MONTH : DECEMBER 2025

Why we do what we do?

A few days ago, a student wrote to us with a thoughtful set of questions. They were not asking for deal tips or valuation shortcuts. Instead, they wanted to understand who we are as investors and why we do what we do.

The questions were probing, especially around early conviction, capital discipline, downside management and how we think about success beyond returns. Answering them forced us to step back and articulate instincts that have been shaped over decades of investing, particularly in complex and long-cycle sectors.  An advantage of proprietary capital in a family office is that we don't feel pressured to show returns in 3-5 years and can stay patient with our capital allowing the founder to build the business the right way.

This piece is a reflection of those responses.


Early signals matter more than early certainty

In early-stage companies, certainty is a luxury. 

Cash flows, timelines, and even addressable markets are poor indicators at the earliest stages. What we look for instead is direction. Specifically, we ask: who is pulling the product forward?

To separate real validation from narrative momentum, we focus on costly signals. Anyone can collect pilot MoUs or letters of intent. What matters more is whether someone is willing to change behaviour: adopt a new workflow, allocate internal resources, take reputational risk, or push back constructively on the product.

 Noise is usually loud and fast. Real validation is slower, more specific, and often uncomfortable.

This is more nuanced for each industry - let's take healthcare. In healthcare, it is often an illusion. Some of the most reliable early signals we look for in healthcare include:

  • Credible practitioners—doctors, hospitals, administrators, regulators, researchers—who are willing to engage repeatedly without being paid to do so.

  • Founders who can articulate the problem from lived or deeply embedded experience, not from market reports or second-order analysis.

  • Evidence of progress despite constraints—limited capital, lack of access, or regulatory friction.

We also tend to back founders who are building for the long term—not playing a short-term valuation game. One of our early investments reflects this clearly. We invested in IKS Health nearly 18 years ago and stayed invested throughout the journey. The company listed on the Indian stock exchanges last year. That outcome was a function of patience, alignment, and compounding not speed.


Capital discipline under Deep Uncertainty

Traditional valuation frameworks do not work at the earliest stages. That does not mean “anything goes.”

For us, capital discipline comes from position sizing and optionality—not false precision.

Before writing a cheque, we try to answer three simple questions:

  • If this works, is the upside meaningfully large?

  • If this does not work, can we still learn something important or retain optionality?

  • Is this the right first cheque, or are we forcing conviction too early?

Strong conviction feels calm and patient. Over-commitment usually feels emotional, rushed, or justified by narratives around mission, timing, or fear of missing out.

One practical internal check we use is this: Would we still be comfortable with this decision if we assumed zero follow-on capital?
If the answer is no, we are probably ahead of ourselves.


Managing downside and surviving the J-Curve

We assume most early-stage investments will either fail or take much longer than expected. The portfolio is designed around that reality.

Downside is managed less through control and more through structure:

  • Smaller initial cheques, with the ability—but not the obligation—to follow on.

  • Avoiding ownership targets that force us to average up mechanically.

  • Pacing capital deployment so we can learn from early decisions before scaling exposure.

The J-curve is unavoidable. What matters is making it survivable.

That requires staying liquid, intellectually honest, and not confusing early activity with real progress. Follow-on capital is earned through clarity, execution, and learning velocity—not just survival.


Looking beyond IRR

IRR matters, but it is not the only scorecard—especially for a family office–led platform with a long time horizon.

We also care deeply about:

  • Whether founders make better decisions over time.

  • Whether companies improve governance and capital allocation discipline as they scale.

  • Whether we are building pattern recognition that compounds across the portfolio.

  • Whether we are contributing to an ecosystem where more companies become fundable without excess capital.

Some outcomes do not show up in IRR immediately: trust built with founders, reputational credibility, or the ability to identify risks earlier in future investments.

One advantage of proprietary, family office capital is that we are not pressured to manufacture outcomes in three to five years. Patience allows founders to build businesses the right way.


Our Social Impact lens

Alongside core venture investing, we also operate a Social Impact arm with a very different intent.

Here, we back companies solving structurally important problems—education, healthcare access, livelihoods, affordability—where the primary objective is meaningful, measurable impact rather than short-term financial optimisation.

Two dimensions matter most to us.

