Angel Investors- are they really the angels?
“An angel investor is a high net worth individual who invests either individually or as part of a larger investment group in a new or small business venture, providing capital for start-up or expansion. These accredited investors provide startups with seed money in exchange for an equity stake in the company. The idea here is that once the company becomes profitable, the angel investor can sell their shares for a profit.”- source the internet university – that’s what it says about “angel investors”
However the key question remains- why are they called angels? Well these days entrepreneurship has a new name – “start ups” more fancy more in fashion these days – you are no more the “baniya” you are now the “start up founder”. However the entrepreneurial bug originates in your dreams- the cycle is very simple dream turns into an idea which in turn translates into a business.
Every start up needs funds to begin the business- mostly known as “seed funding”- and what would you call the person who provides you that ? – An angel ofcourse J but yes angel investors play a very important and critical part in the start up eco system. Not only do they provide funds, they also mentor, take active and involved role in the operations of the organisation. Yes being an entrepreneur I know for a fact that what one needs is not just money but constant guidance – both of which are provided by an angel investor. Moreover the “angels” often invest in risky, unproven business ventures for which other sources of funds—such as bank loans and formal venture capital—are not available.
An angel investor has to be a keen observer and should be a good networker to be able to spot the right opportunity for investment. Angel networks today provide curated platforms for angel investors to invest in a wide array of start ups from across multiple industries which get incubated and are therefore more probable to succeed. The TME (Time, Money and Effort) returns therefore for an angel investor investing through incubator promoted angel networks is far higher.
What do the angels love in an entrepreneur:
- Showcase Value
- Showcase Commitment
- Showcase Authority
- Be Invested
- Be Realistic
Important to always note that what an angel investor brings to the table is “money on time” and “advice on time”- value in both cases lies on timeliness.
As we read in history – BC (Before Christ) and AD (Ano Domini- After Christ), we are currently in a similar scenario and businesses, mindsets, economy and behaviours would get explained in 2 time zones – BC (Before Corona) and AC (After Corona).
Few emerging trends in the AC phase would be the following:
- Increasing importance of “digitisation” – its going to be the new normal.
- Importance of health care and food availability – in my opinion agtech and healthtech are going to be the buzzwords.
- “Innovation” is going to be the new normal, be fast, be digital and be transparent!
It’s a once in a life time opportunity for existing as well as prospective angel investors to invest in the new age start up environment and eco system which is going to be more vibrant than ever before. It might sound cliché but its true – “Every Crisis brings with it a great degree of Opportunity”- this is the time to invest wisely and watch your money grow faster than ever before!
What should an angel investor do in current times?
- Be more networked than ever before
- Attend more conferences (through webinars) than ever before – time to take advantage and use all gadgets at home and be at multiple places at the same time
- Make full usage of the wi-fi at home and ensure you read up on emerging trends
- Be quick to spot opportunities
- Be even quicker to raise your hand and invest
Its simple right? Yes it truly is if you have the cash right now. So don’t even waste time reading the article – just run and grow your wealth! Yes be aware that all asset classes are going to yield at par/negative returns over the next couple of years if not more- I mean how often do we see oil barrel prices going negative! But look at governments globally they are trying to inject money into the economy aimed at:
- Maintaining economic growth
- Arresting rising unemployment issues
- Creating more and more small businesses
- Focus is on “tech and digital”
Historically it has been seen in the case of IA (India Accelerator) that the returns in 2 years have been around 5x-7x, now imagine what would that be in the post Corona era ! not only will you be going laughing to the bank , some of you might invest in tomorrow’s Tinkoff Bank (one of the most successful digital banks).