In the wide sea of business companies, making a separate niche for a startup is daunting. The intimidating fear of sinking may wobble the startup in the early stages of the journey and consequently, the hunt for an anchor goes for a toss. Finding an angel investor is not as easy as it requires a lot of networking and hard work to grab an investors interest in the startup.
However, if the company does manage to catch the attention of investors and PE (Private Equity) firms, then its future is almost certainly secure. As the Indian government is making lenient policies for startups, the count of startup companies is increasing at a good rate, whilst the number of angel investments has significantly decreased over the years.
According to a survey conducted by Lets Venture, Since 2011, a big jump in series A and series B funding has been recorded, which has further boosted the confidence of angel investors to invest in startups in India. The ecosystem witnessed a spike in 2015, and then came the market correction in 2016. However, the angel investments decreased post-2016 from $214 million (in 2016) to $117 million (in 2018).
Despite the decreased number of angel investments, startup companies still seek investors because of the experience and wide network that they possess.
There is an increased interest being seen from foreign VCs, Family Offices and Corporate Ventures leading to additional liquidity in the growth stage, according to the survey.
The Method of Approaching Angel Investors
Getting an angel investment is not like buying a commodity from a brick and mortar shop. It is an intricate process which requires precision, hard work and know-how.
The angel investors are experienced professionals who are very choosy about which company they finalise for investment. As a result, they scrutinise each and every aspect of an entrepreneurs knowledge and practice in the field of their venture. Therefore, thorough know-how about the market and customers that startup company wants to aim is absolutely essential.
Renowned investors like Ratan Tata, Chairman-Emeritus of Tata Sons, often make fair bets on startup companies. The investor has put his money and trust on 43 ventures till now, including Ola, First Cry and Paytm, according to the daily news, Business Standard.
All these startup companies focus on different, untapped sectors and thus, gain traction via their unique business approach.
Startup companies are generally administered by small sets of people and thats why the next thing the investor looks at is how efficient the team is.
In a report named Startup Pulse 2019, startup founders said that they spend about half their time hiring, and also end up leveraging their investors expertise to close the process.
This shows that retaining employees and keeping teams intact is one of the biggest problems that entrepreneurs face. In order to prove the efficiency of their team, an entrepreneur needs to keep the team together by ensuring that they are motivated and growing along with the company.
Once the startups exhibit that they possess the right knowledge as well as the workforce, it becomes easy to climb up the next steps and receive investment from angel investors.