Finance

Being an Investor Can be as Taxing as Being an Entrepreneur : Here's Why

When large bets are involved, the going can get really tough for investors
Being an Investor Can be as Taxing as Being an Entrepreneur : Here's Why
Image credit: graphicstock
Former Staff, Entrepreneur India
3 min read
Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

An entrepreneur’s journey is one of the toughest, especially in the early days, when resources are limited. And while the courage and conviction an entrepreneur shows through his journey is commendable, the investor or set of investors who back him/her have an even more challenging role to play.

As the startup market matures in the country, the VC and Angel Investor community is also taking concrete shape. Not only is the cheque amount getting bigger, the responsibility and thorough assessment into each investment is also starting to  get more taxing. And while VCs are often criticized for being return hungry, most feel that’s the core part of their job, failing which not just them but even the entrepreneur will suffer.

The First Days

While some enter the sector as newbies, most VCs and angels step into the game after having been an entrepreneur themselves. Regardless, investing in  companies and entrepreneurs can be as volatile a bet, as trying to figure out which business idea will work best.   

“When I started, I myself was like an entrepreneur in this field,” says Vikram Gupta of IvyCap Ventures. “Although I had a fair idea of how things work on paper, getting people on board to believe in the fund and invest in these companies was rather taxing,” he adds.  

The Responsibility

Mentoring is a key part of being a VC as entrepreneurs look to them for advice beyond just monetary matters. The added responsibility that comes with being an investor, can be daunting to deal with sometimes, but when success stories comes through it also gives the investor the much needed satisfaction.  

“As an entrepreneur, you are the protagonist. You have to have lots of guts to startup and hence you also get the glory. As a VC, you are more of a facilitator, a sounding board and have the privilege to ride with the entrepreneur. The satisfaction as a VC is that of being a coach and the seeing the players soar and fly away,” says Amit Somani of Prime Venture Partners.

The Failed Bets

Just like entrepreneurs have their profile of failures, an investor too has his/her list of failed bets, and in this case it can accrue to losses in millions at times.

“While the entrepreneurial stage is very fact paced and more physically taxing, being an investor it’s more mentally taxing,” says Avnish Bajaj of Matrix Partners. “ Entrepreneurs still have some control over their destiny, as VC not so much especially with the investments you make,” he says.   

The Belief in Entrepreneurs

Investing is all about placing your trust in not just ideas, but individuals as well. Sometimes great ideas fail to transcend into good businesses, owing to those at the helm of affairs, and sometimes, visionary entrepreneurs can take faded ideas and turn them into great businesses.

“At the end of the day this is a business where you invest in people more than you invest in an idea,” says Bajaj. "Most of the business that we have invested in that have done well have done so because the entrepreneurs were extraordinary, and they made the business what it is," he concludes.   

More from Entrepreneur

Grow Your Business at Entrepreneur LIVE! Join us on Nov. 16 in Brooklyn, NY, to learn from legends like Danica Patrick and Maria Sharapova, pitch our editors, meet with investors, and potentially walk away with funding!
Register here

One-on-one online sessions with our experts can help you start a business, grow your business, build your brand, fundraise and more.
Book Your Session

In as little as seven months, the Entrepreneur Authors program will turn your ideas and expertise into a professionally presented book.
Apply Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.