Launch, deliver, repeat

Why serial entrepreneurs are crucial to the ecosystem

Updated : Nov 19, 2018, 06:20 AM IST

From Donald Trump to Richard Branson, serial entrepreneurs have time and again “disrupted’’ ecosystems. The Indian start-up sector is rife with entrepreneurs vetting their appetite for more by exiting first ventures post an acquisition or an alliance, and starting afresh with another novel enterprise.

Flipkart co-founder Sachin Bansal is believed to back cab aggregator Ola with a $100 million investment after exiting Flipkart post its buyout by Walmart. Recently, Freecharge co-founder Kunal Shah announced his next start-up Cred, a platform to reward creditworthy individuals. Shah follows in the steps of Ashish Kashyap, founder of travel portal Ibibo, who recently announced his next venture, INDwealth, a wealth management start-up.

The rise in serial entrepreneurs heralds a healthy recipe for success, say experts. A working paper by researchers at Stanford University and at the Copenhagen Business School shows that serial entrepreneurs record faster success, are 39% more productive and have 67% higher sales than first-time entrepreneurs.

Venture capitalist and serial entrepreneur Bala Parthasarathy, who is co-founder and CEO of MoneyTap, says, “A good ecosystem like Silicon Valley has a healthy mix of both first-time and serial entrepreneurs. While starting a successful company once doesn’t guarantee repeat success, it certainly provides ballast to the entire environment, tempering it with euphoria and helping attract more investors into the country who are drawn by previous successes.”

According to experts, having a negligible fear of failure is one of the key criteria of success for entrepreneurs. And serial entrepreneurs are known to take greater risks and make bolder strides.

A report by UK-based entrepreneurship think tank, Centre for Entrepreneurs (CFE), shows that compared to 40% first-time entrepreneurs, only 13% of serial entrepreneurs express a fear of failing in business.

Experts say serial entrepreneurs benefit the ecosystem through multiple ways. First, they can attract more funds into the ecosystem. Bhavin Patel, co-founder and CEO of fintech start-up LenDenClub, says through their prior experience and networks, serial entrepreneurs can pool in greater funds. “Sometimes, venture capitalists bet on a serial entrepreneur based on his or her previous entrepreneurial journey.”

According to Mandar Agashe, founder and vice chairman, Sarvatra Technologies, a serial entrepreneur sometimes plays the role of an angel investor, which is vital to the ecosystem to explore untested products or business ideas. “Investors are attracted to the upside of a successful start-up which evades their downside risks, and therefore, are more likely to invest in an enterprise run by a serial entrepreneur, than a first-time founder.”

Agrees Parthasarathy, who says investors are “cold-blooded financial managers who get excited by the risk-adjusted return of their capital. Since successful entrepreneurs are considered to carry lower risks, investors naturally gravitate towards funding them. But once investors step into the ecosystem, they discover new ideas and meet first-time entrepreneurs with attractive business plans and the cycle continues.”

Serial entrepreneurs also enhance the ecosystem by spewing a new crop of founders and start-ups. According to Sandeep Aggarwal, founder and CEO, Droom.in, who also founded ShopClues, entrepreneurship is a tough and lonely path and inspiring others can help the ecosystem to grow. “When I went out for the first time, there were people who came to help and guide me and several of them were serial entrepreneurs.”