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The Angel Investing Masterclass

The Angle investing masterclass was one of the much-awaited and much-anticipated sessions at LetsIgnite 2017. None other than Anupam Mittal kicked it off. Till date, Anupam has had numerous successful and profitable angel investments. Setting the context for the session, he touched upon the broad contours and learnings he has had over the years as an angel investor.

Take a look at some of the key points that he touched upon in the session:

  • The investment trends for the next couple of years are going to be tough.
  • The greatest companies built in the world are, more often than not, built during downturns.
  • The second phase in the early stage investing is on the horizon, which needs institution creation, fund of funds, and consolidation.
  • Angel investing is a long-term investment, say, 8-10 years.
  • While putting down money is the easiest thing to do as an Angel investor, managing your investments, the process, the related documentation can take up a lot of your time.
  • He highlighted the importance of what he calls, Angel Karma, the need to NOT be a jerk.
  • Angel investing is not a science, but something you intuit; deciding quickly and not leading founders on, creates a lot of Angel Karma.
  • Whether you diversify your investments or go for a thesis-based approach, is your personal choice/decision.
  • High quality founders and investors are an Angel investor’s best bets.
  • Since liquidity is low in India and it is such a high friction economy, exits tend to take longer.
  • For exits, timing and discipline are important.
  • Understand companies, markets, and funding environments before investing.
  • The real test of angel investment success is NOT the number of investments but what happens to those investments.

Anand Chandrasekaran, a founder’s funder/angel investor in his own right, took to stage after Anupam, and concurred with his idea of Angel Karma. He also stressed on the importance of being straight and honest with founders from the beginning. Further, he went on to give anecdotal examples of his own experiences of investing in various startups and how they succeeded or tanked, and what learnings he took away from them. Here are the highlights of some of the issues and points he touched upon:

  • Word-of-mouth is still very valuable in India, especially in the startup-investment ecosystem.
  • ‘Don’t lose money,’ is a good investment thesis to have as an early investor, and it is okay to have a simplistic thesis initially.
  • Building anything worth value is going to take time, and so Angel investing is a long-term bet, rather than a short-term one.
  • Focus and make each investment as ‘the only one you ever do.’
  • Good business diligence is important for an Angel investor. Try not to rely on co-investors to do that. Do it yourself.
  • Entrepreneurs are at the heart of the equation in every deal, not exits.
  • He likened Exits to elephants in the room that nobody wants to address. However, Anand stressed the importance of proactively talking about exits and getting it out of the way, so that other important issues can be addressed.
  • Younger founders are ready to disrupt the ecosystem, and it is a fact that everyone needs to get used to.
  • An Angel investor needs to be on the lookout for ‘force-multiplier’ founders, who not only generate returns, but also bring forth valuable information and interactions.
  • In the early stage, if you come across a good opportunity, do not say NO for issues based purely on valuation. During this stage, you won’t lose, but the potential to gain could be exponential.
  • As an Angel investor, when meeting with a founder, talk for less than a third of the time and listen to the founders for two-thirds of the time.

Sanat Rao, the third participant of the masterclass, a VC, gave his viewpoint on angel investing and how to go about it like a VC. He made it clear that a VC is basically investing someone else’s money, that it is an alternate investment. That it is a game of high risk, high return. Some of the salient points he touched upon are here below:

  • VC and PE funds – a game of high risk and high return.
  • The #1 thing that a VC looks for – passionate, driven founders who are great storytellers and who are able to change the narrative.
  • VCs look for a startup that can do ONE important thing 10x faster, 10x better, and 10x cheaper, that delivers non-linear growth even when the input remains linear, and rapid month-on-month growth on key metrics.
  • The VC needs to figure out if there is space to build a business in that domain, before investing.
  • For the company to get funded in the next round, an Angel investor needs to be a long-term planner; help the founder to get their story right; make the right introductions with customers, partners, investors, etc.; help with the pitch deck, metrics, etc.; and stay engaged with the startup even after the money is raised.

The last participant of the masterclass, Shweta Shalini, is the spokesperson of BJP Maharashtra, who is also the social media wizard responsible for building Brand Modi. Stressing on the importance of building your own brand and strategy as an angel investor, she gave insights into how to go about doing it.

  • Angel investors should not only invest in the company, but in their own brand as well.
  • Brand building is a long-term process that requires leveraging people with power, and using technology to drive that power.
  • The 3 important things that helped build Brand Modi include: subtle image building, fan base formation, and increase in youth population.
  • The power of people is important in building any brand. People should ride on technology, not the other way round.
  • Building a brand is a 24×7, 365-day process. You are, in essence, carrying your brand all the time, everywhere, and you are constantly adding to it.
  • Content is king, so it’s important to ensure that it is positive.
  • Building your image according to target group is extremely important, as opposed to your own beliefs and perceptions.
  • Talk to influencers who can influence the decision of followers to make a change.
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