UNDERSTANDING SEED/ANGEL FUNDING FOR

START-UPSPresented by

ANSIF EK (1st Mcom ,MEA SS)

Introduction• Many businesses start with a dream, but it takes more than

just a dream for them to grow into successful businesses Funding is a major concern for start-ups and small businesses.

• Start-up companies are newly founded companies or entrepreneurial ventures that are in the initial phase of development.

• They are most commonly associated with high-tech projects, development and production, distribution of new products, processes or services.

• Financial institutions have been generally found to be reluctant to extend credit facility to the first generation companies or entrepreneurs in view of their risk perception.

• Here the scope of Seed money and angel capital

Methodology and Objectives• The study is based on the secondary data which

has been collected from websites, Books, Journals. Research papers etc. The study is mainly focused on the following objectives

• To study the concept of seed / angel funding • To find out the latest statistics of seed / angel

capital • To distinguish between seed capital ,angel

funding and venture capital • To identify who are the seed/angel investors

inn india and their supreme clients

Start-ups • The Ministry of Commerce and Industry released a

notification on April 1, 2015 to define a start-up. According to it, “an entity will be identified as a start-up.

• 1. Till up to five years from the date of incorporation.

• 2. If its turnover does not exceed 25 crores in the last five financial years.

• 3. It is working towards innovation, development, deployment, and commercialization of new products, processes, or services driven by technology or intellectual property.”

Angel Investor• The term "angel" came from the Broadway theatre,

when wealthy individuals gave money to propel theatrical productions.

• In 1978 the term "angel investor" was first used by the University of New Hampshire's William Wetzel, founder of the Centre for Venture Research. Wetzel completed a study on how entrepreneurs gathered capital.

• An angel investor is an individual who invests his own money directly in a seed stage venture in which there is no family connection.

• The angel investor could be acting alone or in a for-mal or informal angel group.

Types of Angel • 1. Business Angel They are private individual who invests and shares his personal management experience with the start-ups • 2. Entrepreneurial Angel They are very rich entrepreneurial individual who invests to diversify portfolio or expand current business • 3. Corporate Angel Company that make regular large angel type for majority stakes • 4. Professional Angel They are investor with background in professional careers, such as doctor, lawyer, accountant • 5. Latent Angel They are rich individual who has made angel investment but not in the past three years

Seed Capital Also known as seed funding or seed Money Seed capital is the initial capital used when starting a business,

often coming from the founders' personal assets, friends or family, for covering initial operating expenses and attracting venture capital

The term seed suggests that this is a very early investment, meant to support the business until it can generate cash of its own or until it is ready for further investments. Seed money options include friends and family funding, angel funding, and crowd funding.

The seed stage of investing is the first level of raising capital outside of the most common reach of the Entrepreneur such as self-funding. Usually, this round is sourced from professional, experts or seed capital investors such as Angel Investors can either individually, or in an angel group comprising small individual angel investors. Since Angel Investors in most cases having their own businesses have experience, being a founder they can provide more than just capital.

Investment Profile• Angel investments bear extremely high risks and are usually subject to

dilution from future investment rounds. As such, they require a very high return on investment. Because a large percentage of angel investments are lost completely when early stage companies fail, professional angel investors seek investments that have the potential to return at least ten or more times their original investment within 5 years, through a defined exit strategy, such as plans for an initial public offering or an acquisition. Current 'best practices' suggest that angels might do better setting their sights even higher, looking for companies that will have at least the potential to provide a 20x-30x return over a five- to seven-year holding period. After taking into account the need to cover failed investments and the multi-year holding time for even the successful ones, however, the actual effective internal rate of return for a typical successful portfolio of angel investments is, in reality, typically as 'low' as 20–30%. While the investor's need for high rates of return on any given investment can thus make angel financing an expensive source of funds, cheaper sources of capital, such as bank financing, are usually not available for most early-stage

The Most Active Angel Investors in 2016• Position Name No. Deals 1 Dheeraj Jain (Partner, Reddiff Capital) 23 2 Anad Chandisekara (Strategic Head ,Facebook Messenger) 20 3 Kunal Naresh Shah

(Founder and Chairman,Freecharge) 19 4 Ratan Naval Tata (Interim Chairman,Tata Sons) 17 5 Anupam Gopal Mital (Founder And CEO,People Group) 15 6 Anuj Golecha (Core Team,Venture Catalysts ) 15 7 Rajan Anandan (MD,Google India& South India) 9

