Finance and Investments

The Monk and the Riddle – portray of Venture Capital industry

with 5 comments

The book “The Monk and the Riddle” written by Randy Komisar gives a good perspective of VC Industry. The book illustrates how deals are executed in VC industry and what makes a business plan attractive to VC’s. The book is interesting and the points in book are articulated effectively. In case you are looking for VC funding, this book may be very helpful. Few of the highlights from the book are listed below.

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The Author stresses that VCs first and foremost invest in people. The composition and experience of the entrepreneur’s team are something VCs will look very consciously.

He states that VCs want to invest in potential leaders. As most markets eventually consolidate, only leading players make money. The business plan, thus, should promise that the company will “dominate” the market. If a prospect seeking VCs funding doesn’t think in these lines, VCs may think that there something wrong with his projections or his ambitions.

In the early days VCs used to put their skills to make their nvestment successful. Many VCs came from operating roles and could contribute to the business they funded. The total money they had to invest was trivial as per today’s standards, which means they could make only handful of investments annually, a manageable number that allowed them to bring their experience to each venture.

Today’s funds are huge in comparison and thus VCs need to invest huge capital in more companies to produce a return that attract investors. Thus they don’t have enough time to invest in the business they have funded.

VCs want to know three basic things.

• Is it a big market? (If you are slightly off target in a big market, you may still make it but off target in a small market means you are dead.)
• Can your product or service win over or defend a large share of that market?
• Can your team do the job?

More importantly, the book takes the reader into intricate philosophical questions. The author makes a point that money can’t be the soul purpose for the efforts and energy one puts into business. The passion inside the person makes him successful and one should pursue what he loves doing.

In Authors word “Don’t confuse drive and Passion. Drive pushes you forward. It’s a duty, an obligation. Passion pulls you. Only passion will get you through the tough times.”

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Some important questions to ask while starting a business:

Why are you staring the business at the first place?
Is there a purpose that will keep you going when the things look bleakest?
Does the business has something worthy of the immense time and energy that you will spend, even if it fails?
Will it change the way world operates?
Will it change people’s life in a meaningful way?
Who are you and how could you express that in your business?
How can you make a difference by starting the business?

Think about building a legacy company, a place you can be proud of, where people work hard, care about what they do and respect each other. Build a place you can believe in, in every way – what it does, what it stands for and how it works.

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Finally, About Deferred Life Plan as explained by the author which we should try to avoid but most of us follow , is as follows:

Become a Professional, build a career, establish yourself and be successful. Then you can do what you want to do.

Rules of Deferred Life Plan

Rule One: Do what you should do
Rule Two: Do what you wanted to do.

In Deferred Life plan, you postpone risking what matters most to you; that happens later, if it happens at all.

The author makes strong point to pursue your passions rather than the deferred life plan.

You can also see another review of the book at this Website.

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Written by AMIT SAXENA

April 18, 2008 at 3:38 pm

Posted in Book Reviews

Tagged with ,

5 Responses

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  1. Amit: Thanks for your review of the Monk and the Riddle. I’m not sure the deferred life idea would fly with many innovative-minded types, but maybe Komisar knows something I don’t! The art of venture capital has changed significantly throughout its relatively brief history. I’m interested to see what happens in the near future as the recession takes hold and all that VC money will have no where to go.

    Anthony Kuhn

    April 19, 2008 at 1:13 am

  2. Somehow i missed the point. Probably lost in translation :) Anyway … nice blog to visit.

    cheers, Rectilinearly.

    Rectilinearly

    June 19, 2008 at 6:31 am

  3. Hi,
    I didn’t get what you meant by this statement : “VCs first and foremost invest in people” .
    Please solve the riddle.

    Sudeshna

    August 21, 2008 at 5:08 am

  4. “The Monk and the Riddle” this is really very interesting book….i have ever read..

    stock brokers in India

    December 7, 2010 at 6:01 am

  5. Its a very nice book which covers all the important aspect of life, Its a great book.

    Reva Disuja

    October 31, 2011 at 6:55 am


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