The city has been bustling with lot of activities surrounding the magic word “Startups”. Yet one more event and this time it was Impact-a-preneurs or as we know them as “social entrepreneurs”.

Lot of interesting discussions were held in the topic of funding the social enterprises and investor-entrepreneur relationship.

  • Does the investors see any difference between regular funding and impact funds?
  • Is Profit a “bad word” when you are starting a social enterprise?
  • Are the term sheets written mostly in favor of investors or does it give an equal chance to the entrepreneur?

Well, listening to experts, once again It was clear that the startup ecosystem is at its best. The capital is not a problem in fact the supply is more than demand. Lot of investors are chasing behind too few good ideas.

Well ! the highlight statement of the day was of-course “Investor-Entrepreneur relationship is like entering into a marriage with a fixed divorce date”.

Whether it is a regular enterprise or a social enterprise, every business has impact on the society in a way. Hence, even for a social enterprise, the entrepreneur is morally responsible to come up with a sustainable business model. Yep, the word “Profit” is good even if you are running a social enterprise.

Having said that, angel investors are not always making their decisions based on your business plan and number crunching. Its a known fact that in most of the cases, things never go as mentioned in the business plan. Hence, a well thought-out business idea and the passion of the entrepreneur drives the angels to invest in an enterprise.

An entrepreneur should ask his or her part of the questions while choosing an investor. Just because you are at the receiving side doesn’t mean you have a limited say in it. Understanding the term sheet is more important while entering into an agreement with the investor, take your time, clarify yourself before you jump into it.

Also, you need to understand that different investors are good at different stages of funding….are you looking for an angel or series A or series B. Choose them wisely.

In a way, the phrase “a marriage with a fixed divorce date” has summed up many things about this relationship!!!

- Arun G 

( reach me – arung@startupbuddy.in, Tweet me @arun_782)

  • http://gravatar.com/cvenugopal cvenugopal

    Good post.Provides valuable insights.