Depth of impact
We look for real, on-ground change for the end beneficiary: lower costs, improved access, better outcomes, or reduced friction in broken systems. Vanity metrics do not count.

Scalability with sustainability
Impact without sustainability eventually collapses. While profit maximisation is not the goal, financial viability is non-negotiable. Models that depend indefinitely on grants or goodwill are fragile.

Capital discipline still applies—but the return framework is broader.


Healthcare: Not core, but intentional

Healthcare is not a core sector for us, but it is a deliberate one.

The downside of getting it wrong is high, and timelines are long. We therefore engage selectively, drawing on deep domain understanding and lived experience.

A healthcare opportunity becomes compelling when:

  • The founder has deep, non-theoretical exposure to the problem.

  • The solution reduces friction or cost in a way that aligns incentives across stakeholders.

  • There is a credible path to early validation, even if full commercialisation is far away.

 We generally avoid binary science risk unless paired with exceptional teams and clearly defined milestones. What we prefer are healthcare businesses that resemble systems problems rather than pure R&D bets—where execution, distribution, and incentives matter as much as technology.
where execution, distribution, and incentives matter as much as technology.


 

The answer is simple, though not easy to execute:
We optimise for long-term alignment, disciplined decision-making, and the ability to stay patient when outcomes take time.

Is this an AI startup or a nicely dressed AI wrapper?”

A quick checklist to unmask the truth behind the hype and determine if a startup is building real tech or just dressing up an API.

Follow these steps to peer under the hood and spot a true AI innovator before the smoke and mirrors fade.

1. The One-Killer Question

“If OpenAI (or Anthropic etc.) shut off your API access tomorrow, what still works?”

Real AI company:

  • Talks about own models, pipelines, data, on-prem fallback, other providers, fine-tuned checkpoints.
  • Mentions pain, but has a plan.

API wrapper:

  • Mumbles something about:
    • “We’re provider-agnostic”
    • “We’ll just switch vendors”
    • “We’re more of an orchestration layer”
  • Translation: If API dies, we die.

2. Ask: “What is your real IP?”

“What’s your moat, excluding your UI and excluding the base model (GPT, Claude, etc.)?”

Green flags:

  • Domain-specific datasets
  • Labelling pipelines, evaluators
  • Custom ranking / scoring systems
  • In-house tools / agents / retrieval infra
  • Clear evaluation framework (benchmarks)

Red flags:

  • “Our prompts”
  • “Our UX”
  • “Our workflow builder”
  • “Our brand”
  • “Our templates marketplace”

Prompts are not IP. They’re seasoning.


3. Follow the Money: Infra & Team

Quick checks:

  • “What’s your monthly spend on GPUs / inference infra?”
  • “Who on your team has actually trained or fine-tuned a model at scale?”

Red flags:

  • No GPU bills, only “OpenAI usage”.
  • “We don’t really need ML engineers yet.”
  • CTO is a full-stack dev, no real ML depth.

If nobody has suffered through:

  • CUDA errors
  • exploding gradients
  • data cleaning hell
    …it’s probably an API wrapper.

4. The Latency Fingerprint Test

Ask them to:

  • Run the product live
  • Try a few unprompted, weird queries
  • Notice:
    • Response time
    • Style
    • Failure modes

If it:

  • Feels exactly like ChatGPT/Claude
  • Has similar delay patterns
  • Hallucinates in the same style

…you’re basically watching re-skinned ChatGPT.


5. Ask for the Architecture Diagram

“Show me your technical architecture, from data ingestion to model output.”

Green flags:

  • Separate blocks for:
    • Data ingestion
    • Preprocessing
    • Vector DB / retrieval
    • Model(s)
    • Evaluation / monitoring
    • Feedback loop / retraining

Red flags:

  • Big box: “LLM provider”
  • Arrow to: “Our app”
  • Lots of arrows and buzzwords, no data flow clarity.

If the entire brain is one SaaS logo, it’s a wrapper.


6. Ask About Evaluation

“How do you measure model quality? Show me your benchmarks.”

Real AI team:

  • Talks about:
    • Accuracy, F1, BLEU, ROUGE, win-rates
    • Custom eval datasets
    • Regression tests
    • A/B experiments

Wrapper team:

  • Talks about:
    • “Users love it”
    • “Great feedback”
    • “Engagement is high”
    • “We’re iterating fast”

No eval pipeline = no depth.


