’t think this is an intrinsically a bad thing.
This is a business and as a party, in the game, VCs will always try to get more for themselves. That should be the logical way of it.
In the context of Bangladesh, another reason for the expectation gap is a lack of business acumen on the part of the entrepreneurs. The future projections of income and expenditure they come up with often don’t match with the reality.
If we are to get the expected return on our investment, the supporting performance predictions definitely need to be authentic and realistic. Otherwise, how can we hope to keep our own performance up to the mark as VC firms? We also raise funds from investors and have to maintain accountability, do we not?
What I hope is that as the market matures, the gap reduces. In this business, both VC and entrepreneurs are interdependent partners. If entrepreneurs don’t succeed, VCs have no business. While there is a competitive dynamics in this relationship, it is purely because of business. The goal for both parties is same – making the business a success.