Understanding Seed/angel funding for start-ups
Presented byANSIF EK (1st Mcom ,MEA SS)
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 ObjectivesThe 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 InvestorThe 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 CapitalAlso known as seed funding or seed MoneySeed 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 capitalThe 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 ProfileAngel 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 2030%. 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 2016PositionName 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 IndiaNo.NameCompanyLocationAddress1Abhishek RungtaSeedersKolkatahttp://in.linkedin.com/in/abhishekrungta?trk=pub-pbmap2Adit ParekhBlume VenturesMumbaihttp://in.linkedin.com/pub/adit-parekh/14/400/369?trk=pub-pbmap3Alok MittalCanaanDelhihttp://in.linkedin.com/pub/alok-mittal/0/a/590?trk=pub-pbmap3Anil JoshiMumbai AngelsMumbaihttp://in.linkedin.com/in/aniljoshi74?trk=pub-pbmap4Bala ParthasarthyAngel PrimeBangalorehttp://in.linkedin.com/in/balaparth?trk=pub-pbmap5Bharti JacobSeed FundBangalorehttp://in.linkedin.com/pub/bharati-jacob/3/240/a706Deepak ShahdadpuriBeacon India Private EquityMumbaihttp://in.linkedin.com/in/deepakishahdadpuri7Ganesh KrishnanTutor VistaBangalorehttp://in.linkedin.com/in/ganeshk8Gaurav Kachru5 ideasDelhihttp://in.linkedin.com/in/gauravkachru9Harish BahlThe Smile GroupDelhihttp://in.linkedin.com/in/harishbahl?trk=pub-pbmap10Karthik ReddyBlume VenturesMumbaihttp://www.blumeventures.com/team.htm11Manav GargIndian Angel NetworkBangalorehttp://in.linkedin.com/pub/manav-garg/0/254/22712Palani RajanInnovation angelsUShttp://www.linkedin.com/in/pvrajan?trk=pub-pbmap13Pallav NadhaniSeedersBangalorehttp://in.linkedin.com/in/pallavn14Pankaj Jain500 StartupsDelhihttp://in.linkedin.com/in/pankajjain15Pearl Uppal5 ideasDelhihttp://in.linkedin.com/in/pearluppal?trk=pub-pbmap16Rahul KhannaCanaanDelhihttp://in.linkedin.com/in/khannarahul?trk=pub-pbmap17Raj ChinaiHBS AngelsBangalorehttp://in.linkedin.com/in/rajchinai18Rajan AnandanGoogleDelhihttp://in.linkedin.com/in/aniljoshi74?trk=pub-pbmap19Rajesh RaiInnovation angelsBangalorehttp://in.linkedin.com/pub/rajesh-rai/0/54/65120Rajesh SawhneyGSFDelhihttp://in.linkedin.com/pub/rajesh-sawhney/0/455/6b3?trk=pub-pbmap
Differences between Seed capital and Angel InvestorAngel 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-2017No.Date of CommencementCompany Name / ProductIndustry /VerticalCity or LocationInvestors Name110/03/2017Property ShareFractional property ownership & Rental platformBangaloreAsok Praveen ventures210/03/2017Lavella NetworkSDN SolutionsBangaloreIdeaspring Capital310/03/2017iOrder freshOnline fresh fruit and Grocery storeNew DelhiSingapore Angel Network409/03/2017Pee BuddyFemale Hygiene Product ManufacturerNew DelhiIndian Angel Network509/03/2017App BrowzerInstant Mobile App StoreBangaloreDeepak Gurnami608/03/2017Super DailySubscription Based home daily platformMumbaiY Combinator708/03/2017Pipe CandyIntelligent Sales prospectus platformMumbaiIDG VenturesAxilor Ventures807/03/2017Book ServicingOnline vehicle servicing booking platformNew DelhiNational Science and Technological Entrepreneurship Development Board907/03/2017Juno ClinicOnline Counselling PlatformMumbaiAthul Nishar1001/03/2017PaalakFreash produce selling portalNew DelhiVishwadeep Bajaj1101/03/2017SEEITOnline based fashion search portalKolkataCalcutta Angels Network(CAN)