A Brief Overview about the Angel Investment, encouraging IMS students to look ahead for becoming Future Entrepreneurs.

1. ‘ANGELINVESTOR
TALKSERIES’
InstituteofManagementStudies,
Ghaziabad-201009
on
7thApril2015

2. AngelInvestorsareindividualswhoinvestinstart-upsandearlystagecompaniesusing
ahigh-risk,high-returnmatrix.Themajorityofstart-upsfailwithinthefirstfiveyearsof
theiroperations.Thismakesthejobofanangelinvestorevenmoreinvaluable.Apartfrom
investing funds,mostangelsprovide proactive advice,industryconnections,and
mentoringtofounders.Thegoalistocreategreatcompaniesbyprovidingvaluecreation,
whilesimultaneouslyhelpinginvestorsrealizeahighreturnoninvestment.
INTRODUCTION
TheAngelInvestingmarkethasbeenwitnessingmomentum inlastfewquarters&has
startedevolvinginunconventionalwaystofillthegap.Sincelastfew quarters,Angel
Investorshavealreadybecomeanoticeablesourceoffunding forstart-ups.This
momentumisexpectedtocontinuefurtherasmoreangelnetworksarebeingstartedand
existing groups are increasing theirangelbase.The Governmenthas started to
contributecontributeasanangelinvestortohelpSMEsthroughits"CreditGuaranteeFundTrustfor
SME"whichallowsbankstograntloansuptothesumofRs.1croretosmallenterprises
withoutanycollateralorsecurity.Governmentsetthecommitteewhichrecommended
theCentralGovernmenttosetupaNationalEntrepreneurshipMissionwhosesolefocus
willbetoestablishavibrantentrepreneurialecosystem inIndia&providenecessary
fundingconvenience.
CURRENTSCENARIO
TheNetworklooksatinvestinguptoUSD1mn,withanaverageofaboutUSD400-600K
andexitingovera3to5yearperiodthroughastrategicsale.TheNetworkmayconsider
investmentsoveramilliondollarsbutisonlylikelytodosothroughsyndication.
In2012-2013Angelinvestorsandseedfundsemergedasthekeybackersofearlystage
companiesinthatyearastraditionalventurecapitalinvestorsseekedtransactionsthat
werevaluedatmorethan$2million(aroundRs.11crore).
AngelsAngelsinvestingasindividualstypicallyinvestbetween$25,000and$100,000oftheir
ownmoney.Whiletherearedealsthataremorethan$100Kandlessthan$25K,thisis
theareamostangelsfallinto.AngelGroupsworktosyndicatemanyangelstogetherinto
asingleinvestmentthatmayaverage$750,000ormore. Angelgroupsarebecoming
moreprevalentandareagreatwaytogetinvestmentmorequicklyandallatthesame
terms.Venturecapitalistsinvestanaverageof$7millioninacompany.
MARKETSIZE
Page1of6

3. •IndianAngelsNetwork
•MumbaiAngels
•PitchIndia
•VentureGaint
•TiEEntrepreneurshipAccelerationProgram
AngelInvestmentmaybeanindividual
oragroupofindividuals.
•SunilKalra:-IndianAngelNetwork.
•SharadSharma:-Ex-CeoYAHOOINDIA.
•RajanAnandan:-Ex-M.DGoogleIndia.
•KrishnanGanesh:-CeoofTutorVista.
•MeenaGanesh:-CeoofPorteaMedical,providerofhealthcareservicesinIndia.
•RiteshMalik:-DoctorbyProfession.
••IndusKhaitan:-SeniorDirector,Oracle.
•Vikastaneja:-ManagingDirector,BostonConsultingGroup.
FewAngelInvestmentIndividuals:-
FewGroupsare:-
MAJORINVESTMENTGROUPSORINDIVIDUALS
Youcantakemembershipofanyofthe
abovementionedgroupandfollowthePro-
cedure.
IfLookingforfundsforR&DYoumustfollow
thebelow
mentionedstrategies:-1.Searchfornewtechnologies:-
Thisearlystageisoftencalledbasicre-
search,wellbeforeanyspecificcommer-
ciallyviablelimitedprimarilytolargeorganizationswithdeeppockets,includinggovernmentgrants,
universitiesandlargeenterprisesponsorssearchingfordisruptivetechnologies.Hereyour
optionsarelimitedprimarilytolargeorganizationswithdeeppockets,includinggovern-
mentgrants,universitiesandlargeenterprisesponsorssearchingfordisruptivetechnolo-
APPROACHTOGETANGELINVESTMENT
Page2of6

