Something about entrepreneur

However, sometimes, entrepreneurs are so focused on getting their businesses off the ground that they don’t always get the big picture right. “In the first phase, entrepreneurs are very eager to sell their idea,” says DFJI’s Andra. “They wake up only during the second phase to realise that selling profitably is more important than getting customers.” Andra feels that if the entrepreneur doesn’t analyse his business enough, or if he gets too much money early on, he may end up pushing the accelerator too soon. He adds, “If you are not evolved as a company, it could lead to huge problem in execution.”

Indian entrepreneurs are a lot more mature now than they were when we started 10 years ago — Kanwal Rekhi, MD, Inventus Capital

Naukri’s Bikhchandani says it is keeping a tight lid on costs that helps in the long run. “We had bootstrapped [self-funded] the company for 10 years before we took venture capital,” he remembers. “We had to earn money to break even so we were very frugal and that helped us keep afloat during the market meltdown after 2000.”

Trying to keep afloat is exactly what some e-comm firms are doing today.  Start-ups were set up at a frenzied pace as entrepreneurs and investors wanted a bite of the e-commerce pie that is tipped to double to $20 billion by 2015. But here’s the catch. “Only a few million users are consistently buying from online stores,” says Subrata Mitra, partner, Accel Partners, which has funded some of the leading Indian e-commerce start-ups, including Flipkart and Myntra.

“The number is growing, but from a relatively small base, and [the market] can, therefore, sustain only a few such start-ups today.” Deal site Taggle, which was kicked off in June 2010, shut shop last year and Flipkart bought out electronics site LetsBuy. VCs say more e-comm portals will crash and burn before the dust settles.

Mentoring is the most important input that a young entrepreneur can get today to stop him from going in the wrong direction — Deep Karla, CEO, MakeMyTrip

That’s why a team that can adapt quickly is important. A few venture capitalists say they always put the team ahead of the idea. “It’s always better to fund an A-team with a good idea rather than a B-team with a brilliant idea when it comes to investment,” says Deshpande. “Most companies end up doing things a little differently than when they started off, so it’s really important to find the A-team that can navigate through that process.”

Early-stage investing is an art, experts insist. Since there are no numbers, no customers and no spreadsheets to validate everything, it becomes a challenging task. “More often than not, it’s like a roller coaster ride and unless you have been an entrepreneur yourself, it will be difficult to understand the early stage dynamics of a business,” notes Inventus’ Rekhi.

So his firm sets up filters that help it whittle the 800-odd proposals they get every year down to about six in which it invests. Inventus believes every entrepreneur must have some skin in the game so it only funds entrepreneurs who have been bootstrapped, and who have been in business for over a year. “We don’t invest in companies unless we see at least a 10-times return on our investment,” Rekhi says. “So we develop that vision with the entrepreneurs and work with them to realise that goal.”