The growth of a new company usually consists of one short period of high growth preceded and followed by rather long periods of steady growth. Sometimes there might be more than one period of high growth, but for most companies, it is that one period when there is a point of inflexion and growth goes to a new trajectory.

Now, my point is that if you want to raise venture funding, you better do it when you think you are on the cusp of one such inflexion. Usually points of inflexion are associated with some increase in “leading” investment, and a small chance that the company will get on to a new trajectory, and a big chance that the company will go under.

This crude chart shows the typical trajectory of a young company. The beginning of the red zone is when you should raise venture money
This crude chart shows the typical trajectory of a young company. The beginning of the red zone is when you should raise venture money

If you look at the picture here, the beginning of the red region is the state where you need to get venture funding. The thing with the black regions is that irrespective of how you fund those, at best you can expect steady growth. Now, venture capital funds, the way they are structured, are not set out to fund steady growth. The way venture funds make money is when one out of a number of their investments makes shockingly great returns, while the rest go under. They are not in the business of funding steady returns.

Hence, when they fund your company they value you assuming that in case your company is successful there will be steep growth, which will enable them to recover their investment. And if your company is in steady growth phase, it is never going to be able to do that. And you will have a case of your investors pushing you to do more or something different from what you had planned doing. The problem here lies in the fact that you raised the wrong kind of funding!

In times like this or at the turn of the millennium, when venture capital is big, it can sometimes become the preferred mode of fundraising for a lot of companies. The problem, however, is that most of them don’t realize that venture funding is probably not the best form of funding for them at their size and scale, and then get weighed down by investors.

On a similar note, you should go public once you know that there are no really big points of inflexion coming up, and that your company is set on a path to steady growth. Again that follows from the fact that investors in the stock market (where they pick up tiny shares in each company) are usually in it for long-term steady growth. And if you happen to take undue risks and they don’t pay off, your stock will get hammered unnecessarily.

The Jairaj Model

So finally here is the follow-up to the Union Square Park post. Basically most parks in Bangalore follow what I term as the Jairaj model. Even a number of parks that are older than 10 years old have been remodeled using this model in the last few years.

K Jairaj became the commissioner of the BBMP around the turn of the millennium. The story goes that his parents, who live in Banashankari 2nd Stage, complained to him that they had no place for their daily evening walks. And so Jairaj takes this piece of barren BBMP land (on 24th cross, close to the BDA complex) and converts it into a beautiful park. So the park provides for walking paths, lots of shrubs and flowering plants and a small play area for children. Trust me, it’s really beautiful.

This was soon followed by the development of the Hanumanthanagar park by then-corporator later-mayor K Chandrasekhar. It again followed a similar model – and given its greater area included fancies like a musical fountain (if I’m not wrong). Again a big hit among the residents, especially the middle-aged and elderly who now had a nice place for their morning and evening walks.

The trend was set. Following the success of these two parks, all small parks in Bangalore started to be remodeled based on these two. Trust me, they are all really good looking and most are quite well maintained. But it remains that the primary purpose of most of these parks is to provide a venue for middle-aged and elderly to go for morning and evening walks, and a small area for children with slides and swings, and little else.

Normally we take this for granted and wonder what else a park needs to do. But if you visit some of the better parks abroad (I’m taking the example of the tiny Union Square Park here) you’ll know what you are missing out on. Parks are now gated and shuttered, and don’t let people in during the day time (which is good in the way that it provides time for maintenance). And they are unidimensional, which is sad.

And I’m told that there is now a major battle in several areas between youth and middle-aged, with respect to proposals for playgrounds to be converted to parks.

And these parks are strictly “walkers parks” and not “runners parks”. Not so long-ago I used to go to the nearby Krishna Rao park for a run every morning. I gave up because of the traffic jam inside the park. Narrow pathways on which aunties and uncles would walk abreast in large groups, and so it became more of an obstacle race than a leisurely morning run.