4. 2.Technologypilots:-
Thisisthetransitionstagefrom basicresearchtoappliedresearch.Appliedresearch
isstillprimarilyscientificstudy,seekingtosolvepracticalproblems,butdoesn’tyet
focusonacommercialproduct.Fundingsourcesforthisstageextendfrom grantsto
largeprivatefundincubators,suchastheIBMWatsoninitiative.
3.Commercialproductprototypes:-
FundingforcommercialproductprototypesisstillR&Dintheeyesofventurecapital
investors,butinbusinessareaswithlargeopportunities,thisactivitywillcatchtheeyes
ofspecializedangelinvestors.It’sstillconsideredhighriskforinvestment,since
manufacturingandqualityissuesarelikely.
4.Productverificationandclinicaltrials:-
Thesedays,almosteverynew productisnotdeemedscalableuntilithasbeen
certified asmeeting amultitudeofqualityand agencystandards,including the
EnvironmentalProtectionAgency(EPA),Food&DrugAdministration(FDA)andUnder-
writersLab(UL).SpecializedVCsstarttojumpinatthisstage.
5.Businesscommercialization:-
Productdevelopmentatthisstageistheprocessofscalingupformanufacturingand
marketingrollout.Thetechnologyisnowembodiedinasolutionthatcanbereplicated
toreliablysolvearealcustomerproblem.Yourfundabilitywithinvestorsnowdepends
primarilyontheexecutioncapabilityofyourteam.
6.Expandingtheproductline:-
Evenformaturestartups,thereisalwaysaneedforfurtherproductdevelopmentand
researchtocompeteanddiversifythebusiness,andinvestorsunderstandthis.Butto
preventconfusionwithbasicR&D,thesecostsshouldneverbecalledoutthemajor
categoryinyouruseoffundsstatementtoinvestors.
Page3of6

5. Theseinvestorsaren'tdonatingtocharity.Mostaredisciplinedinvestors;theyareoften
successfulentrepreneursandhigh-techprofessionalsintheirownright.It'simportantto
understandanangel'spersonalpriorities.Angelsmaybewillingtotakeslightlymorerisk
withstartupsinafieldofparticularinteresttothem,orincompaniesforwhichtheycan
providespecializedexpertiseandguidance.
1.Don'tbefooledbytheword'angel'.
Angelinvestingisapersonalbusiness,andangelsrelyheavilyonpersonalnetworksof
like-mindedinvestors.Manyangelsworkingroups,jointlyvettingproposalsandputting
highvalueonothers'opinions.Evenwhenangelinvestorsworkseparately,theyshare
ideasandlistencloselytooneanother.Themostimportantkeytoraisingmoneyfrom an
angelisoftenthegoodwordfromanotherangel.
2.Understandangelnetworks.
Mostangelinvestmentsarewithin50milesoftheangelinvestor,andangelnetworksare
ofteningeographicclusters.There'snomysteryhere:Early-stageinvestorsneedtostay
closetothepeopletheyarebettingon.SiliconValleyandBostonhaveparticularlybig
clusters,butmanyothercitieshavethem,aswell.Ifyoudon'tlivenearanangelcluster,
considermoving.
3.Lookclosetohome.
Maxim FaldinandKamilKurmakayev,twoRussian-bornStanfordgraduates,hadnoluck
raisingseedmoneyfromtraditionalVCsforWikimart,aneBay-likesiteinRussia.Thenthey
targetedtheirsearchforinvestorswithnaturalaffinities:thosewithRussianrootsor
internationalexperience,andpeoplewithexperienceine-commerce.Thatledthem to
Fabrice Grinda and Jose Marin--professionalangels with extensive expertise in
e-commerceandglobalmarkets.Today,Wikimartisthriving.
4.Sharedrootsmatter.
THINGSTOBETAKENCAREOF
Page4of6

6. Youmayhaveaperfectlyreasonableplanfora$10millionbusiness.Butangelinvestors
arelookingforcompaniesthatcanrampupto$50millionor$100millioninrevenue.Like-
wise,theyaren'tlookingforincrementalimprovementsoverthecompetition.Theywant
"disruptive"ideasthatwillupendexistingbusinessmodels.Ifyourideaisdisruptive,how-
ever,canyouholdontoit?Cancopycatsandincumbentsjumpinassoonasyou've
showntheway?
5.Angelswillhuntforthefatalflawinyourplan.
Angelinvestorswantpeoplewhocanexecutetheplan.Theywillplaceheavyweightonnot
onlyyourtrackrecord,butalsoyourmanagementteam.Beyondlookingatrésumés,angel
investorswantevidencethatyourteamcanworktogetherwhenthegoinggetstough.
6.Yourteammaybemoreimportantthanyourconcept--orevenyou.
Thesuccessoftraditionalangelshasspurredanew breedof"superangels"or"micro
VCs."Liketraditionalangelgroups,thesefundsinvestinseed-stagecompaniesbutare
structuredmoreliketraditionalVCfirmsthatraisecapitalfromoutsideinvestors.
7.Angelsareevolvingfast
Thereasonwhymostangelinvestorsarelesslikelytomakefollow-oninvestmentsis
becauseoftheriskassociatedwithlosingevenmoremoneywhenreinvestinginan
unsuccessfulcompany.Ontheotherhand,venturecapitalistshaveadifferentapproachto
follow-oninvesting.Theytendtospendapproximately2/3oftheirfundsonfollow-on
investments,takingtheopportunitytoallowcompaniestoexpandwhilediversifyingtheir
currentportfoliofirms.
1.Rarelymakefollow-oninvestments
DRAWBACKS
Page5of6

