DARE - Because Entrepreneurs Do

The dilemma of an entrepreneur when he or she raises money from investors after ten years of creating and running a great business

I have not won the lottery or married a rich man’s daughter.

As an entrepreneur you know that to scale up your business to the next level you need capital. The capital will be needed to fund the ideas that probably will take you to the next level of growth.

Two weeks back I met a highly successful internet entrepreneur who early last year raised almost US $10 million from VCF to fund the next leap for his business. I have known this entrepreneur since the time he started out almost 11 years ago. I have had an admiration for him and his business for the last five years as I probably share the two credos he runs his business on—you have to make money and spend money; as the body needs to create its own blood, your cash flows should manage themselves, and you have to create value for your customers and your business and not necessarily valuations. Valuations will follow this creation of value. I as an entrepreneur believe in these two credos and live by them and have learnt them the hard way.

I also remember a fellow publisher’s dilemma who, two years back at the height of market, got a fantastic valuation and raised almost $10 million. That has been lying in his bank and though he has tried acquisitions and new forays, he has mostly been extremely conservative.

My point is that if you raised the cash for funding the next level of growth why are you not doing it? What is the value of cash sitting in the bank?

In the last 15 to 18 months the market offered good valuations from an acquisition stand point.

The questions that probably the entrepreneur is thinking are:

1. What if I get the investment wrong?
2. What should I invest in-People up-gradation or technology or infrastructure?
3. Should I dream big?
4. If I am doing something that is working, should I expand that or buy other business that could have a better future?
5. What will my investors think if I do not use it fast to create sustainable advantage and value?

I hope all entrepreneurs who are sitting with money in their bank remember this French proverb:

"It’s a wise man who lives with the money in the bank, it’s a fool that dies that away."

Anurag Batra is real life, first-generation entrepreneur who is Much Below Average (MBA) from the prestigious Management Development Institute, MDI. When he is not busy writing such columns, he can be reached at anuragbatrayo@gmail.com.
Anurag is the founder and editor-in-chief of exchange4media group which includes exchange4media.com.

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written by Hemant Nitturkar, April 11, 2010

The entrepreneurs who have worked hard to build good businesses know the difficulties in raising capital when they were growing. So, I feel when they are able to raise capital, they should allocate a small portion of that money to invest in early stage companies. There is no risk capital available in India, and thsi leads to a great loss to not only the entrepreneurs, but also to the nation in lost opportunity, jobs and value creation.

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