Is it good to punish employees with a monetary fine if they don’t adhere to the processes, rules and regulations of the company? Or should we just reward those who follow everything properly to make others also comply ? Alternatively, should companies use both punishment and reward?
The carrot and stick policy is a time-honoured and tested method to drive behaviour in the desired direction. Speaking from my own experience, we too had such a policy which, while rewarding good behaviour and performance, made it difficult for non-conformists to continue for too long. Non-compliance or non-conformance did not, however, imply that we looked at having an army of robots.
It is also important to give employees and colleagues the room and freedom to experiment in order to have a culture of innovation and inculcate a sense of “belonging”. What we, therefore, did was distinguish between mistakes vs. a negative attitude. The former was not punished (at least, until sufficient chances were provided to rectify the same) but the latter was nipped in the bid.
We started with the dictum that we would rather have an average person with a great attitude, who could learn and grow, rather than a genius with a bad attitude. After all, the knowledge process industry, as also most other organisations, is all about team work, rather than individual brilliance.
Is it compulsory that we should have an IIM/IIT graduate in the company for it to get funded?
Not at all. It helps, no doubt, as there is already an aura of entrepreneurship around such graduates, given their track record of success.
What exactly do investors look for in a start-up before funding it? A novel idea? Or just another economic unit which can be expanded?
What venture capitalists or any other investors look for in some measure are:
A great idea, with some validation of the idea
A growing market that is sizable, or will be soon
An enterprise backed up by a great team (not a single individual, but a team of professionals with complementary skills)
A clear business plan and a practical operational plan that reduces risk
Here is a checklist of what funders look for when evaluating a business opportunity:
(i) Market Opportunity : What is the growth potential of the market that the company has identified ? What is it now and how does the company propose to grow that market?
(ii) Timing : Is the opportunity window right? Why?
(iii) Competition : What is the existing and likely competition?
(iv) Business/Revenue Model : How will the business make money? Is it viable and sustainable? What factors can impact revenues?
(v) Scalability : Funders love scale. How scalable is the opportunity? Is the business process-oriented or person-dependent? And can the process be easily replicated across geographies and /or markets?
(vi) Strategy : What is the strategy proposed? How is it different from the competition? What is the key value proposition? What are the chances that the company can effectively deliver on this value proposition? What pain-points does the opportunity seek to address and how can it do so effectively?
(vii) Return on Investment : How much and what time scales? What is the risk level? Evaluation of IRR based on realistic projections.
(viii) Team : Strength of the team. Is the team exemplary? Have they been there, done that? What is their track record? Are the team members’ skills complementary to one another and is there proof of commitment? Also important is the personal level of comfort once the VCs have met the promoters and the team.
(ix) Exit : Normally investors have a seven-year window, with a possibility of a two-year extension. What lifecycle of the fund are they in just now, and the likelihood of an exit determines how interested a VC would be.
(x) Co-investment : Are the other co-investors already on board or are there others interested in investment? VCs like it when there are other co-investors also involved, so that the risks are shared.