“I measure my performance in the startup ecosystem by my LOI—learning on investment”~Dr. Aniruddha Malpani, Renowned angel investor.
If you have kids, then you know that with them, you grow every day as a parent. Kids are not perfect or learned, but they still end up teaching their parents and making them a lot more mature. They can always mesmerise you with their questions and new ways of thinking. On top, kids also learn best from their peer group. We believe startups are similar.
Indian Startups have been all the rage in the past decade. This is because startups are faster and more flexible than mature and traditional businesses, and are leveraging technology to target both macro as well as micro problems more effectively.
Those that are able to tide over the initial challenges provide significant value to its stakeholders along its growth journey. These include not only the founders or employees but its investors and various business stakeholders engaging with a startup.
To be part of such an enriching, high-value generating journey with a startup, it is essential to gain exposure at various stages in its business lifecycle. While this is fairly easy for someone working full-time in this line (e.g. Venture Capital partner), a normal working professional can gain regular access only via structured engagement platforms like Angel investing networks.
Angel investment networks are easy, convenient and time-saving channels to invest in startups. They bring forth the most exciting startups and provide an early-stage investment opportunity. The network members interface at multiple touch-points with startups during its journey and get opportunities within the ecosystem.
Below mentioned 7 points highlight how everyone can grow with Startups, contributing as well as benefiting from them.
Startups are the beacon of disruptive innovation, emblematic of new-age enterprises. They are working on cutting edge technologies and with new processes, spearheading changes in our dynamically evolving world. At times, what young entrepreneurs possess in passion and technical skills, they could lack in experience of scaling people, products or processes.
Startups seek the guidance of subject matter experts and are able to pay for short-term consulting or advisory assignments. These engagements are extremely beneficial for someone with spare time at their hands and not averse to the fast-paced, unstructured work environment of a startup.
E.g. Shubhi Khurana, a pharma sector veteran received offers for part-time consulting roles with 3 health-tech startups evaluated at Inflection Point Ventures (IPV). Gracious enough to provide her time in due diligence of these startups, her interactions with the founders led them to value her expertise & industry connections and offering her hourly consulting roles.
Grow Your Knowledge Base
Being a platform for early-stage startups, here stalwarts of the Indian corporate & investment sectors converge to connect, ask questions, pool-in their knowledge and evaluate startups each week over the internet on calls, as to their investment-worthiness. Each of these 45-60 mins call is an amazing interface with the best of intellectual capital that cuts across industries & sectors, geographies, technologies, businesses & sections of society.
Eg. Manu Iyer (CEO, Blue Hill Capital) says, “Over the last year I have seen startups come from diverse areas like a retail, gaming platform, health care, ecommerce etc. So the breadth of startups that are brought, that have gone through the rigor of evaluation in this platform has been pretty amazing. When we are on these calls having interactions, we have people from each of these industries who have already worked there before who are able to ask very insightful nuanced questions to help evaluate these startups.”
Grow Your Business Or Save Company Costs
Each startup venture is attacking a problem. It might be a problem faced by an individual (B2C) or a problem being faced by a company (B2B). Startups that come forth for early-stage investment are not only looking for funds but also hungry for customers & vendor-partners for their product or service. They are more than willing to tie-up with respective members’ organisations, which serves as revenue opportunity as well as grounds for market validation of their solution.
Just to mention a few examples – 1) Many investors an early adopter of Talent Litmus (HR Tech startup) game-based psychometric assessment process, introducing it as a mandatory step in hiring and on-boarding of new employees at his portfolio Companies. 2) A leading hospital chain has done a pilot for an operations management solution with Syook (IoT startup).
Tie-up with new startups as your vendors or as customers help achieve benefits of solutions customized to your needs and higher business growth at lower costs.
Grow Your Network
An angel investor group derives its strength from the network of its members. The network includes professionals, CXOs, HNIs, successful entrepreneurs and investors from early-stage funds & Family House offices. It is an assimilation of like-minded individuals keen to learn, help each other and make investing fun and profitable for all by pooling of knowledge. Regional meet-ups provide a wonderful opportunity for members to connect & network, share knowledge and gain insights from premier angel investors, VCs or startup founders highlighting the sessions at the event.
Venkatesh SS (COO, The Better India), a seasoned investor says, “Being part of IPV, it’s the community, the networking, the learnings which one shares with each other, that’s different. And these learnings mitigate what qualitatively and quantitatively one can see through in terms of the business plans. That’s immense in terms of the knowledge which everyone brings to the table is what I feel is different here.”
Grow Your Business Acumen
In our daily jobs, we normally dedicate our focus to a specific function or speciality. However, evaluating a startup for investment potential forces you to look at the business from all angles. One can hone their business skills and acumen even further by looking at the business & financial metrics, the market potential & competitive landscape, judging the team and many other critical aspects.
Being part of a group that takes a significant pie of the capt-table, one can also get to be on the Board of investee startups (as observers or members) and be directly involved in decision-making.
Grow Your Country
By most estimates, India is now the third-largest base to unicorn startups as well as the total number of startups in the world. However, our startup ecosystem needs a lot of development to increase the success probability of startups. By supporting new entrepreneurs one can play a major part in shaping the leaders of tomorrow. You can contribute to nation-building by providing monetary and experiential capital to startups which help create jobs, stimulate economic activity & promote innovation culture.
Best summarised by angel investor Pramod Gupta (CFO, Arvind Fashions Ltd), “To me, angel investing is contributing to society and the new India, the technology-oriented India. There is a return that is expected but that’s not a major part. I love the opportunity of being able to add value to founders, to the next generation.”
Grow Your Wealth
It is important to keep in mind that capital in angel investing is the money that you set aside and are not chasing to require immediately, in a year or two. Returns are to be expected but it is patient capital. The most obvious result for a seasoned investor by engaging-with and investing-in startups is wealth generation.
Angel investing provides diversification of a portfolio with a new asset class. It has the potential to grow wealth exponentially over mid to long-term.
[This article is authored by Vinay Bansal – Founder & CEO, and co-authored Madhukar Bhardwaj – Business Analyst, Inflection Point Ventures.]