We hear all the time about the amount of money that’s available to fund startups. For example, that private equity funds invested over $ 3.3 billion in just the first 3 calendar months of the current year. That VCs are always looking out for good deals as most of the plans they see merit little or no attention. That they invest in about 5-10 a year out of the 500-1000 business plans they get. And so on…But the truth is that a majority of deals that get funded are those that come through a referral or because the VC knows (of) the entrepreneurs; its natural because VCs don’t have the time to look at all the plans that they get to pick out the Rediff, Naukri, or Tejas Networks. Deals that come through some trusted source or through a trusted filtering process are therefore valued higher and rise to the top of the pile of business plans. It is therefore easy to see how many plans don’t get funded. And also how competitive the race to secure funding really is. Given this situation, what then makes a VC fund an unknown company started by an unheralded first-time entrepreneur? Imagine this situation: A first time entrepreneur in say, Bengaluru with degrees from Tier 2 educational institutions, average work experience in a regular job in a reasonably well-known company, but with no experience in building a business, no references you know or care for, and with no experience in building products or delivering productized services, sends you an email describing his vision of the way software will be used in the future.
Now ask yourself: Will you take that entrepreneur seriously? Will you invite the entrepreneur for discussions? Will you then fund the business to the tune of say, a couple of million dollars with no business plan? Answer honestly.
What then makes VCs fund companies started by such entrepreneurs? Sure, there is passion in the eyes of the entrepreneurs; sure, they have conviction and confidence; sure, they have researched the market and the business model; sure, they have a powerful business idea; sure, they know what they were talking about; But then so do many other entrepreneurs. Is it the element of chance? Is it that elusive thing called luck? Is divine intervention? What would have happened to such a startup if the founder had not had a chance meeting with the VC in a conference? After all, it was only because the founder met the VC at the conference was he able to talk about his plan, a plan that made the VC resonate with his business idea, right? Surely that meeting was due to luck, right? Especially, when other VCs had rejected the idea? Well, in our haste to qualify it as luck, we overlook the fact that the business idea and model had emerged out of research and market validation. Not from a pipe dream. We overlook the fact that the entrepreneurs at the startup were superbly prepared. And yes, they were in the right place at the right time. Luck,is what happens when opportunity meets with preparation. Without preparation, opportunities cannot be recognized and capitalized upon. Without opportunities, preparations can go abegging. So the next time somebody ascribes something to luck or chance, ask them if they were adequately prepared to exploit the opportunity.
It seems that “lucky†people constantly encounter such opportunities whereas unlucky people don’t. A 10 year research project that led to the 2003 book The Luck Factor by psychologist Richard Wiseman has revealed that “lucky†people generate their own “good fortune†through four basic principles that every entrepreneur will do good to internalize:
i) They are skilled at creating and noticing chance opportunities
ii) Make “lucky†decisions by listening to their intuition
iii) Create self-fulfilling prophesies via positive expectations
iv) Adopt a resilient attitude that transforms “bad luck†into good
What do you think?
This article was first published in The Financial Express
- LUCK? RIGHT PLACE, RIGHT TIME? DIVINE INTERVENTION? - June 29, 2009
- Governance - June 29, 2009
- BUZZ WORD COMPLIANCE - June 25, 2009
Articles when republished need a context, a compulsive setting for them to do a re-run. Your first series met with positive response or at least didn’t provoke rebukes. But then it demonstrated a pattern, of old articles that ended with a frivolous “what do you think?” to give it a bloggy texture. Now, you can’t blame the readers that noticed it.
Think it wouldn’t have mattered as much had it come in small doses, tuned in with timely relevance on or about the time the articles were published in FE. I remember the ribbing Sramana Mitra, Kamla Bhatt too got here when their early noble intentions (of wisening the readers) slowly gave way to hubris. Somewhere down the line they took VW readers for granted and overstepped – and faced the music. At least you showed the earnestness to come back and ask where you’d gone wrong. Admire that.
I liked all your articles. I must put it on record though.
Manav and Krish,
First, thanks for (reading)noticing the articles. All that I write about are from personal experiences (believe it or not!) – questions, concerns, observations, discussions, involvement etc with entrepreneurs and others in the eco-system. If the articles are of no value, independent of when and where they were first published, I concede and will refrain from publishing. On the other hand, if they serve a positive purpose then what? Am not sure if the criticism is related to the number of articles I’ve uploaded, the frequency, the quality, or the fact that they were earlier published or, perhaps, all of these reasons!
Sanjay is so well endowed with writing skills and has a few published articles to his credit in a national daily. We all know that now. Sanjay, why don’t you write about your own experiences (in all those roles described under credits para below the articles) to absorb the community rather than exhuming and republishing archived articles? That perhaps should shrink the volume, frequency and perhaps the intensity of the reader fatigue induced by the narcissistic tendencies of the author, as is what I gauge from Manav’s outburst.
Luck is surely a factor in success, as is timing. But you can help luck and give it a push start. Networking, is a key factor. You must *work* at your networking and put a lot of effort in to it. Build your network much prior to when you will actually need it. Nourish it, feed it, make it grow. Take time to meet people (especially VCs and other sources of finance) even if you are not raising money at the moment. When the time comes, your name will be at least known.
(Manav, what exactly did you not like?!)
Hi,
It seems an un-Divine intervention with a huge overdose of “Sanjay Anandaraman”. It seems suddenly soneone grabbed an old copies of “The Financial Express” and thought Veture woods was a repository.
Mr.Sanjay i think your strategy to “Go for Kill” has really killed the intrest the stinkers might have generated otherwise.
Moderator(s) – Please spare us from the tyranny of such overtures of a few and keep the sanctity of thought sharing alive.