Life is as stressful as you allow it to be. This is especially true for entrepreneurs. Founders can de-stress themselves by preparing family and friends for a roller-coaster ride from the very beginning. Get rid of unrealistic expectations at the outset. This will smoothen your transition from being a salaried individual to running your own business.
Team is more important than the idea
Investors guide startups in making existing processes more efficient, measurable and growth-oriented. In most cases, the team behind a venture is more important than the idea itself. Ideas evolve and startups pivot, but the fundamental truth is that a great team will come up with great ideas and find the right market to deploy those ideas.
Getting a good mentor: A big challenge
They say mentors are your secret weapons. The biggest challenge for the first generation of entrepreneurs is to get a good advisor/mentor. Strong and powerful mentoring relationships are essential because good mentors know how to take your company to the top league. The second-biggest challenge for a startup is team building, especially while bootstrapped. Also, many entrepreneurs may not have the skill-sets required to juggle several hats and manage HR, finance, administration, operations and so on at the same time. Hence, good mentors are very important in the early stages of a firm.
Set the expectations clearly
Family, friends and your social connections are important components to achieve work-life balance. An entrepreneur has to inform his family members and close friends that I am off the grid for a year or two. Prepare them well; so the expectations are clearly set. Overpromising will definitely add a great deal of stress. The vacuum that exists between what’s promised and what’s possible is the real source of imbalance. Therefore, be realistic in setting expectations. Also ensure that your family’s lifestyle and monthly spending are not adversely impacted due to your entrepreneurial plunge.
Bootstrapping is attractive
Most investors would like to see founders put their skin in the game. Bootstrapping tells the investor that the entrepreneur can build a company through unaided efforts and that he/she can create something from scratch. A bootstrapped venture makes the startup attractive for investments.
Indian startup ecosystem is evolving
There is a high degree of maturity in the American entrepreneurial culture. Entrepreneurs there accept failure and are accordingly willing to take high risk. The Indian ecosystem is just coming into its own. Indian investors are now willing to park their money in untested ideas/ventures. It’s a good sign.
High cash burn rate
Cash burn rate is not a grave concern as long as the next round of fund infusion is planned way before the cash runs out. In a capitalistic world, this is natural. As an investor, you have to evaluate the team, the idea and the current market scenario to see whether the idea can command a premium. It’s a bit like saying who pays the highest salary in the industry. Conducting legal and financial due-diligence is important from an investor standpoint.
Hire people better than yourself
I would like to suggest three key tips to budding entrepreneurs:
- Make sure you are the ‘guru’ of the domain you are playing in
- Thoroughly research your idea
- Hire people who are better than yourself and retain them. Basically you have to be very good in selling your vision.
Entrepreneur turned investor Pradeep Mittal is chairman of Hyderabad Angels, a network of angel investors focused on early-stage businesses. He founded IT staffing solutions firm Magna Infotech in the US 20 years ago and later moved to India and started operations in Hyderabad. Magna was acquired by Thomas Cook in February 2013. Mittal has invested in several startups. He sits on the boards of Thrillophilia.com, Winzest.com, Indianmoney.com, Scienceadda.com and Goose Technologies. Mittal is also a member on TiE’s executive committee.
As told to our Principal Correspondent Binu Paul.