The startup ecosystem is maturing. Failure in the ventures is not looked down upon.
There are entrepreneurs who have not succeeded with their early ventures but went on to build and exit later ventures.
The very first investment by Auxano was in a breakthrough idea, which was a category creator & went on to become a market leader … And the promoters of this enterprise were entrepreneur(s), who had to shelve their previous ventures … the experiences from the earlier ones leveraged here …. connecting the dots.
As an investor of the said promoters’ earlier venture, having experienced loss of capital, would you go ahead with the new venture being setup by this promoter?
There is no right or wrong answer …
The easy approach — Once bitten — Twice shy.
The measured approach- Look into the process , governance, reasons for failure (eco-system driven / promoter driven). The new opportunity outlook .. competence of the promoter & team … (this is only a few parameters of the checklist)
The blind approach – spray & pray … (This is the intriguing approach …. Auxano stays away from this & would recommend the investors to think before using this approach…)
This is where the Investor — Founder or Founder — Investor relationship comes into play.
The investor would like to invest with the promoters in their ventures provided there has been mutual trust, the promoters have kept the investors in loop of all the matters, governance standards are in place, frugal approach on spending .. basically, data with numbers at all times.
As Manish Sabharwal in one of his podcasts said … Its Amanat’ and not ‘Jagir’.
One is building an institution & wanting it to grow & leave behind a legacy (in this case all the stakeholders making returns over the period) — ‘Amanat’.
So if an ‘amanat’ mindset is in play, the investors will continue to invest, irrespective of past failures ….
And today, India is the place where global capital is looking to invest … Let’s not miss the bus …
Author:
Brijesh Damodaran
