BackWhen a start-up faces a dead end
In 2000, Sanjay Anandaram returned to India following the acquisition of his company and launched venture capital firm JumpStartUp
Premium(A file photo of Sanjay Anadaram.)
Bangalore: Any new Indian entrepreneur who can now brush shoulders with Silicon Valley can partially thank Sanjay Anandaram.
In 2000, the technology veteran returned to India following the acquisition of his company Neta Inc. and launched JumpStartUp, one of the first US-India venture capital firms. In four years, it has sold its investments in as many of its portfolio companies.
Now a partner with Seedfund, Anandaram actively advises private enterprise, academia and government. Phanindra Sama, founder of online bus-ticketing service redBus, frequently credits Anandaram, his mentor, with the managerial advice that sparked his start-up success. When he speaks publicly, which is often, Anandaram’s introductions typically include his laurels, which are many.
But a few never make the list—ventures he has had, like anyone around start-ups long enough, flopping hard.
A decade ago, Anandaram was scouting the domestic online retail sector, well before any of today’s e-commerce successes were conceived. The market, he determined, was far too deprived of credit cards. So he invested in a company that created pre-paid cards that consumers could buy at local shops to use for Internet retail.
“It required a massive amount of distribution," Anandaram recalled. “That would have been a significant operations challenge, but one that we were aware of."
A different, unseen hurdle sank the company. “We had not anticipated the regulatory issues," he said. Since the cards collected deposits, the company fell under the watch of the Reserve Bank of India, a burden that stressed JumpStartUp, its only investor. Regulatory webs had grown too costly.
But the company lingered on for months.
The seasoned insider had met another unexpected issue: what he now calls “starter-itis".
“It’s a virtue, stubbornness," Anandaram noted. It extends only so far, however. “The stubbornness of management, even when faced with a problem that is insurmountable, can be a very self-defeating exercise."
It was not the last company he had his hand in where the founder baulked at shutting the doors, or being replaced. Those decisions, Anandaram conceded, involve “huge emotional issues". They are becoming easier to make. Yet investors and entrepreneurs, he said, can still be reluctant to admit failure, accept it, then move on. “In India, the tragedy is it’s very hard to shut down something," he said.
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