Dr. Malpani: Congratulations on starting your journey as an entrepreneur! Starting up is exciting but also challenging. What’s on your mind today?

Entrepreneur: Thank you, Dr. Malpani. I’ve been working on my startup idea, but one thing I keep hearing about is the lack of trust in the Indian startup ecosystem. It seems like no one trusts anyone—founders don’t trust investors, investors don’t trust founders, and even within VC firms, there’s so much politics. It’s overwhelming. How do I navigate this?

Dr. Malpani: You’ve touched on a critical issue, and I’m glad you’re thinking about it early on. Lack of trust is indeed a significant problem in our ecosystem. Unfortunately, it stems from the fact that many people prioritize short-term gains over long-term relationships. But trust is the cornerstone of any successful business, and it’s essential to build it consciously. Let’s break this down.

Entrepreneur: Please do. Where does this distrust come from, and how can I avoid falling into this trap?

Dr. Malpani: There is a lot of bad blood in the startup space, because of businesses like Byju’s that blew up spectacularly because the founder hid the truth from his investors. VCs have long memories, and once they have burn their fingers, they are going to be very wary. These episodes leave scars that hurt everyone. A lot of this distrust comes from a lack of transparency and unrealistic expectations on both sides. Entrepreneurs often feel that investors are only looking out for their own interests, while investors worry that founders aren’t being fully honest about their challenges or using funds responsibly. Within VC firms, the competition to take credit for successes breeds politics and backbiting. It’s a vicious cycle.

Entrepreneur: That sounds toxic. So, as a founder, how do I foster trust with my investors?

Dr. Malpani: It starts with open and honest communication. Share your vision clearly, but also talk about the risks and challenges you foresee. Don’t sugarcoat or overpromise—investors respect founders who are realistic and transparent. Keep them updated regularly on your progress, both good and bad. When you hit a roadblock, involve them in problem-solving rather than trying to hide it. This builds mutual respect.

Entrepreneur: That makes sense. But what about the investors? How do I know if I can trust them?

Dr. Malpani: Due diligence goes both ways. Just as investors evaluate you, you should evaluate them. Speak to other founders they’ve funded and ask about their experiences. Look at the investor’s track record—do they have a reputation for being supportive, or do they micromanage and interfere? Remember, choosing the right investor is like choosing a partner—it’s a long-term relationship, so align your values.

Entrepreneur: I hadn’t thought of it that way. But what if I’m desperate for funding? Isn’t it risky to be too selective?

Dr. Malpani: I understand that funding can feel like a lifeline, but taking money from the wrong investor can harm your business in the long run. If an investor doesn’t trust you or tries to exert too much control, it creates unnecessary stress and conflicts. It’s better to bootstrap for a bit longer than to compromise on the quality of your investor.

Entrepreneur: That’s reassuring. But how do I build trust within my own team? I’ve heard that even co-founders sometimes end up in conflicts.

Dr. Malpani: You’re right—trust within your team is just as important. Start by being transparent about your vision, goals, and challenges. Clearly define roles and responsibilities to avoid misunderstandings. Encourage open communication and create a culture where team members feel safe to express their ideas and concerns. And most importantly, lead by example. When your team sees you acting with integrity, they’ll follow suit.

Entrepreneur: That’s helpful. But what about the broader ecosystem? Is there a way to change the culture of distrust?

Dr. Malpani: Changing the culture requires everyone—founders, investors, and VCs—to prioritize ethics and long-term thinking. As an entrepreneur, you can’t control others, but you can set an example. Build your business ethically, treat your stakeholders with respect, and deliver on your promises. Over time, your reputation will speak for itself, and you’ll attract like-minded people who value trust and transparency.

Entrepreneur: It sounds like trust-building is a continuous effort. Are there any specific practices you recommend?

Dr. Malpani: Absolutely. Here are a few practical tips:

1. Regular Updates: Keep your investors informed through monthly or quarterly reports. Share key metrics, challenges, and your plans to address them.
2. Set Clear Expectations: Be upfront about timelines, goals, and potential risks. Avoid overpromising to impress.
3. Seek Feedback: Involve your stakeholders in decision-making and show that you value their input.
4. Admit Mistakes: If something goes wrong, own up to it and share your plan to fix it. This shows accountability.
5. Stay Consistent: Consistency in your actions and communication builds credibility over time.
   
   

Entrepreneur: These are great tips. But what happens when trust is broken? Can it be repaired?

Dr. Malpani: Trust, once broken, is hard to rebuild, but it’s not impossible. The key is to acknowledge the breach, apologize sincerely, and take concrete steps to make amends. Rebuilding trust takes time and effort, but if both parties are willing, it’s doable. However, prevention is always better than cure, so focus on maintaining trust from the outset.

Entrepreneur: Thank you, Dr. Malpani. This has been an eye-opening conversation. I feel much more confident about navigating the ecosystem now.

Dr. Malpani: You’re welcome. Remember, trust is the foundation of every successful relationship, whether it’s with your investors, team, or customers. Stay ethical, stay transparent, and always focus on the long term. If you ever need guidance, feel free to reach out. We’re here to support entrepreneurs like you who want to build sustainable, scalable, and profitable businesses. Our website is www.malpaniventures.com