Good Capital is now…
In embracing its roots, Good Capital – India’s leading early-stage VC firm – has announced it will now be known as Bad Capital.
We believe that to push India further as one of the largest startup ecosystems in the world, an unabashed, brazen and principally BAD approach will pave the way to achieve this vision of ours, and BAD CAPITAL will be at the forefront of this in the next 5 years.
Here’s a paper from Thomas Roulet of Cambridge’s Judge Business School, whose model really is kind of “the whole financial system is evil”; as the school’s blog summarizes it:
The study concludes that negative coverage actually helped banks gain IPO business from corporate customers, as those corporates view certain banking practices widely criticised after the financial crisis (such as appetite for risk, short-termism and big bonuses) as consistent with industry norms, thus suggesting quality of service.
“This study shows how divergence in audiences’ perception of typical industry behaviours can make wrongdoing beneficial,” says the paper authored by Dr Thomas Roulet, University Senior Lecturer in Organisation Theory at Cambridge Judge Business School. “Most audiences tend to disapprove of wrongdoings, but specific stakeholders may interpret this disapproval as an indication of the focal organisation’s level of adherence to professional norms.
”The model is roughly that “professional norms,” in business, are evil, and so businesses looking to hire qualified professional investment banks tend to look for the ones who are most evil. And so winning IPO mandates is correlated with negative press coverage. What kind of negative press coverage? These delightfully specific kinds:
The media coverage was evaluated based on a list of 204 words built on a qualitative analysis of a sample of opinion articles. The articles were then coded on the basis of how those words were associated with the banks. The words were grouped into four factors that have been heavily criticised since the financial crisis:
Greed: words such as “obscene”, “excess”, “selfish”, and “shameless”.
Violence as in a battleground: “assault”, “frenzy”, “vicious”, “fierce”.
Opacity as in fostering secrecy: “covert”, “cryptic”, “dubious”, “hazy”.
Risk-taking behaviours: “casino,” “tempt”, “daring”, and “gamble”.
“This study suggests that the coverage of misconduct can actually act as a positive signal providing banks with incentives to engage in what is broadly perceived as professional misconduct.” It is broadly perceived as professional misconduct, but it is narrowly perceived—within the profession, and its target audience of businesses—as proper professional conduct.
The work of finance is esoteric, and its norms are specific and contextual; in many cases, those norms look bad to outsiders but are sensible and useful in their context.