7. Model Ownership Question

“Which parts of your system are fully under your control, and which are just vendor dependencies?”

You’re looking for:

  • In-house models or at least adapted models
  • Own embedding / retrieval / ranking stack
  • Ability to move between providers without rewriting the whole product

Red flag answer:

“We’re built deeply on OpenAI, but we have a lot of optimizations on top.”

That’s like saying:

“We own a restaurant. Our IP is Swiggy.”


8. Data Story Interrogation

“Walk me through your data pipeline.”

Good answer includes:

  • Where data comes from
  • How it’s cleaned
  • How labels are created
  • How it’s stored
  • How it’s used for:
    • Fine-tuning
    • RAG
    • Evaluations

Red flags:

  • “We don’t really need data, the foundation model is so good.”
  • “Clients bring their own data and we just plug it in.”
  • “We store it in a vector DB and… magic.”

No data thinking → glorified front-end.


9. Ask for a Local / Air-gapped Story

“Could you run a version of this entirely on-prem or air-gapped, if a bank or hospital required it?”

Real AI company:

  • Says “yes, but expensive”, and explains:
    • Containerization
    • Self-hosted models
    • Security considerations

API wrapper:

  • “We’re cloud-native.”
  • “Our value is in the cloud.”
  • “Security is handled by OpenAI/AWS/etc.”

Translation: No control, no depth.


10. The “Non-LLM Feature” Trap

“Show me a feature your product has that would still be valuable even if LLMs disappeared tomorrow.”

If they can’t name:

  • Workflows
  • Integrations
  • Dashboards
  • Analytics
  • Domain-specific tools

…then the only asset is “access to someone else’s model”.

That’s not a startup. That’s a skin.


11. Contract & Pricing Smell Test

Red flags:

  • Pricing is purely usage-based on tokens with a fat margin.
  • No:
    • Implementation fee
    • Customization
    • Managed service component
  • Value prop is:
    • “We make ChatGPT safer/easier for your team.”

That’s basically:

“We are a UI tax on OpenAI.”


12. Ask Them to Draw the Boundary

“Draw a line between what the LLM does and what your system does.”

Good founders:

  • Explicitly separate:
    • Reasoning
    • Retrieval
    • Guardrails
    • Business logic
    • Orchestration
    • Post-processing

Wrappers:

  • Handwave:
    • “The LLM handles that.”
    • “We use AI agents.”
    • “We orchestrate tools.”

Every time you hear “agentic”, mentally replace it with “glorified prompt chain”.


Quick Checklist (Investor Mode)

Print this in your head:

  • Can they survive 6 months without OpenAI/Anthropic?
  • Do they have any real in-house ML talent?
  • Is there a proper data + eval pipeline?
  • Is their infra more than: frontend → API → LLM?
  • Do they own anything you can’t recreate in 3 months with a dev and a credit card?

 

If the honest answer is “no” across the board → API wrapper.

Why Investor–Founder Relationships Matter More Than the Term Sheet

In startups, capital is essential—but relationships are decisive. The quality of the investor–founder relationship often determines whether a company merely survives or compounds into something enduring. This holds true not only when investors say “yes,” but especially when they say “no.”

A rejection does not end a relationship. In many cases, it is the beginning of a longer, more consequential one.

Capital Is a Transaction. Trust Is an Asset.

At early stages, investors are not underwriting spreadsheets; they are underwriting people. Markets evolve, products pivot, and business models change. What remains constant is how founders conduct themselves—under pressure, in disagreement, and in moments of rejection.

Grace in these moments is not optics. It is strategy.

Investors speak to each other far more frequently than founders realise. Reputation—good or bad—travels faster than pitch decks.

Saying “No” Is Part of the Process

Every credible investor has passed on companies that later became category leaders. The difference between a missed deal and a burned bridge is how the founder responds.

Globally, Airbnb is a canonical example. The company was rejected by dozens of investors in its early days. Several of those investors later backed Airbnb in subsequent rounds—not because the original decision was wrong, but because the founders remained professional, transparent, and engaged. They kept updating investors who had said no, without resentment or entitlement.

