Angel investors: Behind the success of many of India’s start-ups

Angel investors are behind the success of many of India’s start-up companies in the last few years. They invest in new ideas, new concepts, and new lines of business because they like taking risks in the unknown and they like the idea of being associated with something that has the potential to become big and successful. While their contribution has been huge, not many are aware of their involvement with new start-ups.

The question is why do they take such risks? Start-ups are largely about new and cutting edge entrepreneurship – the new technology, the innovations, the excitement are what drive angel investors. It is not about money and profit alone. Some angel investors put their money into new businesses because they feel that they can contribute with what they have learned from their own experience in the world of business.

Pseudo-entrepreneurs

Some angel investors like the thought of being pseudo-entrepreneurs, i.e. they are entrepreneurs of sorts with all the pleasures of entrepreneurship but little of the pain and it gives them a chance to see the new business create value.

Angel investors are enthusiastic about funding start-ups where the founders are passionate and motivated; they also look at the practical aspect of the start-up viz. the quality of their business plans, which sectors they are working in, the scalability of the business, the potential market size of the proposed business, the types of problem they are solving, the level of innovation they are supporting, the technical skills of the people involved etc. They invest as long as they see potential in the business idea and the founders.

Evaluate the attitude, mindset and passion

Many angel investors invest not in the business but in the entrepreneur and founder. They evaluate the attitude, mindset and passion of the founder – and they invest in those businesses which are in for the long haul. They are not interested in those that want to make a quick buck and get out. 

One maxim angel investors believe in is not micromanaging the businesses they fund. They contribute time and experience and wisdom apart from the money but leave control and management in the hands of the founders and their teams. At times they form consortiums and invest as a group rather than go solo, as they believe that together they can offer more to budding entrepreneurs.