India’s startup space, which was brimming with confidence a couple of months ago, is now going through a reality check. With several well-funded startups like Local Banya, Tiny Owl, Housing and Helpchat downsizing, the sheer excitement of, quitting your job or dropping out of school and, starting-up has been tamed.
For all those brave-hearted souls seeking to launch their own startup, my sincere advice would be to not sell yourself short. While there is chatter about funding taps drying up, one should not be hasty in grabbing investors. More so now than before, there is an acute need for first time entrepreneurs to evaluate the kind of investor they would go to bed with.
Here are some pointers:
Expertise-based Investors: While an entrepreneur knows most about his/her own business, the investor’s knowledge of your industry grossly helps shape your business model. An investor investing primarily in IT cloud-based services may not be the best fit for a travel and tourism portal, as scale-up and growth time frames may grossly differ in the IT segment and the travel and tourism segment.
Functionally-skilled Investors: This will define how far the investors are able to support the startup. Functional aspects like growth hacking in marketing, operational finance support, technological know-how, and management skills need to be looked at. You need a partner who would guide and support, besides just pumping in money. A good investor should be able to keep nudging you to plough on.
High networked investors (HNI): Rather than their net worth, network is more vital as that defines the reach your investment partner would bring to your business. If your investment partner is well networked, it would help grow your business in multiple ways. A well networked investor will be able to connect you with potential employees, strategic partners to new investors.
Mutually-aligned investors: Mind over matter still holds true for a successful startup and everyone needs to be in sync and in agreement on the vision and mission of the company. A good, successful startup can fail despite good funding and investors. Conflicts resulting from mismatch in ideals of the founding members and the investors have brought turmoil to startups like Housing.com. Transparency, trust and understanding will go a long way in sustaining a successful working partnership.