How to Approach Angel Investors In India In 2022 – Step By Step Guide

One of the common challenges that most startups face is finding an initial investment to get off the ground. Your dream startup might get started by raising funds from your savings, friends, or family members.

But, when you want to push your dream further beyond the odds, you need much more than that.

When you start to accelerate your startup growth, capital issues or a cash flow crunch can hit you hard.

And if you think to get finance from a bank and that also with adequate collateral security, then chances to that are zero. Also, if the chances are there, taking too much debt at the earlier stage of your business might not be a good idea. It will only burden your business growth.

Yes! We know what you are thinking. How to exactly source capital for your business expansion, right?

Well, fortunately, there are a specific set of investors known as angel investors who are looking for opportunities to fund new business like yours.

So, if you are looking to get your startup or small business get off the ground, angel investors can be the perfect solution.

Now how will you find and onboard an angel investor to finance your startup?

Well, it is not easy to find the right angel investor for your startup, especially if you don’t have any experience raising funds.

So, in this piece, we will discuss who angel investors are, the things angel investors look for in a company, and how angel investors work with some key points on how to approach angel investors in India.

WHO IS AN ANGEL INVESTOR?

The real-life angels for startups business, Angel Investors is a high-net-worth individual who provides financial support to startups or small businesses in exchange for convertible debt (bonds) or equity (shares) in the company.

Unlike a loan, angel funding doesn’t bring any monthly repayment commitments or any obligation to repay the invested capital in the event of business failure.

Known by various names, such as private investor, seed investor, and angel funder not just bring money by investing in a promising early-stage startup. The wealthy individual brings their industry expertise and funding support for higher business profitability.

Angel investors are well-experienced and informed entrepreneurs who invest their time and support in startups by working in a close relationship with the entrepreneur to push the business forward.

WHAT ROLE DOES AN ANGEL INVESTORS PLAY IN A COMPANY?

As mentioned above, angel investors bring much more precious than money is their guidance and mentorship throughout the business growth process.

Angel investors can be anyone from any professional background. These startup investors are more passionate about business; hence, they are more focused on the startup’s success instead of its profits.

The investors take up the mentorship role and assist the business at every step. Their guidance and mentorship can be a very useful asset for the growth of the company.

WHY CHOOSE AN ANGEL INVESTOR?

Now, as you are very well aware of the magic that angel investors can bring to your business, it is a favorable choice to collaborate with them.

Networking and collaborating with an angel investor in the early stages of your business not only bring the capital but also the industry expertise and contacts that led your business on the trajectory of success.

Beyond finances, an angel investor offers strategic, marketing, and operational expertise to a business. Also, the magic point, your business can get multiple investments if required at various stages of business from the investors.

WHAT DOES AN ANGEL INVESTOR LOOK FOR IN A BUSINESS?

1. Founders’ beliefs and commitments

The two strong motivating force for any business is the founder’s vision and commitment to their customers.

Even the top investor of India, Rajan Anandan, emphasized that he would bet on the founders whom; he believes are solving a real problem.

2. Traction and scalability of your business

Business traction defines the momentum or signs of a growing business, for instance, a measurable customer base, sales growth, etc. That means the higher your business traction the more investors are attracted to your organization.

The other term scalable business means the potential of a business to multiply revenues with a minimum cumulative cost.

3. Good management team

Having a good management team is very important. If your team is not efficient, there is no point in having a great startup idea. Angel investors generally like to interact with the founder’s team and management team to access their quality.

4. Size of the target market

Revenue generation depends upon the target market. If your product or service is imploring to a large population, investors would be interested in investing in your idea.

5. Reasonableness in evaluating your business plan

Be sure, to be honest, while estimating your financial numbers on your business plan. Proper research is a must to get a reasonable estimation of the valuations so that there is no overvaluation as well as undervaluation.

At My Valuation, we have years of valuation expertise and help businesses figure out their correct financial numbers. So if you want to find an accurate valuation for your startup, reach us now.

