And Why It Matters...
There is a lot of confusion about what an angel investor does in the startup space and I’d like to share my world view, to help dispel some myths.
I enjoy angel investing. I’ve been doing it for quite a few years now, and hope to continue doing it for many more! I believe everyone should play to their strengths, which then brings up the question – what edge do I have as an angel investor?
Since I am a doctor in private practice, I have been an entrepreneur for many years. Hence, I can empathise with some of the problems founders need to deal with, since I have to tackle them on a daily basis as well! This includes the 101 mundane daily tasks which running a business entails, such as delighting patients (who are my customers), hiring and firing employees, creating SOPs, filing tax returns and so on.
Because I am spending my personal money, I can afford to be idiosyncratic about where I place my bets – I don’t need to follow the institutional imperative. I am clear about what areas I want to invest in, the kind of entrepreneurs I want to back, the traction that should have been achieved before I invest and the entry valuation ranges I am comfortable with. I am happy to be open and transparent, and share my investing thesis online, so that entrepreneurs can judge if I am the right angel for them.
Entrepreneurs who reach out to me know that I will not keep them hanging, but will provide a clear answer in a well-defined time frame. Even if we say No, we will try to offer feedback on why we have not invested, and this may help them to modify their pitch when approaching others.
As I am in no rush for an exit or looking for a quick buck, I can afford to take a long-term perspective and offer entrepreneurs more time to build their ventures. As I am investing my personal money, and the amount I can deploy in angel investments is well demarcated, I don’t lose any sleep over how the startup is performing. I don’t need a quick return on my investment, which means I can be supportive, even when the founder runs into a rough patch.
I have a natural love for reading. This has allowed me to absorb insights from different fields. I try to use these ideas for cross-pollination, some founders tell me that I provide a different perspective from other VCs.
I have a great team supporting me which means it’s not just Dr. Malpani writing a cheque! I invest through my family office, and we follow systems and processes to make sure we do our due diligence properly.
Equally importantly, even after writing the cheque, we continue to support the founder, and we believe this adds value to the entrepreneur’s life in areas traditionally which are not their strong points.
Finally, thanks to LinkedIn, I try to share what I learn as an angel investor, so that others can benefit from the mistakes I have made. LinkedIn is great, because I find it easier to reach out to entrepreneurs and they find it easier to connect with me! It’s been a fun journey so far, and I look forward to evolving and growing as I mature.
[This post by Dr. Aniruddha Malpani first appeared on LinkedIn and has been reproduced with permission.]
