EDITIONS
Stories

Funders, founders and the apocalypse round the corner

Anjan Purandare
29th Aug 2015
  • Share Icon
  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • Reddit Icon
  • WhatsApp Icon
Share on

What happens when the natural order in a system is audaciously and disastrously skewed away from its equilibrium point? More often than not a blood bath ensues. We all know this; some of us have been through a few too – the dotcom kaput, the banking meltdown, and the Greek supernova that continues to spook us. Yet, we refuse to implement the single obvious attribute that differentiates us from our machine tools and robot friends – the ability to learn!

yourstory-Funders-Founders

There was a time when VC funding was extremely rare and hard to come by. Companies that were funded by a VC were touted to have something very special on offer in terms of breakthrough in production technology, cost or ultimate use of a product or service and its perceived value to customers.

In today’s context, that pie would probably be split among e-commerce, e-commerce, e-commerce, and e-commerce. You can include any model here, but at the end of the day, it’s all about e-commerce and most of them would invariably fall under the category of marketplace models, logistics (behind e-commerce), payment mechanism models (for e-commerce) and a handful of technology, software and biotechnology outfits that are trying to do something different. So, in a nutshell, this is the “ecosystem” of startups in India, as we stand.

Investors with the greenbacks stocked up are showering their wads on a small majority of sectors. This is making valuations reach unprecedented levels.

Over heating is bound to happen, and the balloon is bound to explode. The investors sitting on the balloon surface will find a way to survive as they get jettisoned outside. The founding community will pay the dearest price. They will implode into a collective garbled mass of great ideas. Of course, the smart ones will survive, pick themselves up and start again.

That is what we, entrepreneurs, vow to do. It is our unspoken Hippocratic Oath after all. Investors will then, collectively, try to zero in on a few different business segments. You see, the cycle continues, and the wheel never stops.

Another scary phenomenon that has taken over this ecosystem is the prevalence of a culture of people in their early twenties, wanting to take on the world – the modern day Don Quixotes. It is immensely satisfying to work for oneself, yet a good idea alone should not be the reason to drop out of school. The word ‘dropout’ next to someone’s name has almost assumed the significance of ‘IIT’, ‘ISB’, and ‘IIM’ graduate with honors. I hope VCs don’t encourage this at all.

To those who have managed to pull this off successfully, my good wishes. They must have had something truly spectacular up their sleeve, but for the others, come on guys; go and finish your studies. It will be worth it.

Take my advice because I’m a not-so-young founder, trying to grow a non-ecommerce, non-logistics, non-bio technology business, hoping to get traction from the right VCs. There are definitely some investors who look beyond the pitch checklist, but till then it can be frustrating. Make sure you have the strength to get up again.

Also I’m no prophet or psychic, but I know that though it is at a very exciting phase in the ecosystem now, there will be an inflexion point in the near future, and some startups will crash and burn, paying for the folly of a few. There is enough opportunity for disruptive ideas across industry sectors, but let’s us hope that guys with deep pockets identify them sooner and take a leap of faith.

 

  • Share Icon
  • Facebook Icon
  • Twitter Icon
  • LinkedIn Icon
  • Reddit Icon
  • WhatsApp Icon
Share on
Report an issue
Authors

Related Tags