Apart from individuals who invest in startups, many angel investors are part of a network like the Angel Investors Consortium [AIC] or the Indian Angel Network.
Angel networks like AIC help angel investor members co-invest in startups that have been shortlisted for presentation to angel investors. Angel groups and their partners like The Hatch not just review and shortlist startups from many proposals received, but they also help startups fine-tune their business plans, rework strategy and make the business case more compelling.
As angel investments are a relatively new and emerging phenomena in India, there are only a handful of really experienced angel investors. Maturity in understanding the investment process, especially while dealing with challenging times during for the startup, is invaluable. Even when you get investments from angels who are investing for the first time, it is prudent to have a co-investment from a more experienced angel.
Some points to remember when selecting angel investors:
- Evaluate what the angel investor gets to the table in addition to capital: How willing is the angel investor / angel investor group willing to assist you in your entrepreneurial journey. But do remember that this can be a double-edged sword. You want the advice and guidance, but do not need operational interference.
- Does the angel investor’s vision match your vision, aspirations and goals: This is critical as a mismatch in goals and vision could lead to conflict on the direction the company could take.
- How read is the investor to lose his investment: This is a critical point. Angel investments carry the highest risk, and most angel investments are not even able to recover their capital. While you would aim for the best outcome, the angel has to be prepared for his capital to be fully wiped out. Hence, it is important that the angel investor understands that they should invest only as much as they can comfortably lose.
- What is the network of the angel investor with the institutional investors i.e. VCs: Angel investors with deep connections with investor groups and investors are great help while raising the next round of capital
- Do the paperwork well: even if it is limited paperwork, and significantly lesser documentation than would be required in an institutional funding round, do evaluate the term sheet carefully. Even if the angel is not keen on proper documentation, do insist on completing the paperwork. This is especially true in the case of a friends & family round when the paper work tends to get ignored.
How to reach angel investors or angel investor groups?
Angel investors are typically High Networth Individuals [HNIs], most often successful entrepreneurs or very senior professionals. Some institutional investors also participate in angel funding in their individual capacity.
Angel investors are flooded with requests for funding, and because they invest in the highest-risk stage of startups, they have to be selective in the deals that they invest in. One of the important criteria that angel investors use is to ‘seriously evaluate’ deals that have come from reliable references. It is also for this reason that many angel investors prefer to go through angel networks like Angel Investors Consortium.
To connect with the Angel Investors Consortium, write to us at firstname.lastname@example.org