Concept of Angel Funding- The Beginning
Every industry goes through a cycle of older trends being refurbished and newer trends getting outdated with time. Recently India is experiencing a startup friendly ecosystem. Thanks to the advent and openness of Internet, people are able to quickly understand the “how”s and “where”s of building a startup.
One of the biggest challenges that anyone with a business plan in mind would face is looking for the right investor- someone who trusts and accepts their vision of the company. Earlier, the investors were usually the family members or friends or well-wishers but not everyone was lucky to find the right person for their business in their own circle. This necessity sprouted the idea of new-age funding concepts like “Angel Funding” and “Crowd-funding” to seed the startups.
Angel Funding vs. Crowd Funding
Angel funding is the process of getting the financial assistance to start a company from an interested angel investor (not necessarily a familiar face). This concept is essentially a marriage of two parties- The one who has the money for a good investment and the one who has the good idea and is looking for a launch pad to kickstart their venture. The resulting collaboration becomes a win-win situation for both. There are numerous online forums, communities, websites, meeting and conferences held to help the startup-enthusiasts find their suitable angel investors.
Crowd funding on the other hand thrives on the age-old concept of “pitching-in”. Someone who has a brilliant idea can explain about that in a public online forum. People who are interested in the concept and are willing to contribute to get it started can pitch-in small amounts to meet the target. The person with the idea for the startup should also be prepared with a good pitch to convince people for their business.
Both these methods have their pros and cons but they have clearly redefined the way people look at starting their own venture. Let us discuss about Angel Investments in detail.
Can anyone become an angel investor? Angel Investors are typically wealthy individuals who can provide the capital for the business. In return, they seek convertible debt or ownership equity from the business. There are guidelines to accredit a genuine angel investor to help the business-owner to join hands with the right person. There are no limits in the investments that an angel investor can make for a particular project. Apart from the monetary benefits they offer, angel investors also help the business-owner with mentorship, assistance, important contacts and other business oriented guidance to help their startup grow.
Examples of Angel-Invested Companies in India
Though the concept of angel investments is quite new to the Indian market, the trend is slowly catching up. India has the world’s third largest startup ecosystem and the first six months of 2015 has seen more funding from venture capitalists than the whole of year 2014. Some of India’s leading companies now (startups a few years back) are funded by angel investors in India and this success has made several influential people to start looking for brilliant and innovative ideas. Some of the popular examples are Flipkart, SnapDeal, Myntra (now acquired by Flipkart), Urban Ladder, Ola Cabs, Car Dekho, InMobi, Thrillophilia etc.
Prominent Angel Investors in India
As the startup market is booming in India, the country is seeing an influx in the rate of number of angel investors every year. There are several angel networks operating across several regions of India. For example: Indian Angel Network is the oldest Angel Investors’ club that is still actively funding companies across the world. Mumbai Angel’s network comprises of members who ventured early in this Angel Investing market and have made some crucial investments. Likewise Harvard Angels network is run by Indian Harvard alumina and there are regional networks like Hyderabad Angels and Chennai Angels as well.
Apart from these networks there are a few billionaires who also happen to be some of the most prominent names in the angel investors’ community. Some of the notable names include Mohandas Pai, Ratan Tata, Sachin & Binny Bansal (The Flipkart Brothers), Rajan Anandan, Kris Gopalakrishnan, Anupam Mittal, Sharad Sharma etc.
Building and managing a startup is no child’s play irrespective of the size and scope of the company. For people who are new to this arena may get extra-frazzled looking at the enormity of the details and background works to be done.
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