Seed And Angel Investors In India

No. Name Company Location Address

1 Abhishek Rungta Seeders Kolkata http://in.linkedin.com/in/abhishekrungta?trk=pub-pbmap

2 Adit Parekh Blume Ventures Mumbai http://in.linkedin.com/pub/adit-parekh/14/400/369?trk=pub-pbmap

3 Alok Mittal Canaan Delhi http://in.linkedin.com/pub/alok-mittal/0/a/590?trk=pub-pbmap

3 Anil Joshi Mumbai Angels Mumbai http://in.linkedin.com/in/aniljoshi74?trk=pub-pbmap

4 Bala Parthasarthy Angel Prime Bangalore http://in.linkedin.com/in/balaparth?trk=pub-pbmap

5 Bharti Jacob Seed Fund Bangalore http://in.linkedin.com/pub/bharati-jacob/3/240/a70

6 Deepak Shahdadpuri Beacon India Private Equity Mumbai http://in.linkedin.com/in/deepakishahdadpuri

7 Ganesh Krishnan Tutor Vista Bangalore http://in.linkedin.com/in/ganeshk8 Gaurav Kachru 5 ideas Delhi http://in.linkedin.com/in/gauravkachru9 Harish Bahl The Smile Group Delhi http://in.linkedin.com/in/harishbahl?trk=pub-

pbmap10 Karthik Reddy Blume Ventures Mumbai http://www.blumeventures.com/team.htm11 Manav Garg Indian Angel

Network Bangalore http://in.linkedin.com/pub/manav-garg/0/254/227

12 Palani Rajan Innovation angels US http://www.linkedin.com/in/pvrajan?trk=pub-pbmap

13 Pallav Nadhani Seeders Bangalore http://in.linkedin.com/in/pallavn14 Pankaj Jain 500 Startups Delhi http://in.linkedin.com/in/pankajjain15 Pearl Uppal 5 ideas Delhi http://in.linkedin.com/in/pearluppal?trk=pub-

pbmap16 Rahul Khanna Canaan Delhi http://in.linkedin.com/in/khannarahul?trk=pub-

pbmap17 Raj Chinai HBS Angels Bangalore http://in.linkedin.com/in/rajchinai18 Rajan Anandan Google Delhi http://in.linkedin.com/in/aniljoshi74?trk=pub-

pbmap19 Rajesh Rai Innovation angels Bangalore http://in.linkedin.com/pub/rajesh-rai/0/54/65120 Rajesh Sawhney GSF Delhi http://in.linkedin.com/pub/rajesh-sawhney/

0/455/6b3?trk=pub-pbmap

Differences between Seed capital and Angel Investor• Angel funding is a type of funding investment sought in a

company generally when it is in late start-up or early stage of operation. The company could be a little profitable and needs funds to go to the next level. An angel investor uses personal finance to invest in the growth of a small business. Angel investors can make investments on their own or as part of a group (syndicate).

• Seed investment means raising the early capital needed to start a business. Seed capital often comes from the company founders' personal assets or from friends and family. Though now even seed capital is available through the commercial route. The amount of money raised here is small because the business is still in the idea stage and funds are desired to cover the initial operating costs until the product or service can start generating profits.

New Company Using Seed/angel fund ,March-2017

No.Date of

Commencement

Company Name / Product Industry /Vertical City or Location Investors Name

1 10/03/2017 Property ShareFractional property ownership & Rental

platformBangalore Asok Praveen

ventures

2 10/03/2017 Lavella Network SDN Solutions Bangalore Ideaspring Capital

3 10/03/2017 iOrder fresh Online fresh fruit and Grocery store New Delhi Singapore Angel

Network4 09/03/2017 Pee Buddy Female Hygiene

Product Manufacturer New Delhi Indian Angel Network

5 09/03/2017 App Browzer Instant Mobile App Store Bangalore Deepak Gurnami

6 08/03/2017 Super Daily Subscription Based home daily platform Mumbai Y Combinator

7 08/03/2017 Pipe Candy Intelligent Sales prospectus platform Mumbai IDG Ventures

Axilor Ventures

8 07/03/2017 Book Servicing Online vehicle servicing booking platform New Delhi

National Science and Technological Entrepreneurship

Development Board

9 07/03/2017 Juno Clinic Online Counselling Platform Mumbai Athul Nishar

10 01/03/2017 Paalak Freash produce selling portal New Delhi Vishwadeep Bajaj

11 01/03/2017 SEEIT Online based fashion search portal Kolkata Calcutta Angels

Network(CAN)

THANK YOU