Anatomy of Indian Angel Investor – What they are looking for and want

I met many angel investors during my visit to Mumbai as well as have interacted with them at various other occasions including my failed attempt in 2008 to raise some fund for a project of mine, so I do have experience of 3-4 years of understanding angel investors fairly well, so here is a post about how Indian investors think and work. I hope it helps few of you guys who are looking to raise some funds.

1. Most of them look to spend 50 lakh (unless they are very sure that the idea is great in which case they will get money from some network) only so if you are looking to raise say 2 crore, you need to find multiple angel investors.

2. The chances of putting money on just idea are very less, like 1 in 1000. Everyone want to see some working revenue model and first client. For US angel investors, proof of concept normally do it but this is not the case with Indian angel investors.

3. They are there to make money, none of them is looking to change the world so if your model has no earning potential, you better find something before approaching them.

4. They love IIT/IIM people like anything, try to find someone and get in your team as a mentor if that is possible.

5. Most of them will never say direct No and will keep you in loop, something you should be careful of, as you don’t want to waste your time chasing angel investors, if your product is good, they themselves will come to you,

6. Don’t expect them to put money unless you yourselves haven’t put any. Every angel expect you to put 20 lakh atleast from your own side first to make them believe that you are serious. Ofcourse for web startups you don’t need this much money specially if you yourself can do all the work but still, they do want you to take the first steps and risk before they put their money.

7. Angel Investors don’t like people who are doing jobs and running the startups in parallel (why will they?), so if you are looking to approach angel investors, you better have a really good reason of why you are keeping your job and when you are planning to quit.

8. I often got this feeling that most of the Indian angel investors like to play very safe, I mean may be because of lack of proper funding options for startups, the “power” balance is highly shifted towards them, hopefully in next few years, this shift gets more balanced with more money getting poured from NRIs.

9. If you have a team of 2-3 people, the chances of you getting the funding is higher then a single person, I personally feels 3 is a crowd and 2 are enough.

10. If you think you can not survive without the angel funding, offer them good equity, say 30% for reasonable price, say 50 lakh. Giving 30% may look big but this will help you to get moving. If you don’t want to give this much equity, raise money on your own first or find more partners.

11. Be realistic and think from the investors point of view, you better don’t attach any immolation, they are a real turnoff and shows your immaturity.

12. Did I mentioned that they are only there to make money ?