Two years ago, a dotcom investor funded a serial entrepreneur to the tune of more than 200 cr and lost it promptly in less than a year.
That begs the question — what did the investor see in the entrepreneur? A great idea? A track record of solid value creation?
Nah.
This entrepreneur had unceremoniously exited his last major startup after literally abusing the investors and everyone else. That startup was built on hot air (hype). And when the hot air was gone, everybody left.
Then why invest more than 200 cr with that person?
I don’t know but here is my guess — he had raised hundreds of crores on this previous startup. And in today’s age, that is considered the ultimate competitive advantage.
How investable you are depends on how much capital you can raise. And if you can sell your ‘hot air’ company to someone at a sky-high valuation, then you are the ‘Pope.’ In every fireside chat and conference in Bangalore, you will be the reigning deity.
In the EdTech space, a few such ‘hot air’ startups were sold for massive sums. And trust me, their day of reckoning is not too far.
Equity investment is inherently a risky business, especially in a startup. There are no guarantees and anybody can fail.
But if we win, we should win decently. If we lose, we should lose decently. A win scored by finding a bigger fool is a con, not a win.
India deserves decent winners and decent losers, not conmen.
– Rajan