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Do you aspire to be a digital entrepreneur? … Here are ten ways to mitigate your risks
Having a strong technical foundation isn't enough for digital entrepreneurs to counter potential risks
We observe that many of today’s highly valued businesses are digital businesses that have been able to scale up fast. There are many firms, such as Swiggy, Pharmeasy, BigBasket, and Paytm that have become unicorns, while many are on the way, examples being Redbus, Rapido, etc. It takes much more than just a strong technical aptitude to float a digital startup; in my view, here are ten risk mitigation ways that you may need to be considerate of before you proceed further with your journey as a digital entrepreneur
First, please note that the personal pain points are good starting points. It can be something that bothers you and which you feel deeply connected with and solving it should make you feel happy. For example, the founder of Redbus suffered the pain of not being able to travel to his home on the occasion of Diwali, which led him to build an aggregation platform for the demand and supply of buses.
Second, your business idea should ideally have a large enough market, or there should be a gap in the offerings by other players that you can try to cover. Also, the customers should pay you sufficiently enough to cover your costs and leave with a sufficient profit eventually.
Third, it is not advisable to go solo, since one needs a lot of support and cheering up in the entrepreneurial journey. If the co-founders are amicable and can complement each other in terms of their skills and attitude, that can be good. For example, one may be a good techie and the other may have excellent business acumen.
Fourth, entering into a known territory can also be a way of mitigating the risk. For example, the ideal founder of an agri-tech startup could be from an agricultural family, who would have seen his family buy seeds and sow them, use fertilizers, harvest the crop, and sell it to a trader. Such a person can at least recognize the challenges in the agricultural value chain and react accordingly.
Fifth, if one enters a new territory, it is recommended to test it once for the product-market fit. People can do a prototype in a lean mode and gauge the consumer interest, without deploying many resources on different WhatsApp groups or Google groups-based surveys.
Sixth, check if there is a product that can fit the market, so that the market can accept your product faster. The market pull is easier to service than creating demand and pulling it.
Seventh, you need to be able to sell your story to potential financers. Create an effective pitch deck, and keep updating it with reflections from contemporary happenings, changes in tech trends, consumer tastes, etc. Also, see if you can seek some small investment from your friends, families, etc. in the seed investing stage, which can make your journey easier.
Eight, it is more advisable to generally take risks at an early stage of life, maybe immediately after passing out from college, when one normally does not have to address too many familial commitments or responsibilities. Another way of mitigating the risk could be to cap the downside by keeping the limit for 1-2 years.
Ninth, it is important to understand the role that emerging technology can play in your venture. Many times, technology can be a tool to enhance the scalability, cost efficiency, or personalisation of the proposed business idea. Therefore, appreciating the latest technology and the promise that it holds for business is crucial.
Last but not least, if you can serve some social purpose in your entrepreneurial venture, there are more chances of getting support from the investing community, because investors like to put their money in impact investments, such as financial inclusion-based fintech, agri-tech, health-tech, climate-tech, etc. This enables them to invest in a cause and use technology to scale up. Also, serving a social purpose will make you happier at the end of the day, since by then, you will have contributed something for the common good.