In India, Zomato faced repeated rejections in its early years when online food discovery was considered a niche problem. Founder Deepinder Goyal has spoken about maintaining dialogue with investors even after rejection. Over time, as execution spoke louder than vision slides, those conversations reopened.

The lesson is simple: a “no” today is not a permanent verdict—it is a time-bound judgment with limited information.

Grace Signals Founder Maturity

How a founder reacts to rejection tells investors far more than the pitch itself.

  • Do they become defensive?

  • Do they argue the investor’s thesis aggressively?

  • Do they disappear?

  • Or do they acknowledge the feedback, stay composed, and keep building?

When Flipkart was scaling aggressively, it encountered skepticism around logistics intensity and capital burn. Several early-stage investors passed. The founding team continued to share progress updates with those investors. Some of those who initially declined later participated in follow-on rounds once conviction caught up with execution.

Grace does not mean submission. It means demonstrating long-term thinking.

Investors Remember Professionalism—Especially in Rejection

From the investor’s side, declining a deal is rarely personal. It may be driven by fund constraints, timing, portfolio conflicts, or risk appetite. Founders who understand this nuance stand out.

Consider Stripe. Early rejections from prominent Silicon Valley investors did not deter the Collison brothers from building relationships thoughtfully. Several investors who initially passed later acknowledged that the founders’ intellectual honesty and calm persistence left a lasting impression—even before metrics validated the business.

In India’s ecosystem, where the investor pool is relatively tight, this matters even more. A founder who reacts poorly to one fund may unknowingly impact perception across multiple others.

Relationships Outlast Funds

Funds have lifecycles. Partners move firms. Market cycles turn. A founder who builds trust compounds optionality over decades, not rounds.

Many Indian founders who raised during the 2014–2016 period found their strongest supporters in investors who had once passed—but respected how the founder handled rejection.

This is why seasoned founders often say: optimize for relationships, not valuations.

A Practical Founder Mindset

When an investor says no:

  1. Acknowledge the decision professionally
    Thank them for the time and feedback.

  2. Ask for one clear reason
    Not to debate—only to understand.

  3. Keep them updated periodically
    Only when there is real progress, not noise.

  4. Never burn the bridge publicly or privately
    Silence is better than bitterness.

Closing Thought

Startups are built on resilience, but reputations are built on restraint.

An investor who says no today may be the one who introduces your Series B lead tomorrow. Grace in rejection is not weakness—it is a signal of founder maturity and long-term orientation.

 

In an ecosystem where capital is cyclical but credibility is cumulative, relationships are the real moat.

The 7 Numbers Every Founder Should Track

Most founder stress comes from surprises. Revenue dips without warning. Cash lasts shorter than expected. A key part of the customer journey breaks and you notice it too late.

A simple fix is to track a small set of numbers every week. Not to impress anyone, but to spot problems early and make better decisions.

 

1) Cash in bank

This tells you what you can actually use today. It is the simplest way to stay grounded, especially when revenue is delayed or unpredictable.

2) Runway

Runway tells you how much time you have left at your current burn rate. If runway is shrinking, you need to act early, not when it becomes a crisis.

3) New revenue booked

This is your momentum indicator. It shows whether your sales engine is working and whether demand is increasing in a way that can be repeated.

4) Collection speed

This tells you how quickly revenue turns into cash. Slow collections can quietly kill a startup even when the top-line looks healthy.

5) Activation rate

Activation is the first moment a new user experiences real value. If activation is low, it usually means your product is confusing, your onboarding is weak, or you are attracting the wrong customers.

6) Retention

Retention shows whether customers continue to get value after the first use. If retention is weak, growth will always feel like pushing a boulder uphill because you keep refilling a leaky bucket.

7) One operating quality metric

This is the single metric that best reflects whether your product or service is being delivered reliably. It could be delivery time, uptime, support response time, or defect rate, but it should be the one that most directly protects customer trust.

 

The principles these metrics cover:

  1. Time is your real currency.
    Cash and runway are not financial metrics. They are decision-making metrics. They tell you how much time you have to experiment, recover from mistakes, and compound learning. When the runway is long, you can choose the best move. When the runway is short, you are forced into the fastest move, which is usually the worst one.