7. 2.Canactuallybedeceptive
Whilethemajorityofangelinvestorstrulylookbeyondthepromiseofmonetaryreturn,
thereareafewangelinvestorswhoaregreedyandmotivatedbymoneyratherthanin
promotingthegoodofthefirm.Theseangelinvestorstendtobelesspatientwithnew
entrepreneursanddonotprovideanymentoringorguidanceduringacompany’searly
stageofdevelopment.Toavoidsuchcomplications,itiscrucialthatanentrepreneur
obtaincompleteinformationaboutthecharacterandreputationofanypotentialinvestors
beforepursuingandagreeingtoanyterms.
3.Canbecostly
Inexchangeforprovidingtheneededstartupcapitalforanew company,manyangel
investorsoftenrequireacertainpercentageofstakeinacompany,startingat10% or
more,andexpectalargeROIfortheirexit.Fromtheirperspective,thisisareasonableex-
changesincetheyareinvestinginveryyoungandriskybusinessesthathavenotyetbeen
established.Inaddition,angelinvestorsmayhireskilledprofessionalstoensurethe
day-to-daybusinessoperations.
4.Activecompanyinvolvementcanleadtoproblems
Eachlevelofcompanyinvolvementvariesfrom investortoinvestor;however,itisnot
uncommonuncommonforanangelinvestortohaveacertainamountofcontrolinrunningacompany.
Theentrepreneurmayunwillinglybeforcedtogiveupsomedegreeofcontrolinorderto
meettheirangelinvestor’srequirements,whichcanoftenleadtoresentmentonthepart
oftheentrepreneur.Anotherproblemthatmayariseistheangelinvestor’slackofindustry
experience.Thislimitedknowledgeaddsverylittlevaluetoacompany’ssuccess.Thatis
whyentrepreneursshouldonlyseekangelinvestorswithprovenexperienceintheir
industry.
5.Donothavenationalrecognition
Whiletherearewell-documenteddirectoriesofventurecapitalfirmsavailable,thereisno
nationalregisterforangelinvestors.Duetothesedifferences,angelinvestorsdonothave
thenationalrecognitionastheirVCcounterparts.Theyremainhiddenandmysteriousbut
choosetodosoinordertohaveadegreeofseparationfrom entrepreneurs,whomay
pesterthemwiththeirbusinessplansandtelephonecalls.
Page6of6

8. ShailendraPratapSingh(bornonJuly17th1974Sultanpur
districtUttarPradesh,India)isanEntrepreneurand Social
activist.HepursuedhisB.Tech(MechanicalEngineering)from
IITKanpur(1992-1996).Hestartedhisprofessionalcareerby
joiningpublicsectorCompanyinIndiaandlateronmovedto
USA.
In year2005 he started his own enterprise M/s Neometrix Engineering (P)Limited
(www.neometrixgroup.com)inhightechnologyengineeringdomaininIndia.M/sNeometrix
supplies engineering equipments and services to Indian Airforce and otherdefence
establishments.
WithCNG IndustrytakingcenterstageinAUTOMOTIVEandseeingtheopportunity,he
startedM/sPaskalsFluidSystems(P)Limited(www.paskals.com)inyear2008.M/sPaskals
focusesonHighPressureliquid&gasTechnologies.
InInIndia,industrialbuying/procurementishighlyinefficient.Havingfirsthandexperiencein
industrialbuyingandsellinghelaunchedOnlineIndustrialMegastorewww.industrykart.com
.IndustrykartworksonthreepremisesnamelyCertifiedGenuineProducts,Ex-StockDoor
Delivery&GuaranteedLowestPrices.
Mr.Mr.Singhisalsoassociatedwithvarioussocialorganizations.HealsocontestedLokSabha
Electionsin2014fromSultanpuronAamAadmiPartyticket.Herunstwofoundations“Build
IndiaFoundation”and“ITeachOneFoundation”withanideatogivebacktothesociety.He
also givesguestlecturersin engineering/managementcollegesforentrepreneurship
development.Healsoorganizesmotivationalseminarsforschool&collegestudents.He
worksasmotivator,guide&dreambuilderforyouth.
About
Groupcompany
Website:www.thespsingh.com Email:Shailendra@neometrixgroup.com
...
facebook.com/thespsingh@thespsingh blogspot.thespsingh.com
...
ContactDetails