For Startups India is Home to 26,500+ Angel Investors
According to Fortune India today is home to a 26,500+ strong community of angel investors with members comprising of private investors and successful entrepreneurs. This is indicative of a fast-maturing ecosystem that has increasingly become mainstream due to factors like successful listing of startups in the capital market. FY21 saw the peak of angel investing with ₹746 crores raised in seed funding deals. Additionally, the top 100 angel investor portfolios showed investments in 3,231 startups. These startups, in the same year cumulatively mopped up $13 billion in investments.
What is interesting to note is that India has one of the world’s leading startup hubs with more than 50,000 startups at various growth stages. In 2021 alone, 42 startups gained unicorn status and 11 floated their IPOs – attracting cash-rich angel investors across the countries. As a result, 708 Indian startups received seed funding worth $1.1 billion with an average deal size of $2.3 million.
Who are Angel Investors?
Angel investors also go by – seed investors, angel funders, and private investors. They are typically high-net-worth individuals who financially back startups and entrepreneurs in exchange of a proportional share of the company’s equity. The term could also be extended to include lawyers, bankers, employees with cash from ESOPs, salaried corporate employees, serial entrepreneurs, family members, and friends
The fund angel investors provide are usually one-time investments that help companies kick-off or support themselves through difficult growth stages. Due to the high risk involved, such investments do not attribute for more than 10% of the investors’ portfolio. The mostly enter seeding investments as they have access to additional funds and are looking for high rate of returns that might otherwise not be possible through more traditional investment opportunities.
What sets angel investors apart is that their terms are relatively more favorable than that of lenders. And unlike venture capitalists who need proof of the business’s viability and tangible performance metrics, angel investors invest in the founders rather than the viability of the business.
Why Angel Funding?
Angel investors are what you could call – sophisticated investors who are interested in making long-term investments. And because angel investors act more as partners, entrepreneurs could leverage the investor’s expertise and network to build and expand their business. Because they are partners in both, profit and loss, entrepreneurs don’t have to worry about returning the money. However the true cost of onboarding an angel investor is handing over control of part of the business. This makes it essential for businesses to do a thorough background check on the investor to establish if they are in for the long-term or for quick returns and to determine if they are the right fit for the business
Today the angel investing space has seen an increase in successful entrepreneurs backing upcoming startups with their finances and expertise. Some notable names include Paytm’s Vijay Shekar, Flipkart’s Sachin Bansal, and Zomato’s Deepinder Goyal. Other public figures like Deepika Padukone, Sachin Tendulkar, Alia Bhatt, and MS Dhoni too have investsed in multiple startups.
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