MotorExchange Gets Funding From Canaan Partners – Is A Great Team The Key To Raising Funds?

It seems dot com companies that facilitate actual transactions are still in vogue even if they might be in really early stages. So Canaan Partners has announced that they are investing in Motorexchange.in which is aiming to be India’s largest used vehicle marketplace. The amount of investment hasn’t been disclosed by Canaan. Canaan’s earlier investments include Bharatmatrimony and Techtribe which shutdown early this year.

motorexchange-canaan

Motorexchange was in the news recently for acquiring Cartradeindia.com. Motorexchange is headed by Vinay Sanghi, the former CEO of Mahindra First Choice and Rajan Mehra, venture partner at Clearstone Venture Advisors and former country head of eBay India.

Alok Mittal from Canaan partners mentions inhis blogpost at venturewoods that the key reason to backing this startup is the team. He says and I quote “It is a very early stage investment for us, and the key driver in the decision has been the team behind it.” One can look at the entire team here to know why Alok is so bullish on this business.

Is Team Everything?

A lot of entrepreneurs who lack a great team (at least on paper) would wonder if team is everything that one requires to make a business a success. Well there was a great example a VC gave me once. He said ” If the company is run by just one inexperienced guy then he is surely mad! If its run but 3 guys with some experience then they maybe mad! If its run by 10 guys with great relevant experience then they know what they are doing and Im comfortable investing in them!”

As you can see VC’s don’t know how big a risk they are taking but a good qualified and experienced team just helps them calm their nerves a bit and back their investment decision. So unless you are talking to Ajit Balakrishnan Id say avoid asking money from VC’s if you are 22 year old and inexperienced! ;)

3 Responses to “MotorExchange Gets Funding From Canaan Partners – Is A Great Team The Key To Raising Funds?”

  1. piyush
    December 17, 2009 at 8:03 pm #

    I think a good team is a good way to get funded easily. But you have missed the point here i.e. FUNDING != SUCCESS
    Google — Started by two doctorate students
    Facebook — Started by a 19 year old kid
    Microsoft — Started by some really clueless fuckers
    Apple — Started by a hippie and a mad electronics engineer

    They did not get funding easily and they not only succeeded but kicked all the experienced asses! Getting funding doesn’t mean you will succeed. VCs fund experienced teams because they think it has a better chance of success. In reality VCs hedge the risk this way because the rate of failure of startups by inexperienced guys is very high but it is also true that the biggest companies were started by in-experienced junta. When Ajit Balakrishnan says Indian internet landscaped will be changed by a 24 year old, I believe him. Older ones are just too “learned” to do anything path breaking. They will always just follow the herd and it has been exhibited so far.

  2. December 18, 2009 at 7:13 am #

    Piyush, you are right. We don’t always need VC funding to create a great company. Most of the large companies were created by young innovators.

    Even VCs are not wrong. Its their money and they have to minimize losses and risks like everyone else does. They can’t just throw it on anyone.

  3. December 21, 2009 at 11:30 am #

    VCs have different logics for different investments, its never the same ever. More often than not their investments fail, of the 10 they bet on even if 3 succeeds, it compensates to the losses incurred by others, its more to do with gut feel, knowledge of the space and market proximity of the business.

    So if a VC says they have invested on a team today, I can assure you it wont be a reason for their future investments. If that was the case then I’am so sure there would have been many who would have got funded.

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