When ‘Return (of) Investment’ matters more than ‘Return (on) Investment’

“The woods are lovely dark and deep,
But I have promises to keep,
And money to return before I sleep,
And money to return before I sleep.”

The only person you will find humming these words is someone who has borrowed what I call “trust capital”. Trust capital is money taken from the Family fund. It’s not risk adjusted; it did not come with a term sheet. It came because you’re family. And, what really matters with trust capital is Return of Investment (R of I) and not Return on Investment (ROI).

My mentor who is now a multi-millionaire told me a story that happened in the early years of his company. He had borrowed money from his father-in-law to fund his new idea. This was within a year of marriage. After struggling hard and getting a few customers, the first thing he did with his tiny revenue was to return it promptly to his father-in-law. Most of us would have reinvested it into the company or offered shares, because it’s still early days and returning it a few years later is more optimal. Well, it’s not. If you had seen the twinkle in his eyes when he narrated that story, you will know why returning that money was more important than anything else he could have done with it. That was his proud “R of I” moment and neither he nor his father-in-law would trade that moment for any ROI moment. Whenever I remember him telling me that story, it brings tears to my eyes as it was only much later that I understood the deeper lesson behind the story.

He did not make the mistake of treating family as investors. They’re not. They don’t balance portfolios and they don’t ask questions about your team’s abilities and your business model. They are not expected to give you advice or worry about your company. They only worry about you, and when you return that money, they know you did well. And more importantly, you respected the fact that they gave it to you.  The two Rs that matter with money are – Respect and Return. The other Rs – risk, revenue, ROI, Rate of growth, don’t matter in this case. Save these Rs for the outside investors. In fact, my mentor mentioned that he returned any interest he made on family/friends’ money, because it was never given to make interest but to help him bridge to the other side.

Two of my friends started a company by each borrowing money from other friends. It has been two years since they’re struggling it out, and every month I get an email on how close they are to making revenue. I know they will get their “R of I” moment even before they get financial ROI. They’ve changed the idea, the business model, even the core team. There is no escape route in your heart if the money came from your trust fund. Someday you will return it with the right attitude. That has to be your karma.

I distinctly remember my last R of I moment too. My dad’s friend had helped me develop a software product many years ago. I knew his small company was in need of projects, but I had very little money then. I was also inexperienced and very new to the whole concept of outsourcing. He kindly agreed to a clause in the contract that 20% could be paid only if I make profit. How crazy for his small company to take risk on my product! Profit is such a subjective word. How many products show “profit” in the first 5 years? I often regret reinvesting earnings from one product into other products. In any case, that clause was not right. A few years later I returned the 20%. Writing that cheque from my personal account was an important moment for me. He never expected it or even remembered it. And, I will never forget the kind words he said when he saw the cheque. I learnt something that day – the value was never in the money itself; the value came from the way it had been respected in that moment. That respect will get etched in memory forever.

Whether it is Silicon Valley or India, trust capital is sacred. Don’t associate any startup/VC jargon with it, or try to put a value to it. It’s beyond that.

I am not saying one should avoid taking trust capital. What’s the point of living a risk-less life? It’s important to keep doing what you love doing. Nothing ventured, nothing gained. But remember that “gain” is a profoundly subjective concept, and many times, R of I is more rewarding than ROI.


  1. -Mo

    Very nice post Anjali!

  2. Very nice post there are certain things which are more important than money !!!

  3. In today’s world where success is measured by only one thing. Your story is refreshing change!

  4. Amit Paranjape

    Nice post.. good story. The title is really interesting!

  5. I have only begun to embark on my own entrepreneurial venture and I absolutely love this post!

  6. Fabulous! So important to recognize people who love you. Be it in business or be it in life. Many times we fool ourselves in believing that people did what they did because of reasons beyond just plain love for you as a person.



  7. Beautifully carved and expressed the thought behind.

  8. Tremendous things here. I’m very happy to see your article.
    Thank you so much and I am taking a look forward to contact
    you. Will you please drop me a e-mail?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: