1. W
hat happens when an excited mind
meets a problem waiting to be solved?
What happens when an inquisitive
brain searches for probabilities of things that
can happen? What happens when an individual
thinks about issues in a manner that defies norms?
Entrepreneurship is just the start of these experi-
ments. Ever imagined what the world would be
had there been no entrepreneurs? Nor can I.
Entrepreneurial capital, along with intellectual
potential, is the cornerstone of all successful entre-
preneurial ecosystems. There is no evolution with-
out intellectual potential. The perseverance that
entrepreneurs show in creating and failing in their
entrepreneurial process is what defines venture
success. So let’s start with the basic paradigm that
startups are not companies. And they never will
be. The parameters and thesis that define corpo-
rate success may not apply to them.
A startup is an experiment. The entrepreneur
or a group of people with the acumen to identify
an opportunity and match their skills, create a so-
lution to meet the opportunity or gap. They pos-
sess the necessary skills to execute the vision, or
have the capability of executing the skills. They ac-
quire physical and financial resources to launch the
business and share the ownership of the product,
and thereby wealth is created. Now that is the rosy
picture of how everyone thinks entrepreneurship
works. However, do remember: A startup is an ex-
periment. That means that the agility of action and
results determine how easily and deftly the idea
will pivot into a more productive execution, which
eventually determines if the experiment will hold
itself through to market acceptability.
Opportunity assessment and validation is
therefore the most important function for a pivot-
able startup. Good opportunities address impor-
tant market needs. On examining social, techno-
logical, and economic trends, an entrepreneur can
identify emerging needs. A good opportunity can
then be worked on when it matches the entrepre-
neur’s capabilities and interests, exists in a favor-
able context, exhibits the potential for sustainable
long-term growth, and facilitates the acquisition of
required resources.
New ventures are often initiated by people who
have experienced significant problems in their
own lives. As an investor, the decision is not only
to assess the validity of the idea but also to deter-
mine the execution of the venture. As an investor,
I would categorize start up investments as follows:
• An investment to increase the value of a prod-
uct or service. This could be by way of improved
performance, quality or experience.
• An investment to seek new applications to vary
the usage of an existing technology or process.
• An investment to create mass markets for exist-
ing products.
• An investment to improve the supply chain and
market growth of a successful startup.
• An investment in business or manufacturing
process innovations, which are huge drivers for
return on investment.
• An expansion of geographies or regions of cus-
tomer growth.
• Acustomizationstartup,whichcustomizesaprod-
uct or service for a target audience that is niche.
• A convergence of industries, which is another
growth area for entrepreneurial acumen. For
example, genetic engineering is the convergence
of electron microscopy, micromanipulation, and
supercomputing.
• A consolidation of industries. This could be the
automobile manufacturing industry, cable and
satellite TV broadcasters, and telecommunica-
tions carriers.
As a rule of thumb, the investment of time, money and
effort in the venture should be less than what it will be
worth in two years, with a probability of large returns
in four years. The outcome variably depends upon:
• Asolidanalysisofthecurrentandexpectedindustry
A Startup State Of Mind
IMAGEFROMSOURCE
BY MEERA KAUL,
FOUNDER OF THE
MEERA KAUL
FOUNDATION
Entrepreneurs are an exceptional breed of person and vital to economic growth,
but finding the right investor for a start-up is key to its success.
GUIDE 2016
INVESTMENT ENTREPRENEUR
24 FORBES MIDDLE EAST I GUIDE 2016

2. SERGEYNIVENS/SHUTTERSTOCK.COM
conditions leading to a viable opportunity.
• Whether you can exit with minor losses if the
opportunity turns out unfavorably.
• Whether potential future gains are significant.
• The capability of the entrepreneur to execute
the strategy.
• Whether the customer will buy.
Only one or two very good opportunities are
needed in a lifetime. Invest less time, money, and
effort in the venture than it will be worth in one
or two years. Calculate the probability of a large
return in four years. Carry out a solid analysis of
the current and expected conditions of the indus-
try where the opportunity resides.
Risk is the chance or possibility of loss. This
loss could be financial, physical, or reputational.
When Christopher Columbus embarked on his
first voyage to the New World, he risked finan-
cial, reputational, and bodily harm. Most, per-
haps almost all, people are risk-averse or risk-
avoiders. A startup investor is a risk lover. In a
portfolio of experiments, this investor is willing
to take a risk on a large number of pivotal busi-
ness outcomes in the hope of one or a few of
them developing into ventures.
I categorize startup investors into three
states of mind. The first is the “real estate” in-
vestor—the ones that only invest for returns and
kill experimentation with clinical due diligence.
They normally invest within their networks. The
second is the “one might click” investor. These
investors will spread cash across ventures with
the hope that one out of 100 may exit favorably.
The third is the “go where no one’s gone before”
investor. These are the ones who are changing
the world. So you dream of living on Mars; these
are the people that are making it possible for you
to someday realize your dreams. These investors
may not invest for immediate returns. They are
investing to be a part of a future that may take a
long time in realization.
I tell most of the entrepreneurs who approach
me; taking an investor on board is as important
a decision as marriage is. Investor alignment is
critical to the survival of any venture—especially
ones that are experimental in nature. As an inves-
tor, the gain is not only monetary. Startup invest-
ing is a vocation. To work with entrepreneurs who
have ideas to solve problems or create a change
is a process of understanding, learning, strategies,
evaluation and execution. It requires the investor
to be a mentor, a guide, a networker and some-
times even pulling up their sleeves to steer the
startup. Investing in startups is a state of mind—
the state of mind where risk is the joy and uncer-
tainty is both a return and a reward.
Finding the right
startup in which to
invest your money
takes time and
evaluation
GUIDE 2016 I FORBES MIDDLE EAST 25