  2. Healthy growth is a chain, not a spike.
    New revenue booked, activation, and retention together show whether your growth loop actually works end to end. New revenue without activation means customers are buying but not getting value. Activation without retention means they try it but do not stick. Retention without new revenue means you have something valuable but your distribution is weak. The point is not to “grow.” The point is to strengthen the chain.

  3. Cash flow is where reality shows up.
    Collection speed is your lie detector. It reveals whether customers value you enough to pay you on time, and whether your pricing, contracts, and follow-ups are disciplined. Many startups look fine in a spreadsheet and fail in the bank account. This metric closes that gap.

  4. Reliability creates trust, and trust creates scale.
    A single operating quality metric forces you to protect the customer experience even when you are busy chasing growth. Most startups do not lose because they lack ambition. They lose because execution becomes inconsistent, customers feel the drop, and word-of-mouth turns against them.


Conclusion

If you review these numbers every week, you will catch problems earlier, waste less effort, and make cleaner trade-offs. You will also become calmer, because you are no longer guessing how the business is doing. Start simple, stay consistent, and let the data guide your next small decision. Over time, those small decisions add up to real momentum.

 
 
 

 

 

 
 

How to Detect Founder BS in 5 Minutes

Minute 1: Ask for Specifics

Question: “What exactly does your product do today for one customer?”

Green flags

  • Names a real user
  • Describes a real workflow
  • Mentions a concrete outcome (“cut billing time from 2 days to 2 hours”)

Red flags

  • “Platform… ecosystem… AI-powered… synergies”
  • No names, no numbers, no nouns
  • More adjectives than verbs

Rule: If it sounds like a TED Talk, it’s probably empty.


Minute 2: Test for Customer Truth

Question: “What’s the ugliest complaint you’ve received?”

Green flags

  • Tells an embarrassing story
  • Knows exact pain points
  • Shows the fix

Red flags

  • “No major issues”
  • “Customers love us”
  • “Just minor feedback”

Real users complain. Loudly. Frequently.


Minute 3: Check Delivery Reality

Question: “What are you embarrassed isn’t built yet?”

Green flags

  • Names delays
  • Explains dependencies
  • Owns trade-offs

Red flags

  • “Everything’s on track”
  • “Next version will handle that”
  • Eternal future tense

If nothing is broken, nothing is real.


Minute 4: Stress test Numbers

Question: “What happened last week?”

Green flags

  • Revenue, churn, usage, outages
  • Knows growth and slowdowns
  • Mentions mistakes

Red flags

  • Only talks about runway
  • Shows TAM charts
  • Avoids metrics like they’re radioactive

Vision is nice. Cash flow is cuter.


Minute 5: Pressure Trade-offs

Question: “What did you intentionally NOT build?”

Green flags

  • Clear prioritization logic
  • Mentions regrets and rework
  • Knows cost of decisions

Red flags

  • “We’re doing everything”
  • “It’s all a priority”
  • No opinion at all

Founders without trade-offs are running PowerPoint, not companies.


Bonus Lie Detectors (Rapid-Fire)

“Our AI does it all.”

Translation: One API call in a trench coat.

“We’ll scale later.”

Translation: Showstopper bugs everywhere.

“Enterprise-ready.”

Translation: The demo laptop is sacred.

“Strategic partnership.”

Translation: Had coffee. Took a selfie.

“Soft launch.”

Translation: It crashed.


The 10-Second Gut Test

Ask yourself:

  • Did they talk about users or themselves?
  • Did they mention failures or fantasies?
  • Did they know details or slogans?
  • Did they welcome questions or dodge bullets?

If the words:
“Revolutionary, game-changing, disruptive, visionary”
appear more than:
“Bug, apology, delay, refund, failure”
…you’re in a TEDx audition.


Iron Rule

Founders who are building talk about problems.
Founders who are pretending talk about possibilities.


Investor One-Liner (Steal this)

“Show me a customer angry at you—and I’ll believe you’re real.”

Valuation and Control: The Two Deal-Killers (and How Smart Founders Avoid Them)

Entrepreneur:

Dr. Malpani, everyone tells me fundraising is about valuations and term sheets. But the more I talk to investors, the more I realise it’s actually about… control. And ego. And fear. Why is this so hard?

Dr. Malpani:
Because money reveals character.

The truth is simple:
Every fight between investors and founders boils down to two things — valuation and control.
Everything else is just legal paperwork pretending to be important.

