Most first-time entrepreneurs are in love with their idea. They feel it’s completely cool and that it’s going to change the world. This is partly because all they do all day long is think about their idea and how they can implement it. They get completely obsessed about it and their world starts revolving around it. When they compare it with existing ideas, they invariably find that theirs is far superior – just like every mother feels her child is the best-looking child in the world.
When they get ready to implement it in real life, they find they need money to convert their idea into action. They approach investors, and naively expect them to be as enthusiastic about their idea as they are. They are sure that funders will get excited about how cool and innovative their idea is, and will line up to fund the venture.
They get extremely disheartened and disappointed when investors don’t seem to hold their idea in the same high regard they do. They get frustrated when it seems that no financier is the startup space appreciates how valuable their idea is. They start thinking of themselves as the persecuted genius whose brilliance society has one again failed to recognise. They complain loudly and frequently about how unsupportive and short-sighted Indian funders are because they fail to understand the brilliance of what they are proposing.
This creates a big chasm between funders and founders, and we need to bridge this gap. The only way to do this is by understanding each other’s worldviews.
Understand Each Other’s Worldviews
Founders need to learn to put themselves in the investor’s shoes. The truth is that investors are flooded by new pitches daily, which is why a lot of investors start feeling that ideas are a dime a dozen. Most are convinced that there’s really not much value in the idea itself – it’s the successful implementation which makes a world of a difference, and there are lots of slips between the cup and the lip.
Most entrepreneurs have very little real life experience, and grossly underestimate the difficulties which they will encounter in running a startup. They have spent so much time in polishing their idea that they think of it like a diamond. They believe that everyone should be dazzled by its brilliance and should be happy to throw money at them so they can bring it to fruition.
They can’t believe why investors are being so dumb – can’t they recognise the next Steve Jobs? Don’t they see that this idea is going to help them invest in the next unicorn? They believe that since their idea is so great, how hard would it be to implement it in real life, once they had the money which they required?
It’s not as if investors don’t value ideas – it’s just that we have learned the hard way that an idea by itself is worth very little. We know that the devil is in the details, and while it’s great to admire creative ideas when you read about them in a book, only someone who has actually slogged through running a startup understands how much blood, sweat, and tears need to be invested in order to make that dream come true.
This Is The Real Challenge
To persevere and remain undefeated, no matter how many roadblocks you encounter. Investors are very worried that most founders are not mature enough of handling these challenges.
Forcing entrepreneurs to pitch to many funders is actually a great screening tool in the startup ecosystem. An entrepreneur who gives up just because he can’t raise funding from the first few investors he pitches to is very likely not to be able to do a good job running a startup. If he can’t handle rejections from investors, then he should accept the fact that he is not suited for the startup space.
Many founders shoot themselves in the foot because they are so secretive and paranoid about their ideas. They refuse to share it with others, as a result of which they don’t get high quality feedback. Most of the responses they get are from friends and family who are obviously going to be very supportive and say, “Yes, it’s a great idea! Anyone will be happy to fund it!” It’s only when they go out into the investor community do they realise how little an idea is worth. This is why you need to be open and start sharing your ideas, instead of hoarding them, so you can use the feedback you get it polish and improve it, so it become fundable.
Mature founders learn from the feedback they get from investors. No feedback at all is actually a loud message that they’re not excited by what you’re saying.
This maybe because they’ve heard it before, or because they think what you’re saying is not practical, or that it requires too much money, or they don’t think you have the capability of being able to pull this off. Now it’s up to you to prove them wrong!
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
