For most Indian entrepreneurs, survival is their unique value proposition. The fact that it is impossible – from a legal, financial and procedural standpoint to “close” your company, declare failure (bankruptcy) and move on, creates for more resilient entrepreneurs than in the US.
Last week at NPC, I had a chance to meet 5 entrepreneurs who I have known for 3-5 years now. 3 of them had raised some money (accelerator programs, angel investors, etc.) and 2 were bootstrapped. All of them had approached me a few years ago with the intent of having me fund their company. I passed on them all for a variety of reasons, but largely because I did not think what they were doing was going to be a large enough company to generate big returns.
The most amazing part to me was that they were *all* still in business. They all survived. They had all found a way to generate revenue, and *all* – everyone of them, claimed they were breaking even, or making a profit.
That’s amazing. 100% survival rate from the list of people I thought would have closed and moved on, if they were in the US for sure.
To be fair, most of these entrepreneurs would have survived and built a cash-flow business in the US as well, so it is not correct for me to label this as a particularly Indian trait.
Every one of these companies was doing between $150K to $500K in revenue and turning a small profit in some cases after paying for employees & founder’s salary plus expenses.
I am not sure if this is to be filed under “tenacious” entrepreneurs, perseverance, “lost the dream mid-way” or “lost the hunger” founders – which is being very condescending, I know.
I asked why they did not fold, shutdown and start over to find quick growth.
None of them mentioned “difficult to close a company in India” as the reason for not shutting down. All of them were fairly wise in their response – “It takes a long time to build anything meaningful in India, and they got started with revenue development and were now well down the path to give up”.
Now that they had some decent revenues and maybe profit, they were trying to build their base and grow further. Slowly, but surely.
I wonder how many of these will be “cash flow” businesses.
One entrepreneur (a fairly young person at that in his late 20’s) had hired a COO to run the business, while he spent time investing in other companies and try to open new opportunities abroad.
I wonder if this is the new “IT services company” from the 1995-2005 era. They had all built a product or a web service – generated some revenues and were now protecting the cash flow and growing the business at a much more moderate pace.
I wonder though – if shutting down a company in India were much easier, would they have done that mid-way, looked for a new opportunity and moved on?
We will never know, will we?