With the current business ecosystem in India driven by start-ups, it is quintessential to identify the key factors impacting these ventures. While growth is their key driver, mentors and investors are also prominent entities that impact a start-up’s success.
Just as a sapling needs the appropriate climatic conditions for effective growth, it is essential for a start-up to grow in an accelerator ecosystem. It is here that a start-up will thrive and reach its potential. Mentors form an indispensable part of such an ecosystem, lending their nuggets of wisdom to budding entrepreneurs. Here, the start-up is given the required direction and strength to function in the competitive market. Multiple feedbacks by veteran entrepreneurs will help the founders gain the appropriate perspective to lead their start-up in the right direction.
Investors also form a vital part of a start-up environment. The faith shown by a prospective investor will yield funding to the start-up, enabling its founders to realise their dreams and sustain their project in the market. But, do investors restrict themselves to funding? It is often found that investors engage in advising entrepreneurs about the management of the start-up. This phenomenon is known as the investor whiplash, where an entrepreneur is obligated to listen to his/her source of funding. This brings us to the vital question – can investors be mentors too? With the vested interest in the profit of the start-up, an investor’s advice may not be in line with the start-up’s key goals and objectives. An attitude of ownership may creep in which will prove harmful to the start-up. Moreover, an investor may even lack expertise in the given area. While mentorship lays the foundation for a start-up to flourish, investor- mentorship is bound to restrict the growth of the start-up. There may be instances where investors might try to misuse their position and try to influence the recruitment of people known to them into the start-up. Such advice and inputs from an investor can be very detrimental to the start-up’s future
But, can mentors become investors? This question has a yes and no answer attached to it. A mentor should not be motivated by monetary gain. So, if he or she decides to invest in a start-up with a motive to gain incentives in the form of a stake or an advisory position on the board, then it is inappropriate and unethical for the start-up. On the other hand, there is a breed of passionate veteran entrepreneurs who not only indulge in mentoring but offer unconditional monetary support to the start-up. Such a scenario is acceptable, provided their enthusiasm is advisory in nature, and not binding on the founders.
India is now the home of many flourishing start-ups. The success of these ventures is heavily dependent on the role played by the two entities – mentors and investors. If each play their role with dedication and performs their tasks with the growth and success of the start-up as their objectives, then the country will become a progressive start-up ecosystem.