The idea of the startup itself paves the way through problems. Then hits the zone where a startup is unable to find any funding. This makes the innovation go to waste. It was in the year 1992 when foreign companies were first to allowed by the Indian Government to buy stocks of Indian companies on the stock exchanges. Hence the concept of Angel Investors came into light that stated them to be individuals with high net worth who invest in startups or independent entrepreneurs to provide financial backing to them. This is prima facie done in exchange for ownership equity or convertible debt.
These angel investors most of the time invest in these startups when they are on a verge of failing or in the starting when capital is needed, this is mostly a one-time investment. Well, usually the blueprint of investment is through equity crowdfunding and through sharing investment capital by putting themselves into angel groups or networks and also by advising their portfolio companies. Angel investors for startups are also known as private investors, seed investors, angel funders, informal investors, or business angels. Angel investments are mostly one time and aim at assisting the take-off of a startup. The number of angel investors has increased over the years especially in India. According to research on the Indian Angel Network which s the country’s largest angel network, it has come to light that more than 20% of their total investors reside abroad. Foreigners are aware of the fact that India is a developing country that is growing at a high rate and therefore is a very vibrant place for investment and similarly startups are the ‘avant-garde’ of this new India and therefore has a scope of innovation, experimentation and accommodation.To support the growing number of startups in the country, there are a number of angel investors and platforms that are a part of Angel Investors India Network.
Dubai angel investors group DAI is one of the recently established angel investor organization in Dubai which is increasing rapidly. There exists many such organizations which have the same purpose and investing through these organizations is the best idea because you get access to several investors one which means you do not have to go pitching around your idea to hundred different people, you get it all in one go. It includes experienced angel investors, venture capital partners and various successful executives. These all have a common desire to invest in startups/ small companies because they are open to new ideas and venturous which yields more profit. Another benefit of investing through an angel- investor groups is that it yields mutual benefit because on one hand startups and entrepreneurs do not have to pitch their ideas repetitively the investors do not have to sit through several pitching’s in a day they have a dedicated group of professionals who help them do that to fasten the process and make it more efficient.
How startups advent to the investors
Be it any task, the onset shall be marked with thorough researching of the potential angel investors- researching happens from both ends, startups search for the potential angel investors who wish to invest in their area of growth search for startups how are trying to venture into a new arena because startups are the major source of experimentation and innovation and therefore they look for new interesting opportunities to invest in.
The theory of ‘elevator pitch.’ It is a presentation done by the entrepreneur/ startup for the networking company to propose their plan of action or idea. This pitch is then reviewed by the secretariat. This presentation or elevator pitch is the most important phenomenon because it brings forward the plan of action and this is the basis for the investors to select a particular startup for investment.
Building Connections: Startups contacting a certain member assigned for communications who then begin the process. This is the member of the investment committee and reviews and advises the entrepreneur/ startup on its application about if it is adequate, if not what needs to be added/ subtracted likewise. This concludes the first step of the process.
Application & Paperwork: Applying to the investment committee for screening and selection purposes. This is the factor that decides if you have the potential to be called for pitching or not.
Placing ideas on the table: The final step involves, pitching to the committee and the investors, this is the final step of the selection process. If liked by the investors you get selected and the further process of you getting the investment begins. The appeal your application and pitching make to the market/the people of the investment committee and the investors is the determining factor in if you get the investment.
One also needs to prove to them if they are capable of making a profit and try to substantiate it with examples of similar ideas that succeeded or with some facts that will help make your point. The basic idea is to make the customer willing to pay for your service, then only will the investor pay for your service too. You need to make sure that your business proposition is scalable and profitable with modest volumes for both you and the investor. It adds if it is a globally spread business which decreases its chances of failure and therefore investors are more attracted.
Another factor that is looked at while reviewing applications and most importantly during pitching is the psychology of the team and its leader. How well they can handle vulnerabilities, uncertainties, complexities, ambiguities and other important psychological factors which are essential for running a business because if the team is not capable however goof the idea it might not work, therefore it becomes important to determine all these factors. And it is also looked that how many people comprise a team because volume helps it grow, it need not be a mass, a team of 2-3 people is good enough to gain the investors' trust. Every heard of HealthifyMe? Neelesh Bhatnagar, a Dubai-based angel investor has invested $1 million in mobile health and fitness start-up HealthifyMe. Hence making it an intriguing example for a company that was originally a start-up receiving funds from a Dubai- based investor.
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