“At the end of the day people buy people, investment is no different.”— Anonymous
Here’s a no-brainer for entrepreneurs: Every time a startup idea pops up in one’s mind, it goes through several life cycles of ideation before it can be finally put in place with some action.
From scrapping proofs of concept (PoCs) an ‘n’ number of times to testing product ideas, seeking advice, testing the product, bootstrapping, imbibing gyan (knowledge) from successful entrepreneurs to finding ideas to pitch to investors — every entrepreneur who’s every started up has been through these stages.
However, when the ground is set, your product is calling out to you to make it a reality, all your bootstrapped money has been poured into initial investments, and the couch you and your ragtag team have been working on has started stinking under the weight of innumerable discussions, it’s time to move on. And for that you need funding.
But first things first: Do you need the funding at all? If yes, from who, when, what amount, and what for? If no, how are you going to bootstrap and for how long?
We’ve shared with you before the views of industry stalwarts — Vijay Shekhar Sharma with his decacorn Paytm to Sridhar Vembu with his bootstrapped yet profitable Zoho — on the benefits and perils of bootstrapping and raising venture capital. This time, the answer we have for you is to find the right angel investor for your venture.
The Indian startup ecosystem, in no small measure, owes its success to angels and VCs. According to Inc42’s Indian Tech Startup Funding Report H1 2018, 231 active angel investors participated in Indian tech startup funding while 166 venture capitalists made investments in the first half of this year.
In this edition of Startup 101, we bring to you the answer to this all-important question — where can I find angel investors? The decision is largely based on who suits the needs of your business better.
As an entrepreneur seeking funds, should you pick angel investors from your personal and professional network or are there any angel networks you should look out for? Who is the best person to approach? Who is most likely to understand your passion and commitment towards your venture?
Do you begin by posting on LinkedIn or Twitter that you want to raise funds or should you comment on posts of every investor you can find on social media and ask for funds? Or do you need to make rounds of their offices?
To answer all of these questions and more, we have Akshay Bhushan, Partner, LightSpeed India, a venture capital and private equity firm. It focusses on direct- and cross-border businesses, generally investing $1 to $25 Mn in growth- or early-stage startups seeking to disrupt or transform large markets in the domestic economy.
Bhushan has been in the tech startup ecosystem for a long time and has served as a mentor at Microsoft Ventures India as well as to several entrepreneurs.
He believes that the best way is to first exhaust your network. He says Angels typically like to invest in people they personally know, so you should start with exploring your professional and personal networks, people you work with, people who know you really well because they are most likely to back you.
“What is an angel investment? Generally, it is investing behind a person and their passion. So, I would say that’s the best way to start out with,” Bhushan added.
Further, he shares that when you meet folks in your network you can ask them for referrals. He believes that a lot of times angel rounds come around because an angel referred the founder to another angel… that’s how these rounds get constructed.
And last, but not the least, there are platforms such as LetsVenture, AngelList Syndicates, and so on, and it’s worth listing on them as well.
“I would say probably it makes more sense to think about those as the last resorts, but start with your network first, that’s the most important,” he added.
I hope that answers your question about where to find the right angel investor so you can take an important step in making your startup PoF or idea a reality.