Middle class upbringing doesn’t change middle class values

I was reading on write ups on successful entrepreneurs. I found that 95% of them  are born in a middle class family. It is true that middle class upbringing(read save every penny, buy whatever is necessary, early to bed early to rise...) doesn’t change middle class values( no exorbitant salaries for employees, no fancy decors at office...). These values help entrepreneurs deliver when the chips are down. Recession no recession they survive with elan. The rich kids are not in tune with the ideals entrepreneurship stands for. They are not able to empathize with the people. They want to create a hollow image and live in that bubble. I know of a person who started an start up venture in the field of event journalism. Half the time he was partying, going on holidays. I have no idea how his start up is surviving.
On the other hand, I was reading about CEO of aspire systems who started in a modest fashion. Even-though he clocked his first million in the first year, till date he travels in his company bus everyday to office, all his employees take comfortable salaries. His company was able to withstand recession and grow robustly.
His mantra was: live a modest life and always plough back profits into the company.
Merry Christmas  to all the readers of the blog . May god bless all of us.

What ails startups in India

Startup companies find it difficult to raise funds in their early stages.

I remember, the day I started my company. I approached many banks for loans. All of them offered personal loans( 18%-20% interest- to high to repay). None of them offered any other loan cos I was dealing with a service and there was no physical stock to show(it didn’t matter that I had IP). I did’nt get any loan and I had to beg and borrow money from friends and family to get started.

My angst was echoed at the TIE conference held here. They discussed that the seed funding structure was like an inverted pyramid. There is a shortage of funds at the startup level and there is a lot of interest in later stages of funding. This spells badly for many start ups, as primarly cash is important for startups in the beginning.

(For those newbies who don’t know about funding,  let me elaborate on the funding nature.There are primarly 3 sources of funds for startups. They are-

• Friends and family funding-When the other two stages don’t work
• Angel funding- Happens when the company is 1-3 years old. Source of funding-Angels fund managers
• Venture capitalist funding- Happens when the company is 3-5 years old. Source of funding – Private equity firms.)

On the contrary, in western economies good funding exists at every stage of the development of the company. Probable reasons why there  is less money in India for startups is that there are higher  executional challenges for newer companies in India than in the west and there is a dearth of quality mentors who can guide start ups in the early stages. Fund managers  prefer to leave a company to its fate for the first few years, check if it survives and take a call in the 3rd or the 4th year of operations to start or not. That is indeed a sorry state of affairs.

Maybe the HNI(high net investors) in India should invest more in startups than in real estate and gold. The overall startup ecosystem has to improve for all of us tomorrow.