"Getting Promoters to Give Veto Right to the Investor is a Challenge"

How should one deal with PE/ VC funding issues?

The most important issue when you are looking at PE/ VC funding is that structure your transaction very carefully. You should evaluate your funding options.  It means that you need to understand whether you are willing to part with the equity capital of the country; are you more comfortable with depositors; are you more comfortable with preference share or; whether you are looking for a combination of equity and debt. These are some of the financial issues before bringing an outsider into your home.

Throw some light on the investment agreement.

The most important part that you have to draw here is balance between getting growth capital, protection of the capital of the investor and the flexibility you want to keep with yourself with respect to the operations and management of the company. It should not happen that you take your capital and give away equity.

What is the biggest challenge between the investor and the promoter?

The biggest challenge is the synergies between the investor and the promoter. Promoters are generally busy doing their own work and taking their own decisions. The challenge is when suddenly they have to give a veto right to the investor.

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