India's angel investment market has achieved a few significant feats, thanks to the successful returns made by early-stage investors. A rise in the number of angel investors from diverse backgrounds, coupled with an increase in early-stage venture capitalists and the subsequent awareness among professionals and entrepreneurs, has brought to this market segment adequate depth and vibrancy to create exciting investment opportunities. To capture the current trends and identify India's most attractive business ideas, VCCircle's 2nd edition of India Angel Summit brought together 250-plus entrepreneurs, start-ups, angel investors and early-stage VCs.
The opening panel titled The Rise Of Angel Investments In India: Is It A Good Time For Entrepreneurs was moderated by Rajesh Sawhney, president of Reliance Entertainment, while Flora2000 Inc., WPP Group, Rave Technologies and Everest Flavours Ltd were the participants. According to Ranjan Kapur, country manager of the WPP Group, valuation is just a piece of "angel investors looking at entrepreneurs. When you pitch your start-up, try to be articulate and if it helps, get your friend instead (who is more articulate) to sell the company's story to an angel investor."
Rehan Yar Khan, another angel investor and founder of Flora2000 Inc., advised young start-ups not to get too perturbed by the number of clauses they would see while getting an angel investor on board. In fact, such clauses are only triggered when something goes wrong. Also, most of those clauses get rewritten when the next round of funding kicks in. Therefore, it should not be a big issue, he commented.
Ranjan Kapur also mentioned that he would look for marathon runners among entrepreneurs instead of those looking to exit as soon as the VC funding came in. However, out of the nine start-ups he has invested in, at least three of them are being run by marathon runners.
But Kapur had more tips in store. For instance, there are start-ups who don't need funding but are looking good angel investor to get some sound advice. One way to bring them on the advisory board is to give stock options (say 1-2 per cent in the company) and get their opinions at the start-up phase.
In an interview during the event, Rajan Anandan, one of India's top angel investors, talked about the five investment themes that a tech angel is most excited about. "I like to angel-fund entrepreneurs whose first start-up didn't work; those with 2-3 failed start-ups are even better as failure teaches you valuable lessons," he observed.
When asked about the e-commerce sector, he said, "If you are entering even now, I would suggest that you look at specialised segments which are new. Entering a market that already has 3-4 players is not going to be exciting for an angel investor unless you have had a fairly successful track record in founding/running companies earlier."
According to him, the most important thing for an entrepreneur is persistence.
Sanjay Kamlani, co-founder and CEO of Pangea3, discussed the six steps of building a successful start-up while Mukund Mohan, founder of Jivity, gave his take on how to prepare to raise capital. "I think a business plan spanning 3-5 years is useless when we are evaluating a company. We essentially ask people about their 90-180-day plan," he detailed. Mohan also advised start-ups not to set deadlines for investors as that would not help their cause.