6. Feasible Exit Strategies

Angel investors are patient and willing to invest in the long term. As profit is not their main motive, they expect some sort of return on their investment. Therefore it’s obvious; for investors to look for an exit strategy to reap their benefits.

The most common exit strategy is the sale of shares to the company’s principal founders. Another common thing is selling the business to strategic buyers. 

STEP-BY-STEP GUIDE ON HOW TO APPROACH ANGEL INVESTORS FOR FUNDING IN INDIA

Step 1: Create Your Pitch 

Making your deck pitch is as important as your idea. When approaching an angel investor, your first task should be preparing a persuasive pitch deck. 

Make a PowerPoint presentation with all necessary pitch desk components. 

You need to explain all components such as your idea, business model, team, current traction, target market, income potential, and competition analysis.

The pitch deck you create must be simple yet clear to cover all the key elements of your business. 

And don’t forget to consider all your business challenges and be ready for all the tough questions.

Step 2: Make your product/service prototype

Create a practical illustration of your product/service idea that bring your idea into the world to see if it is actually attainable.

This helps you show the investors that your business plans are achievable and not just numbers.

Hence, having a prototype of your product helps you to persuade your angels and get your angel funding.

Step 3: Finding an Angel Investor

With so many wealthy investors in India, it has become easy to find them online on platforms like Twitter or LinkedIn. 

You just have to search for angel investors based on your industry and send them a direct message with your quick yet powerful pitch on LinkedIn.

Also, we have sorted out the list of the top 10 most active Angel Investors for Indian startups with their quick investment and portfolio details in one of our blogs so do check it out for your reference.

Step 4: Be Confident

It is very important to stay confident while presenting your idea. 

After all these successful steps, you need to explain your ideas, business plan, and product or service prototype to your business investor confidently. 

Do not become anxious about the result; just show them how passionate you are about your idea, how you will market it, and scale your revenue.

THINGS TO KEEP IN MIND WHEN CONNECTING WITH ANGEL INVESTORS IN INDIA

Proper Research:

If you are new to the startup world, then you should definitely make it a priority to do proper research. Proper research of your target audience, their needs, and preferences is a must. 

Angel investors have been investing in various products and services for many years; hence, you cannot just go and present an incomplete idea to them and make them believe it will work.

Angel investors only invest in you if they are impressed by your research and knowledge.

Contact Angel Investors In Your Niche:

An entrepreneur from the finance industry approaches investors experienced in the health sector. 

Does this make sense?

Obviously not!

Contacting an angel investor having expertise in your specific industry makes it easy for them to comprehend your ideas and concept well.

Also, their established networks with other reputed investors can be a plus point for your business. These networks can help your business expand and grow.

Networking:

Angel investors are more likely to be found in business events and conferences looking specifically for investment prospects. 

So you need to follow your angel investor, network with others by connecting investor groups, Indian angel networks, and attending business meets.

Some dependable angel networks are Angel.co, Investment Network, Let’s Venture, Your Nest, etc.

Showing Past Business Ventures Success:

Showing investors how successful your past business was can influence angel investors to come on board and invest in your business.

Your past business venture records will make an impact on angel investors and make them believe you can grow your startup after getting adequate funding.

MOST IMPORTANTLY

We know how your startup requires strong support and guidance at the time of expansion. To reach a stage of progress at an early stage of business calls for assistance from experienced business entrepreneurs like Angel Investors.

Now how can My Valuation help you?

My Valuation helps you with the most important part – a reasonable valuation. Having an accurate startup valuation is very important when you are ready to pitch your angel investor for funding. 

My Valuation is an IBBI Registered, full-service startup and business valuation firm ensuring accurate Valuation for startups.

So, if you have a good startup idea and are ready to pitch your angel or need guidance on every step of your entrepreneurship journey, Contact us now; we will help you with accurate and dedicated valuation services.

Please visit our site to learn more about our valuation services: https://myvaluation.in/