by: Akshay Shah
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Passion, patience, persistence.In my recent interactions with the entrepreneur, as well as the investor community I have found one thing increasingly common these days. More and more entrepreneurs, especially on the technology venture side, are creating companies with an aim to raise large sum of capital someway or an other! I found this strange as entrepreneurship is all about Passion, Patience and Persistence, I see no ‘M’ as in for ‘Money’ in the earlier three P’s, but seems the definition is dwindling, the presence of the ‘M’ factor is increasing more and more these days. Let me shed some more light on this:

1) First of all, it’s not necessary that all startups need large funding or have to raise large chunks of money from the word “go”! Startups need just enough money to sustain and grow. If a business model is self-sustaining why would you need big capital from an external source? In fact, self sustainable startups are the blue eyed boys in the eyes of both the investor, as well as the customer community. So please, if you are a startup – find ways to self-sustain with a small round of capital like from some angel or crowd-funding, rather than wasting time on jazzy presentations just to convince a VC to put in large rounds of capital in your venture, especially when it’s not required!

2) I have seen entrepreneurs discussing the various rounds of money they raised with pride! We all need to realize that the more external money you take the more control you are losing, either in the form of equity loss or by an increase of debt which is an overall burden on the company and a big strain on your balance sheets. Personally, I would prefer being a Lean Startup, a debt free, equity rich with some basic capital raised either by way of crowd-funding, via angels or a small loan from a bank and focus on bootstrapping and working closely with customers to start getting revenue. Isn’t that what’s most important?

3) I’ve seen many startups that feel they “run out of time” at around two to three years, where they get desperate to sell off, merge or raise capital. I sincerely believe that one should give a startup a minimum of five years to sustain and then think of large expansion, large capital if the need arises. Trying to be too quick and getting large overnight can destroy the value in a startup.

Let’s try to learn how the big guys, especially in IT grew, lets see Twitter, it has no proper channel of revenues till date, their business model is still evolving, they are still finding ways to make cash but do they sell off? Do they throw up their hands and say it’s dooms day for us? Let’s try to learn from all successful companies, be it Microsoft, Google, Dell, IBM. All had their initial days of struggle, all had to change business models to evolve, strive and thrive in the marketplace, but none lost sight of the three P’s and most importantly all tried to stay lean.

So please relax and give your venture enough time and make a growth plan over a period of few years. It’s a well known saying that ‘slow and steady’ wins the race, so let’s be focused, meticulous and sincere! Rather than focusing on how to raise big money via a venture fund, let’s focus on being as lean as possible and focus more on customer engagement and on how to increase sales and revenues. Try to induct lean capital and more so only for growth. Make your startup worthy enough to run the day to day operations, even if you have to stay hand to mouth, do it. Do not focus on the large material comforts, try to remember that “there is no free lunch” especially not when it comes to capital. Today or tomorrow one will have to pay for it, so let’s stay lean and mean and focus on revenues and customers, be it small or large.

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Akshay Shah

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This entry was posted on Tuesday, November 30th, 2010 at 9:51 am and is filed under Business Education. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.