Failures in Entrepreneurship and Investment

SELCO Foundation
Sep 7, 2018 · 6 min read
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“In funding, there’s a hierarchy where investors sit at the top and the entrepreneurs at the bottom. If there were an intellectual pyramid or hierarchy, it would be the entrepreneurs at the top and the investors at the bottom.”

Social enterprises endeavour to create positive social impact, sustainable change and tackle problems that cover a vast variety of fields. This often entails working in environments that are a bit challenging and not exactly conducive to business, it also requires time, unlike traditional enterprises. While there are many types of enterprises, all undergo similar indeterminate phases, a good example being the nascent, unsure years of the IT boom.


Losing Sight Of What Consumers Really Want

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Photo by Clark Young on Unsplash

However, something about this model didn’t click the way Mahendar had imagined. He didn’t let it go there, Mahendar made visits to these offices, asking his customers what was missing, what was it that kept them from coming back for more cups of coffee during the day. His research led him to one man who remarked about how inauthentic the coffee vending machine felt, that it simply didn’t match up to a traditional cup of coffee.

In Mahendar’s quest to grow, riding the wave of a popular market trend, he realised that he had lost touch with what consumers actually wanted.


Staying True To Your Core Value

In the chase for investors and funding, Dhruv Lakra of Mirakle Couriers experienced a similar momentary lapse, not with his customers, but with his own internal personnel.


Tall Tales And ‘Dumb’ Models

With investors, Dhruv, who runs a courier service, realised that often the best way to get funding was to play up the idea;

“So we’d find ourselves saying that we’re the next Fedex”.

For Vineet Rai, an investor, a golden rule that has seen him through the years is the brevity of the pitch.

“If someone can’t explain what they are doing in the span of a few minutes, it simply will not work”.

A former forester, Vineet takes a more pragmatic approach to impact investment,

“In some sense, you can say I am driven towards so called ‘Dumb’ models, where you have a simple idea and a brilliant management team, something that is crucial towards making ideas work, and be scalable.”

When Vineet entered the space, he harboured more idealistic notions of how business could create impact and prosperity all around, but developed the method he now practices after years in the field, facing pressure from his investors, which focuses on scale and returns.


Towards A New Understanding Of Risk And Capital

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Photo by Fachy Marín on Unsplash

We need at least 3 months to decide if an idea is worth investing in. We see people in small towns scattered all over India, who have great ideas and really want to create impact. ” he says, with a cautionary footnote “But these ideas can take time, they need to be worked on. They solve complex issues and there are no simple solutions”.

Manoj then expands on this vision of patient capital, “A new vision of capital needs to be created, one where investors are not looking at returns in 4 or 5 or 8 years, one where they are willing to take great risks that are aren’t commensurate with returns, and one that exists between philanthropy and venture capital. If not, I’m sorry to say that most of these entrepreneurs will not get funded”. He is also quick to issue an important condition; “My solution is not to throw money at something. In fact, if you see a lot of failures these days, the primary issue is overfunding.”

Impact Failure

The aim of Impact Failure is to provide an in-depth and…

SELCO Foundation

Written by

SELCO Foundation seeks to inspire and implement solutions that alleviate poverty by improving access to sustainable energy to underserved communities.

Impact Failure

The aim of Impact Failure is to provide an in-depth and open discussion about the role of failure in the development space. The goal is also to celebrate learnings that emerge from failures and the impact that can be created through the learnings.

SELCO Foundation

Written by

SELCO Foundation seeks to inspire and implement solutions that alleviate poverty by improving access to sustainable energy to underserved communities.

Impact Failure

The aim of Impact Failure is to provide an in-depth and open discussion about the role of failure in the development space. The goal is also to celebrate learnings that emerge from failures and the impact that can be created through the learnings.

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