Easily Maneuvering Through Entrepreneurial Risks
Indu Navar
CEO,
serus corp
serus corp
Starting off on the ground level, I have helped grow family business 20 years ago in India. The concept of venture financing did not exist at that time and no seed funds were available through bank loans. My father, who is my hero and role model made it seem that anything was possible if you believed in it. He knew how to grow the business organically and take manageable risks. I co-founded Serus Corporation based in Mountain View, CA, along with Barbara Hoefle who also believed in much of the same principles. What have we learnt? Some fundamentals that haven’t changed over time—fundamentals that we are very passionate about.
Create Return on Investment—the Bottomline: You have a great idea and want to start a company. What is the first thing to do? Develop an investor presentation and start looking for money? Wrong! You need to put together a product presentation and start looking for paying customers. This may seem like an impossible task at first. It is not.
Focus on a sustaining model: Start thinking about creating long-term value. Before seeking investment, you need to understand that your primary responsibility is to generate value and return 10 to 50 times the investment, within a 3 to 5 year period. Investors are in the business to make money and entrepreneurs are in business to innovate.
Investment alone is NOT going to help: It saddens me to see today’s entrepreneurs’ first task while starting a company is to seek investment. It almost seems like obtaining venture capital is the main goal of starting the company. This is quite like thinking that you want to buy a house because your goal is to get a mortgage loan. The goal is NOT the mortgage, the goal is to improve your living conditions or to make an investment by buying the house. A mortgage loan just enables you to achieve that goal. The aim of starting a company should be to satisfy a market need that would in turn nurture the life of your company. Venture funds should only be to enable you to achieve that goal.
Measure Revenue-per-employee and profits: In failing to educate young entrepreneurs of their responsibility when seeking investment, we will continue to create companies doomed to fail rather than succeed. Avoid falling into the hole that many companies have fallen into during the last few years. Entrepreneurs need to stop getting carried away with investor pitches. Example: The very famous ideal “hockey stick” financial growth plan that everyone knows is just that—ideal.
Create Return on Investment—the Bottomline: You have a great idea and want to start a company. What is the first thing to do? Develop an investor presentation and start looking for money? Wrong! You need to put together a product presentation and start looking for paying customers. This may seem like an impossible task at first. It is not.
Focus on a sustaining model: Start thinking about creating long-term value. Before seeking investment, you need to understand that your primary responsibility is to generate value and return 10 to 50 times the investment, within a 3 to 5 year period. Investors are in the business to make money and entrepreneurs are in business to innovate.
Investment alone is NOT going to help: It saddens me to see today’s entrepreneurs’ first task while starting a company is to seek investment. It almost seems like obtaining venture capital is the main goal of starting the company. This is quite like thinking that you want to buy a house because your goal is to get a mortgage loan. The goal is NOT the mortgage, the goal is to improve your living conditions or to make an investment by buying the house. A mortgage loan just enables you to achieve that goal. The aim of starting a company should be to satisfy a market need that would in turn nurture the life of your company. Venture funds should only be to enable you to achieve that goal.
Measure Revenue-per-employee and profits: In failing to educate young entrepreneurs of their responsibility when seeking investment, we will continue to create companies doomed to fail rather than succeed. Avoid falling into the hole that many companies have fallen into during the last few years. Entrepreneurs need to stop getting carried away with investor pitches. Example: The very famous ideal “hockey stick” financial growth plan that everyone knows is just that—ideal.
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Reader's comments(9)
1:
This is a good article and as NexGen my venture is just 2 weeks old and i can still implement some of the stratergies of Bingham....
Posted by:Subin B - 14 Jan, 2010
2:
I am writing this comment to convey a message to sameer goel, hi... you can get in touch with me on ajith14285@rocketmail.com.I can give you lots of information about people who are ready to fund practical ideas.I suggest you to mention your contact no in any future communications if you wish to have...:)
Posted by:Ajith Kamath - 14 Sep, 2009
3:
Entrepreneurs,Very valuable article. Will recommended it for anybody aiming a start up. This is truly helpful to people who is in the middle of starting a new investment firm.
Jacob J Kallupurakal
Boston, USA
Jacob J Kallupurakal
Boston, USA
Posted by:Jacob Joseph M Kallupurakal - 16 Jul, 2009
4:
Thanks a lot mam. this article is really inspiring.
Since i am planing to start a costume boutique for the artists your article will help me a lot. thanks a lot
Since i am planing to start a costume boutique for the artists your article will help me a lot. thanks a lot
Posted by:Valsala Johny - 19 Jun, 2009
5:
mistakes man a man perfect subject not repeat again.
struggle is life & again try to see.
regards
r g sharma
struggle is life & again try to see.
regards
r g sharma
Posted by:RAM GOPAL SHARMA - 15 Jun, 2009
6:
Mam, I have completed my B.E in computer science few days ago and have a very great idea of a business and I'm very optimistic in terms of the success of that business very rapidly.
But the problem is the capital required for that and I want a VC to fund this project and in this regard, i have some questions following below:
1. How can i trust a VC that after seeing my business plan, he won't invest in that project on his own and reject my proposal because for him, I have nothing but a great idea and great enthusiam to be successful in that.
2. I have seen many articles saying about the contents of the good business plan but no one has the detailed description of the contents of the business plan. So, how can I get the detailed list of the contents of a business plan.
3. How to find which VC would be my true business partner and on which parameters I should choose them. Can you provide me some references of VCs interested in investing initially 1-2 crore in a business in IT field.
4. Since I am not from a business family and havn't done MBA, Would it be better to enter in business field right now or to first do MBA and then get some experience in any company and then start my own company. I don't want to wait for 5-6 years because I have threat in my mind that if someone would start that kind of business before me, then I will loose the competitive edge i would get otherwise.
But the problem is the capital required for that and I want a VC to fund this project and in this regard, i have some questions following below:
1. How can i trust a VC that after seeing my business plan, he won't invest in that project on his own and reject my proposal because for him, I have nothing but a great idea and great enthusiam to be successful in that.
2. I have seen many articles saying about the contents of the good business plan but no one has the detailed description of the contents of the business plan. So, how can I get the detailed list of the contents of a business plan.
3. How to find which VC would be my true business partner and on which parameters I should choose them. Can you provide me some references of VCs interested in investing initially 1-2 crore in a business in IT field.
4. Since I am not from a business family and havn't done MBA, Would it be better to enter in business field right now or to first do MBA and then get some experience in any company and then start my own company. I don't want to wait for 5-6 years because I have threat in my mind that if someone would start that kind of business before me, then I will loose the competitive edge i would get otherwise.
Posted by:Sameer Goel - 09 Jun, 2009
7:
Thanks,
A very good and informative article.....
A very good and informative article.....
Posted by:rohith sathees - 05 Jun, 2009
8:
Thanks a lot!! In this article you have put all those that is running in my mind at this point of time. As Renstas is just a week old, I am only planning to keep my clients happy for creating a long term value.
Posted by:Anoop Menon - 28 May, 2009
9:
Awesome strategies for the upcoming entreprenuers.. But due to upgrade in technology, it is very difficult to the upcoming new one's to sustain in this highly competative market.. May be one has to think out of the box... Hats off Indu....
Posted by:Bharath S - 12 Jan, 2009
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