Letter clarifying a tweet to India.

Dear Mr. Modi and the government of India:

I wrote a tweet and it blew up on social media and it probably requires some explanation.

There is a simple formula for wealth in a nation. It is freedom, fairness and frictionlessness. Each of these tenets bets and work to their fullest potential when unfettered — freedom is maximized when there is minimal regulation; fairness without bias in government, and frictionlessness without trade barriers.

Allow me to take you through my thinking.

I am the Founder and Managing Director at Draper Associates, a global venture capital investor and innovator. I tend to be a bell weather for VCs, as I was the first Silicon Valley VC to invest in China, and many VCs followed my lead after the successful public offering of Baidu. I was also the first Silicon Valley VC to invest in Eastern Europe, and when Skype was acquired, many VCs followed suit and started looking there.

We are willing to invest in entrepreneurs wherever they may come from. In fact, we have a network of 24 venture capital firms around the world who invest and help guide our investments globally. We have recently developed two such relationships in India with leading VC’s Blume Ventures and IronPillar Ventures. We have also created an interactive TV show called, “Meet The Drapers” distributed by The Times Group and Sony with mostly Indian entrepreneurs where viewers can crowdfund.

We have had a long relationship and special connection with India, since my father was the first venture capitalist ever to focus on India with Draper International. I followed my father’s lead and grew to love India. Nevertheless, ten years ago, we pulled out of India because we believed that corruption in the then-government was leading to corrupt practices among the local entrepreneurs (trickle down corruption).

Honesty, trust and fairness are a big thing with venture capitalists, since we are trusting entrepreneurs with our investors’ hard-earned money to try their best and treat us fairly in both positive and negative outcomes.

I am in no way an expert in Indian politics, any more than I am an expert in the politics of China, Eastern Europe or the US. I merely go from my gut. So I am sure there are many subtleties that I miss when deciding which countries to invest in. It is possible that I misinterpret one policy or another in my analysis as a global venture capitalist.

With that caveat, let me tell you about the three actions in India that sparked my interest, one positively and two negatively.

I liked the currency cleanup a lot. That effort sent a message to the world that India would end corruption, that India was open for business, that India would have a fresh start and usher in a culture of opportunity. It gave me hope so I started to invest again. After all, there is a lot of opportunity when 1.4 billion potential entrepreneurs are unleashed with an honest free market, and I certainly don’t want to miss it.

On the other hand, I didn’t like the blocking of Bitcoin as a currency. Bitcoin, the Blockchain and smart contracts have the potential to transform some of the biggest industries in the world and the next 40 years will be defined by what happens today. Governments that mess with technological advancements like Bitcoin run the risk of being left behind. Imagine what would have happened to countries that didn’t allow the internet. Bitcoin promises to be 10 times as big as the internet. With all the progress India has made, I would not want it to be left behind by arbitrarily condoning one technology that will likely be the future.

Finally, while I realize that I show an American bias, since we are programmed to treat everyone equally, I didn’t like this most recent calling out of favoritism. Prosperous governments promote freedom and equal opportunity for their people. They create a fair platform for people to participate in the global economy. They reduce the friction of regulation, they make sure everyone feels equally welcome, you make sure people and money can flow freely through your country, they create pure transparency for their government and their businesses, and they celebrate the fruits of business success. They loosen up the reigns and let 1000 flowers bloom. In the case of India, it is more than 1,000,000,000 flowers! And those billion flowers are people who can do great things.

If you want your people to thrive, you create simple fair rules for everyone, and then you set them free. Freedom is a big thing for venture capital. More rules and restrictions create more corruption, more friction. Whereas fewer restrictions allow people to innovate and create.

The Draper Venture Network is a network of fairness, openness and transparency. We are guiding our invested companies toward free markets and other basic freedoms, religion, assembly and speech.

Governments around the world are deciding how they want to manage today. How they treat people and the quality of services they provide to citizens will affect their success over the next 40 years. Governments are in competition with each other for the citizens, the businesses, the money and the startups of the world. They need to show fairness to be able to compete. They have to decide if they want to permeate a culture of need or a culture of opportunity. A culture of need makes people needy. A culture of opportunity creates a dynamic culture of opportunity. In India, the country has had a long history of supporting a culture of need, and they have many needy people. But there is now a spark of hope for a culture of opportunity. Let’s fan that spark.

The recipe for governance that leads to prosperity is not that complicated. It is: Freedom, Fairness, and Frictionlessness.

I love India. It is a country with enormous opportunity.

I will be in India the week of March 8 for the Draper Venture Network Summit. I look forward to interviewing startups, sensing the new culture and meeting with Mr Modi to discuss his plans for this extraordinary and large nation.