is glamorous, but the big question is how much returns can they generate as an
investment asset class?
young, emerging companies working on breakthrough innovations that would fill
the need gap or eradicate existing complexities in the ecosystem. These
companies are in a constant endeavour for new development and researching new
markets. They have agility embedded in their inventive thinking. Angel investors
fund a startup for several reasons but the first and foremost reason is that
they believe in that idea, project or passion. They want to make the
entrepreneur startup successful with the help of the disposable capital
available at their end.
startups is more an art and less of a science Ė it isnít meant for everyone; it
is subjective. There is no method to this madness, nor a defined college degree
to help you learn venture investing. Every deal, experience and strategy shared
in the public domain is anecdotal. Angel investors provide capital for small
entrepreneurs but are not in the money-lending or financing business. The
finance they provide is for that first round of seed capital to make the idea /
vision into a reality. Entrepreneurs can also find angel investors in their
family and / or friends who will support them with capital on terms favouring
them. Angels risk their money in people, teams and ideas which are fragile in
nature. Hence this is termed risk capital investment.
individuals who have a good, successful background; their names evoke trust in
the minds of customers or future investors. They back the startup by
associating their name with it, which provides the entrepreneurs the required
creditworthiness in the market.
Why I love startups
as an asset class for investment is because I can offer my time besides my
capital. In other investments like public equities or real estate I canít
influence an outcome. Venture investing is a people business, so if you
like meeting, working and helping people, then your chances of success are very
high. With early stage startups as their lead investor, I work closely with the
founders to create a positive outcome. Before beginning a discourse on the
merits and demerits of investing in startups, letís first understand investing
in startups from the bottom up.