Navigating Startup Investments: Process vs Outcome
In the world of investing, there’s a constant struggle between aiming for big results and focusing on how to get there. Investors often have to decide whether to chase after the promise of huge profits or to focus on building a solid foundation for success. Let’s take a closer look at this balancing act from the perspective of an investor, using real life insights that reflect — how sticking to a plan , even when things get tough — is the course.
The Attraction of Big Wins
At first glance, it’s easy to see why investors get excited about big wins. Who wouldn’t want to be part of a startup that becomes a game-changer, worth billions?
Take Flipkart, for instance. This online shopping giant started small but quickly became a big deal in India. Investors rushed to support Flipkart because they saw the potential for huge returns. And when Walmart bought Flipkart, those early investors hit the jackpot.
In another recent instance, a payment giant was caught under the radar of the regulator. Sources (credibility cannot be assured) mentions, the platform lost ~100M users during the period of uncertainty. Eventually, the regulator suspended one of the business licenses of the entity leading to distrust amongst the users and chaos to safeguard their money parked across products offered by the entity.
Another data point from the same instance revealed that the business lost ~Rs. 30,500 Cr. in market cap amidst the crisis while the actual monetary penalty was a mere Rs. 5.4Cr. A disproportionate loss in wealth of the founder and investors.
Such instances do not just lead to loss of customer trust over a single entity but have a ripple effect over the entire ecosystem.
Why Process Matters
Behind every big success story, there’s a lot of hard work and smart planning.
While it’s tempting to focus only on the end goal, experienced investors know that sustainable success comes from having a solid plan, the right systems in place, and strong leadership.
Investing isn’t just about betting on a dream; it’s about making sure the team can handle challenges and keep moving forward.
Think about it like a pilot preparing for takeoff. Before every flight, they go through a checklist to make sure everything’s working as it should. This routine isn’t just a formality — it’s a way to be ready for anything that might come up during the journey.
Finding the Right Balance
In the world of investing, it’s crucial to find a balance between chasing big dreams and focusing on the steps needed to reach them. Having a clear plan and sticking to it can help businesses navigate tough times and come out stronger.
For investors looking for the next big thing in India’s startup scene, the key is to look for startups with both ambitious goals and solid plans for getting there.
From a process orientation perspective, investors must recognize that while ambitious goals drive excitement, adherence to regulatory requirements and meticulous documentation management are equally crucial.
Having robust processes in place not only facilitates compliance but also enhances operational efficiency and risk management.
By proactively managing compliance requirements and staying vigilant, investors can minimize the possibility of oversights and mitigate potential risks associated with non-compliance.
Take Away
In the end, while big wins might grab headlines, it’s the smart planning, disciplined approach and hard work that make them possible. Just like a pilot’s checklist helps them adhere to safety protocols and stay prepared for anything, a solid plan helps businesses weather storms and reach new heights. And for investors, backing compliant businesses with big dreams, smart strategies is the way to safeguard the investments and more probality to have big returns in the long run.
In the dynamic landscape of investing, this dual focus on vision and vigilance is key to achieving sustainable returns and fostering long-term success.
Author
Karan Gupta
