At Entrepreneurs for Nepal (E4N), a loosely structured organisation that hosts business interactions and assists entrepreneurs and small businesses to scale up, we try to exchange experiences and advice.
Members of this self-selected group have ideas about starting niche businesses within a bigger industry, such as, offering Thakali d?cor services to hotels and housing companies. Some want to make use of food technology degrees to produce oil from Himalayan olives. All are driven young Nepalis with ideas, vision, enthusiasm and energy. Over cups of coffee, E4N helps them by critiquing business plans, sharing business know-how', coaching on presentations, analysing the numbers, opening networks and contacts, and being business mentors.
Through the E4N work, we have tried to drive home these three ideas that Nepali entrepreneurs need to have when they search for private investment.
1. Money is not important; credibility is: Almost all young entrepreneurs talk about money as if lack of it is the only thing that's holding them back from executing their great ideas. This is not surprising. People do equate business with money. But most do not realise that the only way to attract money or investment is to first invest time and effort in building up their own credibility.
This can be done through acquiring the relevant education, experiences and skills, building up a team that can develop prototypes, widening contacts, owning proprietary technologies, and so on. Investors, or people with money, do not want to chase every business idea that needs money. They want to give money to credible entrepreneurs who can send consistent signals saying that the money invested in their ventures is likely to deliver a return. In other words, to attract money for your venture, first, be credible yourself.
2. Ideas are dime a dozen: Unsurprisingly, most entrepreneurs tend to fall in love with their ideas. They tend to think that no one else in Nepal has thought of what they have thought. In conversations, they stress on this unique ownership. They even go to great lengths to keep their plan a big secret.
All this is counter-productive. First, most investors do not want to throw their hard-earned money to test someone else's new and unproven idea. They'd rather fund niche ideas, within an established and competitive industry, that come with a high probability of commercial success. Second, smart investors tend to be skeptical: if no one has thought of the idea before, perhaps there is not much to the idea, and the hard burden of proving it otherwise lies on the entrepreneur. Rather than pitching "first time in Nepal" ideas that investors do not know what to make of, first-time entrepreneurs are better off selling a niche idea in familiarly competitive industry.
3. Confidence and humility: Starting a business taps into one's psychological strengths: an ability to take calculated risks, to deal with unknowns, to learn what one does not know, etc. These are all intangible strengths. Through informal questions, investors like to test the limits of an entrepreneur's self-confidence, thought processes and knowledge.
But most Nepali entrepreneurs tend to stick to a script no matter what the questions are: making investors worry that the entrepreneurs are so rigid that they do not understand the very ecosystem of business. Investors look for signs that the entrepreneur is confident of reaching the goal while being humble enough to accept that the road may come with many unexpected turns and twists.
Entrepreneurs make effective use of resources to create jobs. Helping them talk honestly with private investors is the first small step toward strengthening our collective entrepreneurial know-how for our prosperity.