‘ANGEL INVESTOR TALK SERIES’

Institute of Management Studies,Ghaziabad-201009

on

7th April 2015

Angel Investors are individuals who invest in start-ups and early stage companies using

a high-risk, high-return matrix. The majority of start-ups fail within the first five years of

their operations. This makes the job of an angel investor even more invaluable. Apart from

investing funds, most angels provide proactive advice, industry connections, and

mentoring to founders. The goal is to create great companies by providing value creation,

while simultaneously helping investors realize a high return on investment.

INTRODUCTION

The Angel Investing market has been witnessing momentum in last few quarters & has

started evolving in unconventional ways to fill the gap. Since last few quarters, Angel

Investors have already become a noticeable source of funding for start-ups. This

momentum is expected to continue further as more angel networks are being started and

existing groups are increasing their angel base. The Government has started to

contributecontribute as an angel investor to help SMEs through its "Credit Guarantee Fund Trust for

SME" which allows banks to grant loans up to the sum of Rs.1 crore to small enterprises

without any collateral or security. Government set the committee which recommended

the Central Government to set up a National Entrepreneurship Mission whose sole focus

will be to establish a vibrant entrepreneurial eco system in India & provide necessary

funding convenience.

CURRENT SCENARIO

The Network looks at investing upto USD 1 mn, with an average of about USD 400-600K

and exiting over a 3 to 5 year period through a strategic sale. The Network may consider

investments over a million dollars but is only likely to do so through syndication.

In 2012-2013 Angel investors and seed funds emerged as the key backers of early stage

companies in that year as traditional venture capital investors seeked transactions that

were valued at more than $2 million (around Rs.11 crore).

AngelsAngels investing as individuals typically invest between $25,000 and $100,000 of their

own money. While there are deals that are more than $100K and less than $25K, this is

the area most angels fall into. Angel Groups work to syndicate many angels together into

a single investment that may average $750,000 or more. Angel groups are becoming

more prevalent and are a great way to get investment more quickly and all at the same

terms. Venture capitalists invest an average of $7 million in a company.

MARKET SIZE

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• Indian Angels Network

• Mumbai Angels

• Pitch India

• Venture Gaint

• TiE Entrepreneurship Acceleration Program

Angel Investment may be an individual

or a group of individuals.

• Sunil Kalra:- Indian Angel Network.

• Sharad Sharma:-Ex-Ceo YAHOO INDIA.

• Rajan Anandan:- Ex-M.D Google India.

• Krishnan Ganesh:-Ceo of Tutor Vista.

• Meena Ganesh:-Ceo of Portea Medical , provider of health care services in India.

• Ritesh Malik:-Doctor by Profession.

•• Indus Khaitan:-Senior Director ,Oracle.

• Vikas taneja:-Managing Director, Boston Consulting Group.

Few Angel Investment Individuals:-

Few Groups are :-

MAJOR INVESTMENT GROUPS OR INDIVIDUALS

You can take membership of any of the

above mentioned group and follow the Pro-

cedure.

If Looking for funds for R&D You must follow

the below

mentioned strategies:-1.Search for new technologies:-

This early stage is often called b asic re-

search, well before any specific commer-

cially viable limited primarily to large organizations with deep pockets, including government grants,

universities and large enterprise sponsors searching for disruptive technologies. Here your

options are limited primarily to large organizations with deep pockets, including govern-

ment grants, universities and large enterprise sponsors searching for disruptive technolo-

APPROACH TO GET ANGEL INVESTMENT

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2.Technology pilots:-

This is the transition stage from basic research to applied research. Applied research

is still primarily scientific study, seeking to solve practical problems, but doesn’t yet

focus on a commercial product. Funding sources for this stage extend from grants to

large private fund incubators, such as the IBM Watson initiative.

3.Commercial product prototypes:-

Funding for commercial product prototypes is still R&D in the eyes of venture capital

investors, but in business areas with large opportunities, this activity will catch the eyes

of specialized angel investors. It’s still considered high risk for investment, since

manufacturing and quality issues are likely.

4.Product verification and clinical trials:-

These days, almost every new product is not deemed scalable until it has been

certified as meeting a multitude of quality and agency standards, including the

Environmental Protection Agency (EPA), Food & Drug Administration (FDA) and Under-

writers Lab (UL). Specialized VCs start to jump in at this stage.

5.Business commercialization:-

Product development at this stage is the process of scaling up for manufacturing and

marketing rollout. The technology is now embodied in a solution that can be replicated

to reliably solve a real customer problem. Your fundability with investors now depends

primarily on the execution capability of your team.

6.Expanding the product line:-

Even for mature startups, there is always a need for further product development and

research to compete and diversify the business, and investors understand this. But to

prevent confusion with basic R&D, these costs should never be called out the major

category in your use of funds statement to investors.

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These investors aren't donating to charity. Most are disciplined investors; they are often

successful entrepreneurs and high-tech professionals in their own right. It's important to

understand an angel's personal priorities. Angels may be willing to take slightly more risk

with startups in a field of particular interest to them, or in companies for which they can

provide specialized expertise and guidance.

1. Don't be fooled by the word 'angel'.

Angel investing is a personal business, and angels rely heavily on personal networks of

like-minded investors. Many angels work in groups, jointly vetting proposals and putting

high value on others' opinions. Even when angel investors work separately, they share

ideas and listen closely to one another. The most important key to raising money from an

angel is often the good word from another angel.

