A successful startup thrives on teamwork. Entrepreneurs cannot afford to behave like dictators. They must delegate responsibilities to in-house domain experts and stress on partnerships. There is a growing trend of like-minded startups joining forces to feed off each other’s strength, something which ought to be encouraged. Such partnerships not only make them a stronger collective force but also help in enhancing valuation.
Common mistakes made by entrepreneurs
An entrepreneur needs to realise that just like in a game of sport, it is the team that ensures victory and not just the captain. The entrepreneur should not just lead and dictate but share responsibilities with each domain expert and respect the domain expert's opinion. At the very outset, founders need to study the market and understand the competitive landscape. Ambition is necessary but over-ambition should be avoided. They should remain grounded at all times and be ready to face the fact that everything won't go as planned
Entrepreneurial ecosystem in India vis-a-vis the US
India's entrepreneurial ecosystem is fast catching up with that in the US. The risk taking appetite in India has definitely gone up. Crowd funding is happening in a big way. However, willful cohesion between entrepreneurs and investors for advice/assistance is still not happening. More of that must happen. The good news is that there are people who want to invest and grow their money by promoting new business ideas. In the good old days, such options were not available to startups.
High cash burn rate
A high rate of burning cash is becoming common as a startup needs to conduct R&D at the inception stage. If the concept is effective and scalable, the entrepreneur should keep at it and the investor should remain invested. However, if the budget shoots way over what was initially estimated, then we have a problem.
Rahul Yadav episode: Learnings for startups and entrepreneurs
Well, entrepreneurs get unconventional ideas which are turned into businesses and they succeed. An investor would like to see his funds secured, but episodes like these may not hamper the flow of money into startups backed by maverick founders. A learning from the episode would be to have a professional come on board along with the entrepreneur to help and guide common interests.
Startups playing 'bhai-bhai'
It makes sense for like-minded startups to join forces. It not only adds to their individual strengths but also improves their valuation. Such partnerships help them leverage the joint knowledge base, manpower, financial strength and customers. However, startups should not squabble to get a larger piece of the merged pie. The endeavour should be to increase the pie and ensure that they collectively are a stronger force to reckon with.
As an investor, there are three key points that attract me to a startup. Firstly, the team, their background and how they work with each other. Secondly, I am attracted to the domain expertise of the team, especially those who handle business development/sales and technology practice. Finally, it is the uniqueness of the problem they are trying to address and what will be achieved by the solution they would create. I am open to any technology or business idea and am not fixated on any one particular stream. As long as the startup is able to demonstrate with validated data that there is a problem and that their solution does address/solve it, I am fine to move into the next step with them.
Yes, it is tough to maintain work-life balance if you are the founder of a fledgling young firm. One needs to maintain equilibrium nevertheless. Ensure that evenings are spent with family by doing common activities such as playing a sport or hitting the gym together. It is ideal to have planned timings for productive work but be prepared for the unplanned at all times.
(Mohit Rampal is an angel investor and IT security expert. Previously, he was the South Asia head for Finnish technology security firm Codenomicon. Prior to that, he was associated with organisations such as SafeNet, Avaya, 3Com and Motricity. Rampal has made angel investments in three startups in the mobile app development and digital marketing domains)
As told to our Senior Assistant Editor Adith Charlie.