 


The Valuation Trap

Entrepreneur:
Let’s start with valuation. Founders want it high. Investors want it low. End of story, right?

Dr. Malpani:
And that zero-sum thinking is precisely why both sides lose.

Founders treat valuation like a vanity metric.
Investors treat it like a negotiating trophy.

Neither is asking the right question.

The right question is:
👉 Is this business becoming more valuable every month?

If yes, valuation will take care of itself.

If no, arguing about valuation is like debating the resale value of a broken scooter.


Entrepreneur:
But won’t a low valuation demotivate founders?

Dr. Malpani:
Only if the founder is in love with paper wealth instead of real progress.

I’d rather own 30% of something growing than 90% of something dying.

The goal is not:
“Look how rich I am on a pitch deck.”

The goal is:
“Look how many customers fight to pay us.”


Control: The Silent Battlefield

Entrepreneur:
What about control? Investors want board seats. Veto rights. Founders want independence.

Dr. Malpani:
Because both are afraid.

Founders fear:

“The investor will hijack my company.”

Investors fear:

“The founder will sink my money.”

So both start installing legal bombs.


Entrepreneur:
So who should really control the company?

Dr. Malpani:
The customer.

Not the founder.
Not the investor.

The moment customers love you —
you gain negotiating power.

The moment customers leave you —
no term sheet can save you.


Trust Is Not Soft. It Is Strategic.

Entrepreneur:
Everyone talks about trust. But it sounds like a vague, fluffy word.

Dr. Malpani:
Trust is not fluffy.

It is economic infrastructure.

Just like roads make trade faster —
trust makes decisions faster.

A high-trust startup raises money faster, hires better, pivots quicker, and bleeds less.

A low-trust startup drowns in lawyers, clauses, and paranoia.


How Founders Build Trust with Investors (Without Brown-Nosing)

Entrepreneur:
So what should founders actually do?

Dr. Malpani:
Three radical habits:


1️Tell Bad News Faster Than Good News

Most founders hide trouble.

Smart founders advertise it.

Nothing builds confidence faster than:

“Here’s what’s broken and here’s our plan.”

Bad news ages like milk.
Transparency ages like wine.


2️. Treat Investor Money Like Your Mother’s Pension Fund

When founders behave like gamblers,
investors behave like control freaks.

Respect creates freedom.

Waste creates surveillance.


3. Obsess Over Cash Flow — Not PR

Revenue is nice.

Profit is power.

Cash flow is oxygen.

The business that pays its own bills
can choose its investors.

The business that burns cash
gets interrogated by them.


How Investors Build Trust with Founders (Without Acting Like Gods)

Entrepreneur:
What about investors? What should they get right?

Dr. Malpani:

1. Add Brains, Not Just Bank Balance

If you only bring money —
you are a commodity.

If you bring insight —
you are priceless.


2. Respect Founder Psychology

Founders are not employees.
They are emotionally married to their company.

Treat the business like a spreadsheet
and you lose the founder.

Treat the founder like a human
and you win the company.


3️Praise Publicly. Criticise Privately.

Ego destroys faster than fire.

A founder whose dignity is protected
will protect your capital.


The Frugal Innovation Advantage

Entrepreneur:
You believe in frugal innovation. How does this build trust?

Dr. Malpani:
Because frugal founders are not gamblers.

They are engineers of survival.

They experiment cheaply.
They scale systematically.
They treat capital as fuel, not fireworks.

Investors trust:

  • Businesses that survive winters
  • Founders who fix leaks before expansion
  • Teams that build moats, not castles

Valuation ≠ Respect. Control ≠ Vision.

Entrepreneur:
So what should founders chase instead?

Dr. Malpani:
Three things:

Revenue that recurs
Customers who refer
Teams that stay

When those happen —
valuation becomes easy.

When those are absent —
no valuation is fair.


Final Truth Bomb

Entrepreneur:
If you had to explain trust in one line?

Dr. Malpani:

Trust is built when founders stop selling dreams and start delivering results — and when investors stop seeking control and start offering wisdom.


Closing Advice to First-Time Entrepreneurs

Dr. Malpani:

Don’t think:

“How do I extract maximum valuation?”

