This article is in response to a recent article by Mukund Mohan, titled ‘How can you tell if an angel investor is “real” or “fake”?
I fully agree with Mukund’s argument in the above article that – what startups need in addition to capital is solid mentoring and the experienced perspective that angel investors can bring to the table. Mukund suggests that the ideal angel investor should be someone who has the intention and ability to do the heavy lifting in terms of mentoring, and taking the startup to the next level. He also suggests that, ideally,angel investors should have had a track record of investing in startups. I have no disagreements here.
Where I differ from his view is when he suggests that someone who does not have the previous experience of investing in startups, or time to mentor or the ability to guide startups is not an ‘ideal’ angel investor. In my view, we also need to significantly increase the pool of angel investors by making it possible for people without previous experience of investing in startups to participate as co-investors. Not all individuals who can put in the money will either have the time, inclination, or the expertise to mentor companies. And that’s fine.
Not for one moment am I suggesting that mentoring is not critical and can be done away with. Far from it. However, individuals who can put up the money as co-investors have an equally important role in supporting early-stage startups as individuals who bring in capital and time in terms of mentoring and perspectives.
Eco-system enablers like co-investing platforms, accelerators, incubators and angel groups should create opportunities and processes to allow those providing just capital and those providing capital & mentoring, to collaborate to fund startups.
This is especially true in India where the angel investor community is rather small compared to the 1000s of aspiring entrepreneurs emerging every month. Unless we are able to provide early-stage capital – often small-ticket investments – we will be in trouble at a national scale, as we would have created the aspirations but failed to provide the support structure needed to nurture and progress these aspirations. The frustrations unleashed by aspirations that do not get support, including capital, due to the currently small size of experienced angel investors can be detrimental to the country’s future.
We need those with money as those with money & mentoring skills to collaborate to help the entrepreneurial eco-system in India to expand to its true potential.