Funding is the biggest gift to an ambitious individual. India is a country with a percentage population of youth so large; unemployment is a joke here. Sustaining the idea at bay, from a group of 10, there will be one individual who is ambitious and hyped at the same time to initiate a startup and make that smooth money flow in the bank. Seldom do they, even take time to calculate, the breakdown of a startup in the process. Going to investors every day, with a drawing or prototype of an idea, they sit there listening to inspirational and motivational music video and preaches to only get Goosebumps to make that higher jump. I might be exaggerating at this, but this what I pictured in my head when I hear my friends or anyone I know with that ambition.
Walking with a group of friends, standing affront, the others behind expecting at instant victory in this world, expecting the guy to make that wise speech and bring the investor’s check on his side, how bloomed up has the youth gone to. This is a very serious and stagnant problem that hasn’t been discussed by anyone such a successful startup innovator. Incubation centers across the country are set up to help them get to logical grounds that they once flew higher than cloud nine, teach them to face the truth of failure, and expand the mind on the slightest expenses during the development. Google, Amazon, and many more such huge organization were the result of a slow economic period. Many investors didn’t even understand what Steve Jobs, Jeff Bezos, Larry Page had for their ideas.
Come 5-6 years down the line, the world changed instantly, the economy boomed like never before, and those who invested received divided that shook their banks. They saw the potential of an idea and call for more ideas to invest in, inspired by this, many such individuals came forwards, and then… everything changed. Starbucks, KFC, Fastrack, Yahoo, AT&T, Verizon, OnePlus and so on came to be the biggest start-ups then. When we look at their successes, it is of psychological evidence that the rest try to do the same but at a pace quicker than what one would anticipate. Then 2009 came, and the companies that just started got flushed down, and those who gradually prepared for the aftermath grew up with smaller investments.
The Fad of Investments over Profits
When a survey was asked to a group of individuals who had an incubation meeting at a center, the shocking result was that 7/10 required an enormous investment, and when asked why? They replied it would inspire them to get the best to have a proper start. The rest wanted a slow start with profit that helped them survive for a longer period. When an investor makes an investment that matches the initial approach of the young guy, some of the purchases that he makes will be of the type; a lavish office, to begin with, premier setup and equipment that swallow almost half the offering, and a selfish group of individuals who would want a huge initial salary.
If the guy is immature, they’ll do that but if he/she is smart and understands the market, then the world is theirs. Every year, a million inexperienced young individuals from IIT’s and many more come for such investments and months later… Boom! Fail! And the reason, they ran out of money. They’d later dilute their stakes but then. They would have to cut down that improvement they showed on their lavish expenses of the money and that’s how the investors leave slowly until they call for bankruptcy and liquidation. They failed for the fundamental reason, that they didn’t know how to manage a company and control the expenses and dividends.
Here are some reasons as to why they fail:
- Easy Investments
- A synopsis of the overly formal idea and beyond the comprehension of the investor.
- If the investments happen between relatives, then it would be easy investments as the relationship runs across blood and bond, expecting the individual as an upcoming success with a spoon of motivation.
Responsibilities – The Investor and the Graduate
A responsible investor will make sure that they recognize capitalization. They will analyze the success rate of a similar idea and expect errors from the idea while valuing with analysts and start-up experts. They will understand the graduate, examine their attitude and motive, examine his steam, be involved at the beginning of the process, attend periodic meetings, and question their progress. They understand the USP and make sure of the IPO value in the market and preventing credit crunches that can immediately flip that market and cause the capital to sink.
An ambitious entrepreneur will value the investor’s money and make sure the value time and profits over immediate growth. They will make sure to raise even more funding through fundraisers and other methods to prevent debt failures. They will make sure to update their investors and provide shares of the company and to inform the investors of any new ventures. They will state true values of growth and value a steady growth for long profitable survival. They should be aware to comprehend and make decisions that will benefit that growth, they should solve problems that will help grow forwards and promote a pleasant environment for everyone.
The times are changing constantly. Youngsters are constantly on the move to achieve more towering heights in their lives, and it’s not a bad ambition. If a certain percentage of such youngsters came up with a mature understanding of the market and perceive the way the consumer market works, then the time of the ’80s could easily return where many investors could easily invest without the hint of doubt. The problem of a sped upmarket is what deters their patience and thus move ahead unprepared.