OVERFUNDING KILLS A START-UP

A good business plan was presented to investors. They liked it a lot. They trusted your energy and efforts put in it and promise you initial seed funding. Now that you got some capital you search for a co founder, share the capital with him. He also brings his expertise and  expands your business. Seeing your business grow you get more funding.

Then the aim to be an entrepreneur shifts to become a money making machine whose each action is limited to raise some funds.

Indians have witness a chain of startups in say any segment you can think of. The startups were accepted by public on account that they were solving there problems, making life simple.
So what we have got, a mobile app to order food, look for houses or a piece of land on rent or even a plumber.

But the main question is why startups are going in loss? Why do people leave the idea they nurtured as their own kid? I recently went through news of Rahul Yadav EX CEO of Housing.com resigning first and ultimately fired. This whole incident made me to think and think more.

To make it simple, Indian markets is the most unique market among the world. Despite the huge potential, the commoners take time in adapting a change. There are very few early birds rather most are adopters, who when get to see someone trying a product and being satisfied with that, then only opt it themselves. (Refer product adoption life cycle)

But on a global front, people trust the new generation. The ideas are being respected and thus there is more and more investment. You are in your mid twenties and thirties and you are the brain behind a big xyz dollars company, which is too much exciting and motivational.

Taking the other side of the coin. You are a graduate / post graduate working with a great company whose package has spoiled you. You have never been in the market and have never tasted risk. Suddenly you bring a solution (which you see as a solution) and you prepare a business on it. You get series of fundings but that would actually kill your Entrepreneurial spirit. Every investor you get is investing on you more rather than your business and round the time line they will catch you for returns that the business. With great power goes great responsibility is true in the case of startups.

You may get huge funds but that would make you to run, run pretty fast. Prepare your team well and remember slow and steady wins the race. Growth is good but a growth for very short period is never digestible.

Wishes for the new entrepreneurs of the country.