Startup 101: What Do Angel Investors Look For In Founders?

“When you first meet an investor, you’ve got to be able to say in one compelling sentence what your product does.” — Ron Conway, American angel investor

The State Of The Indian Startup Ecosystem 2018 report by Inc42 shows that angel investing contributed nearly 45% of the total investments in the ecosystem in 2018, with the number of deals crossing nearly 300 in the last three quarters.

Angels have been a crucial part of the startup ecosystem considering the guidance and mentorship they bring along with their investments for startups. With angels supporting founders right from the inception of their entrepreneurial journey till the stage startups take wings, the connection between angels and entrepreneurs is a deep and intense one.

In previous editions of Startup 101, we’ve brought you suggestions on how to get angel funding, whether to bootstrap or raise funds, and also told you whether you should choose venture capital or angel investment. Now, we bring you the view on angel funding from the other side of the lens.

In this week’s Startup 101, we bring to you important lessons on what an angel investor is looking at when they are considering investing in your startup, how are they judging you, and what they are looking for.

To answer all of these questions and more, we have Akshay Bhushan, partner, LightSpeed India, a venture capital and private equity firm. Lightspeed 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.

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Bhushan emphasises that angel investors generally examine the quality of founders by either spending quality time with them to understand their vision/roadmap or by understanding who they work with and talking to someone they trust.

These exercises help the angels get a full-fledged view of the team’s capabilities, its strengths, and the product or service they are developing. It also helps the angels evaluate the investment from a people’s perspective.

Bhushan says that angels also look at the sector a startup is operating in. “I think typically at a very early stage, a business model matters the less to me…generally business models change over the time, so you want to make sure they are operating in a space which is large enough, in which you can actually make money,” he explains.

So when you meet an angel, share your vision with them, explain your business model, and for all you know, they will help you soar high in the startup sky!

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