2. Understand angel networks.

Most angel investments are within 50 miles of the angel investor, and angel networks are

often in geographic clusters. There's no mystery here: Early-stage investors need to stay

close to the people they are betting on. Silicon Valley and Boston have particularly big

clusters, but many other cities have them, as well. If you don't live near an angel cluster,

consider moving.

3. Look close to home.

Maxim Faldin and Kamil Kurmakayev, two Russian-born Stanford graduates, had no luck

raising seed money from traditional VCs for Wikimart, an eBay-like site in Russia. Then they

targeted their search for investors with natural affinities: those with Russian roots or

international experience, and people with experience in e-commerce. That led them to

Fabrice Grinda and Jose Marin--professional angels with extensive expertise in

e-commerce and global markets. Today, Wikimart is thriving.

4. Shared roots matter.

THINGS TO BE TAKEN CARE OF

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You may have a perfectly reasonable plan for a $10 million business. But angel investors

are looking for companies that can ramp up to $50 million or $100 million in revenue. Like-

wise, they aren't looking for incremental improvements over the competition. They want

"disruptive" ideas that will upend existing business models. If your idea is disruptive, how-

ever, can you hold on to it? Can copycats and incumbents jump in as soon as you've

shown the way?

5. Angels will hunt for the fatal flaw in your plan.

Angel investors want people who can execute the plan. They will place heavy weight on not

only your track record, but also your management team. Beyond looking at résumés, angel

investors want evidence that your team can work together when the going gets tough.

6. Your team may be more important than your concept--or even you.

The success of traditional angels has spurred a new breed of "superangels" or "micro

VCs." Like traditional angel groups, these funds invest in seed-stage companies but are

structured more like traditional VC firms that raise capital from outside investors.

7. Angels are evolving fast

The reason why most angel investors are less likely to make follow-on investments is

because of the risk associated with losing even more money when reinvesting in an

unsuccessful company. On the other hand, venture capitalists have a different approach to

follow-on investing. They tend to spend approximately 2/3 of their funds on follow-on

investments, taking the opportunity to allow companies to expand while diversifying their

current portfolio firms.

1. Rarely make follow-on investments

DRAWBACKS

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2. Can actually be deceptive

While the majority of angel investors truly look beyond the promise of monetary return,

there are a few angel investors who are greedy and motivated by money rather than in

promoting the good of the firm. These angel investors tend to be less patient with new

entrepreneurs and do not provide any mentoring or guidance during a company’s early

stage of development. To avoid such complications, it is crucial that an entrepreneur

obtain complete information about the character and reputation of any potential investors

before pursuing and agreeing to any terms.

3. Can be costly

In exchange for providing the needed startup capital for a new company, many angel

investors often require a certain percentage of stake in a company, starting at 10% or

more, and expect a large ROI for their exit. From their perspective, this is a reasonable ex-

change since they are investing in very young and risky businesses that have not yet been

established. In addition, angel investors may hire skilled professionals to ensure the

day-to-day business operations.

4. Active company involvement can lead to problems

Each level of company involvement varies from investor to investor; however, it is not

uncommonuncommon for an angel investor to have a certain amount of control in running a company.

The entrepreneur may unwillingly be forced to give up some degree of control in order to

meet their angel investor’s requirements, which can often lead to resentment on the part

of the entrepreneur. Another problem that may arise is the angel investor’s lack of industry

experience. This limited knowledge adds very little value to a company’s success. That is

why entrepreneurs should only seek angel investors with proven experience in their

industry.

5. Do not have national recognition

While there are well-documented directories of venture capital firms available, there is no

national register for angel investors. Due to these differences, angel investors do not have

the national recognition as their VC counterparts. They remain hidden and mysterious but

choose to do so in order to have a degree of separation from entrepreneurs, who may

pester them with their business plans and telephone calls.

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Shailendra Pratap Singh (born on July 17th 1974 Sultanpur

district Uttar Pradesh, India) is an Entrepreneur and Social

activist. He pursued his B.Tech (Mechanical Engineering) from

IIT Kanpur (1992-1996). He started his professional career by

joining public sector Company in India and later on moved to

USA.

In year 2005 he started his own enterprise M/s Neometrix Engineering (P) Limited

(www.neometrixgroup.com) in high technology engineering domain in India. M/s Neometrix

supplies engineering equipments and services to Indian Airforce and other defence

establishments.

With CNG Industry taking center stage in AUTOMOTIVE and seeing the opportunity, he

started M/s Paskals Fluid Systems (P) Limited (www.paskals.com) in year 2008. M/s Paskals

focuses on High Pressure liquid & gas Technologies.

InIn India, industrial buying/ procurement is highly inefficient. Having firsthand experience in

industrial buying and selling he launched Online Industrial Megastore www.industrykart.com

. Industrykart works on three premises namely Certified Genuine Products, Ex-Stock Door

Delivery & Guaranteed Lowest Prices.

Mr.Mr. Singh is also associated with various social organizations. He also contested Lok Sabha

Elections in 2014 from Sultanpur on Aam Aadmi Party ticket. He runs two foundations “Build

India Foundation” and “I Teach One Foundation” with an idea to give back to the society. He

also gives guest lecturers in engineering/ management colleges for entrepreneurship

development. He also organizes motivational seminars for school & college students. He

works as motivator, guide & dream builder for youth.

About

Group company

Website: www.thespsingh.com Email: Shailendra@neometrixgroup.com...

facebook.com/thespsingh@thespsingh blogspot.thespsingh.com...

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