Think:

“How do I build a business that doesn’t need rescue capital?”

Don’t ask:

“How do I dilute less?”

Ask:

“How do I create more value?”

Don’t chase investors.

Build something so good that
investors chase you.


And Finally…

Trust is not built in pitch decks.

It is built:

  • In late nights
  • In honest conversations
  • In painful decisions
  • And in boring financial discipline

The startups that win long-term
are not the loudest…

They are the most trustworthy.

 

 

Good Investor Green Flags: How to Recognise Smart Money Before You Sign the Term Sheet

Not all capital is the same.
Some investors accelerate you.
Some drain you.
And a rare few actually build with you — not over you.

Here are the real green flags founders should look for long before the wire hits the bank.


1️⃣ They Ask About CUSTOMERS First

Before valuation.
Before equity.
Before exit.

A good investor starts with:

  • Who uses this?

  • Why do they pay?

  • Why do they stay?

Because real investors love businesses, not optics.

2️⃣ They’re Calm Under Pressure

They don’t panic when you hit:

  • Missed targets

  • Product failures

  • Cash crunch

  • Pivots

If they get jittery early,
they’ll get toxic later.

3️⃣ They Challenge You — Without Crushing You

They ask tough questions.
Offer sharper thinking.
Suggest smarter alternatives.
Push you to level up.

Not to dominate — but to elevate.

4️⃣ They Don’t Micro-Manage

Good investors give:

  • Space

  • Trust

  • Autonomy

They only step in when:

  • Strategy derails

  • Governance collapses

  • Ethics wobble

Silence isn’t neglect —
it’s confidence.

5️⃣ They Tell You the Ugly Truth

They won’t flatter you.
They respect you enough to disagree.

If every meeting feels comfortable,
you’re probably not learning.

6️⃣ They Invest TIME — Not Just MONEY

Good investors:

  • Take calls

  • Answer WhatsApps

  • Read updates

  • Show up in trouble

  • Make real introductions

Capital is abundant.
Attention is rare.

7️⃣ They Respect Founder Psychology

They understand:

  • Pressure

  • Loneliness

  • Burnout

  • Panic

  • Decision fatigue

And they never judge you for being human.

8️⃣ They Protect Your DIGNITY Publicly

They praise you outside.
They critique in private.
They build your authority — not undermine it.

9️⃣ They Care About BUSINESS HEALTH, Not Just EXITS

They ask about:

  • Cash flow

  • Morale

  • Retention

  • Sustainability

  • Profitability

Not only:

  • Exit

  • Return

  • Valuation

Short-term investors build exits.
Long-term investors build institutions.

🔟 They Encourage PROFIT, Not JUST GROWTH

Good investors say:

  • “Fix margins”

  • “Focus on retention”

  • “Preserve cash”

  • “Build defensibility”

Not:

  • “Burn faster”

  • “Outspend competitors”

  • “Chase headlines”

1️⃣1️⃣ They Respect Your VISION — They Don’t Replace It

They add clarity.
They add perspective.
They don’t hijack the company.

Great investors collaborate.
Bad ones colonize.

1️⃣2️⃣ They Are Honest About LIMITS

Good investors openly admit:

  • What they don’t know

  • Where they can’t help

  • When they’re unsure

Honesty > hype.

1️⃣3️⃣ They Play LONG GAMES

They don’t rush:

  • Exits

  • Headlines

  • Vanity metrics

They build:

  • Moats

  • Brands

  • Culture

  • Cash flow

1️⃣4️⃣ They Keep Promises — Big or Small

They:

  • Call when they say they will

  • Follow through

  • Show integrity

Character > capital. Always.

1️⃣5️⃣ They Make You Better

When every conversation leaves you feeling:

  • Clearer

  • Stronger

  • Smarter

  • More grounded

…that’s your investor.


🌱 THE ULTIMATE GREEN FLAG

A great investor doesn’t make you feel lucky to be funded.
They make you feel capable of building.

THE FINAL TEST

If your investor vanished tomorrow… would your company:

  • Still function?

  • Still grow?

  • Still respect you as a leader?

 

If yes — you chose wisely.
If no — you chose dependency.

If you feel we are the right investors for you, reach out to us at team@malpaniventures.com

Post

Recent Posts

Dec 27, 2025