Many a VC/early investor/mentor/advisor who’s considered ‘a good investor’ was an entrepreneur before they became that. It’s a path many take, and take pride in as well. Yet, for some the action is where the action is and they go right back to scratch the itch of ‘starting something on their own’ all over again!
Entrepreneurship is a brave enough choice. To go there once you have done that, and are possibly even sitting pretty on a comfortable sum of money takes a mindset and desire to do it. What makes people do it? We sounded a few out.
Mukund Mohan turned early investor and advisor in 1999 after selling his first company – as an LP at a venture fund called Zodiac Ventures LLC and liked the experience enough to help a few other startups. Previously, Mukund had sold Buzzgain and now runs Jivity.
So why did he startup again? “Living vicariously through other people’s experiences is boring. So I have been always an entrepreneur first, then an investor. Have been investing and building companies, with the investing being a way to help others and also learn from new entrepreneurs”, says Mukund.
Indus Khaitan – who sold a startup, joined Morpheus Venture Partners as a partner through a chance meeting – and is now back to creating a startup again – concurs – “At Morpheus, I was operationally involved with portfolio companies. I was doing many of these: database design, debugging PHP code, pricing a product, wire-framing the website, reviewing investment pitches and of course doing feet-on-the-street sales. Once the issues of the day were resolved the entrepreneur would be gone and I would be secretly craving for more. That was the first trigger. Another was; I would do the same thing again for a new batch of startups — I got bored.”
Joe Fernandes – a long time angel investor associated with the IAN – though, believes its not that different – “Mentoring, Entrepreneurship and VC are part of the same passion/focus. I found a number of consumer areas where i could make a difference, and wanted a more intimate way to be involved. I have now developed a portfolio some as just an investor, some as a mentor/influencer, and one as the primary entrepreneur. I have also been building a network of functional best in class partners in UX design, Product design and dev., Marketing. My objective is to institutionalize this model as a new form of incubation – a digital solutions Lab”. Right now – Joe’s working on a consumer idea he’s been keen on taking to market for the last couple of years.
Indus also felt there was more in him left to create before he switched completely to offering advice to others. “I feel that as an investor, the best gyaan one could give is only after doing a few startups. If you haven’t traveled the world, you can’t tell the stories, and if you can’t tell amazing stories, you cannot become an amazing tour-guide. I only had two risky adventures and the ride was not done. I wasn’t feeling complete — wanted to rear some more babies before I become a grandmother. Hence I swapped — if future stars align, I may be back as the grandmother with lots of money.”
The only downside Indus faced was in finding it incredibly difficult to compose interesting tweets ‘laden with gyaan’, “whereas earlier I could easily shoot few a day!” 🙂
Mukund clearly liked the roles he plays on the other side of the table though. “You meet a tremendous set of young, talented entrepreneurs who teach you much about a new market, new technology or a new way to do business. At some point, I felt learning by doing was going to be a lot more effective than learning by watching.”
Of course, it’s riskier being an entrepreneur than playing investor or advisor. You have more ups and downs, and that is the thrilling aspect of the lifestyle as well. There is also the uncertainty of finances – though for some earlier exits may alleviate the pain to a great extent. Like Mukund says – “It’s a lot more fulfilling being a driver than a passenger or being part of the pit crew (to use a NASCAR analogy). It’s also a lot more risk. As an investor you risk is divided among more startups, so even if one does very well, you end up being okay. For an entrepreneur, the startup is the baby, her life, dreams and ambitions.”
The fun part of being an investor or advisor is the opportunity to play with multiple ideas. Yet, these guys don’t really miss that; even though entrepreneurship is about “one idea”, they’re quite happy with the various problems within that idea itself that need solving.
The big question – is it easier to raise money for those who’ve once been on the other side, understand the game well and know the right folks already?
The short answer? “Not really” was the unanimous response from everyone we spoke to.
For Joe, it was a good learning experience. “I have developed a much more informed perspective of how to think about raising money – in terms of when best to raise it and how to question whether it is really necessary. When one raises funds, the value of creating focus and setting targets, also causes constraints on one’s ability to pivot, if you raise the money too early”.
Indus thought – “Knowing people definitely helps. A door is easier to open. However, the bar gets raised higher. People expect that you are no longer the first-time entrepreneur and you know what you are doing. In reality, you have a clarity on the big picture, know how to execute, but have no control on the customer’s buying cycle. As an entrepreneur you are playing to prove a new hypothesis everyday and the major ingredient is assumptions.”
Mukund agreed – with a nice analogy to boot – “Used to be, if you had a good team, good market, an initial customer or two and a “prototype” you might be able to raise funding. Now, you actually have to build a real product, have “traction” with many customers and a methodology on how you will scale to raise money. Knowing the “game” helps, but that just means you know that if you hit the ball at the baseline, and place it well, you have as much a shot at winning than just having a booming serve and a great volley (to use a tennis analogy). You still have to be a great athlete and play good tennis to win.”
Clearly, it’s not just money – the journey is something many an entrepreneur enjoys in itself. And in the case of these folks, so much so that they gave up a “more comfortable” role after having been there and done it – not to prove anything to anyone – but because they wanted to. There’s a good takeaway in there if you’re considering entrepreneurship, or just started down that path.