Why Indian Investors Should Take More Risks
Posted: Aug 28, 2015
Any form of investors whether they are a financial firm or angel investors always face a myriad of dilemmas. Even if it’s a safe-bet tech start up, an angel investment often takes five to six years to see a substantial return. Before a calculated existing investment gets a potent exit, the investment is always in a cold storage, and then due to hesitancy and fear of the venture becoming a dud, the funding slowly decreases and ultimately the venture meets its natural fate of being doomed. Considering ‘India’ as an emerging market in innovation, there are varied amount of problems an Indian investor faces before helping a start up become a success story. Case in point – ‘Chumbak’ the hip retail store after receiving a great response from the market in the year 2009, the company got his first round of funding in mid 2014. In fact the founders of the company had to sell their house to start the business and fund it for initial years. This ventures story clearly speaks volumes about the level of apprehension Indian investors have for rather unusual yet a disruptive start up.
As a kid, did you ever play ‘follow the leader’? I believe most of you did. But today all I see around me is the advanced version of the game. Wherein brands follow brands, and market laggard’s copy or imitate the leaders. Considering this as a safe investment, investors will line up to start ups, which are better carbon copies. They will invest in products, which compete in features, rather than filling in the gaps, where innovation will not only account to creativity, but as a necessity. Filling in those gaps will not only prove to make our life better, but will always be a safe investment considering the fact it’s a need and not just a mere advancement in already available innovations. Take a wild guess on what happened when India experienced the retail boom? What happened when Flipkart emerged as the market leader? The answer is simple; another e-commerce giant emerged, which aimed at being the next Flipkart. Now ask yourself, what is so new about that? There rings a bell in your head and a voice whispers "nothing".
Now let’s imagine… What if I offered you total sum of top 5 richest individual’s our country’s income tax money for a year or a month. What would you do with it? Buy an expensive yacht, maybe invest in mutual funds or bonds or simply lock it up in a bank account and reap interest benefits out of it. Or if you love doing business, then you might invest in a steady or potential tech related start up. Now let me ask you a question, why would anyone think about investing in something like horticulture related start-up? Why so? Because of the golden word ‘RISK’! Who would even invest in horticulture? But you would be shocked to know that the same very industry is one of the top contributors for the Canadian and the Holland economy. How many of us know that littlegrowers.com is on of the world’s most successful horticultural education community interest company based in UK and provides varied range of horticultural equipment’s, including eco-friendly irrigational systems. It’s been rated as one of the best ‘profit plus purpose’ company’s, which targets the resource efficiently, and compliments corporate social responsibility. Now, you want to invest in it don’t you?
Each year, our nation churns out engineers by numbers which are greater than the population of Mauritius, but did you know what is more startling, that the number of those who are jobless amongst them is equivalent to the population of Sweden. You think these bright minds don’t have new ideas? Most of them do, but where do these ideas go? Either they scrapped due to unawareness or just end up being scribbled notes. Why is that? Maybe it’s because of the less quantity of risk-taking entrepreneurs. It would be safe to admit the lack of confidence in our entrepreneurs is indirectly linked to lack of confidence of investors in a rather offbeat and resource efficient ideas.
We live in exciting times. I call it exciting merely because of its volatility. Mergers, acquisitions, etc. are being witnessed by the day. But do we see startups bloom at the same rate. No. How would they? After all, who will take the risk and vouch for someone who chooses to merely help book cabs online or via an app. Well, the Japanese giants Softbank did and ‘Ola Cabs’ was born. This is something, which global corporations have realized rather quickly. And maybe it’s time for our Indian investors to take a cue from the global investors.