Most entrepreneurs are first-time entrepreneurs. They have never done this before, and are very excited about starting a startup. These are usually young students who feel that being an entrepreneur is the best way of being able to change the world. They’re very gung-ho and are optimistic that they will be able to implement the great ideas which they have been working on, which is why they go looking for investors to back them.
Occasionally, the first time entrepreneur is a more seasoned mature professional, who has worked for a few years in a job, and now wants to strike out on his own, because they want to be independent. They are fed up of being stifled in a corporate job, which straitjackets them, and want to be in charge of their own destiny.
The other, much smaller group of entrepreneurs, are those who are experienced and seasoned founders, and they also fall into two categories. Some are the serial entrepreneurs, who have had one of the more successful exits in the past. They enjoy the challenge of starting a company from scratch, growing it to a particular size, and then letting someone else run it because they find management boring. They don’t like getting bogged down in the minutiae of setting up systems and processes and supervising employees. They would rather take on a new challenge, and they thrive on the adrenaline of creating something from nothing. These successful entrepreneurs find it much easier to get funding for their next venture because they have an established track record.
The other group of seasoned entrepreneurs are those who have failed the first or second time but have been able to gather up their courage, bounce back, and want to start off again. They have a much harder time, because once they have failed, this becomes a blot on their track record, especially in India, where failure still carries a huge social stigma. People are very reluctant to fund these failed founders, because they think their chance of succeeding again is very poor.
I have a slightly different perspective and have a soft corner for these entrepreneurs. For one, they are older, which means they’re more mature, and I find it easier to talk to them since I am an old fogey too! More importantly, because they’ve been through failure, they’re going to be very careful this time around about not repeating the same set of mistakes which caused them to fail the first time.
They are much more careful about putting together the right team of people; of respecting the value which investors add by bringing invaluable funds; and of monitoring their cash flow like a hawk. They’ve learned all these lessons the hard way, and these are hard-wired into their brain. They are much more frugal and careful because they know they are not likely to get another chance and are quite desperate to prove themselves.
I am happy to back these entrepreneurs, provided they are upfront and honest; can explain what mistakes they made in their earlier startup; what they’ve learned from them; and how they’re going to do things differently this time around.
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]