I came across this very nice post by Mr. Haresh Chawla, a partner at India Value Fund Advisors, a leading private equity fund.
The article has some very simple but practical insights into why so many start ups fail. Many of these start ups have a business plan made on Excel sheet. However, the realisation comes, later but eventually, that real life is different from the Excel sheet. The assumptions are more important than the numbers. Though the discussion is about private equity investing in start-ups, there are lessons for any investor.
Emotions play a big role in the way we decide – whatever the decision, including the investment decisions. We go through the roller coaster of our emotions every now and then – even the best minds who hold purse strings are humans and hence vulnerable to falling prey to mood swings.
So long as the men think, mania would prevail. So keep your seat belts tightened if you participate in such markets.
Mr. Chawla’s sage advice may sound appealing to some and “sour grapes” to some. I remember laughing at Dr. Mark Mobius’ words when he talked about the DotCom bubble in end-1999 to early-2000.