During my journey as an angel investor, I initially ventured into the world of entrepreneurship by starting an online CA services company called finmart.com between 2013 and 2015.
While working for this company, I faced significant challenges, including almost losing it and incurring a substantial financial loss of around 90 to 95 lakh rupees.
This experience made me realize that although I excelled as a chartered accountant, I lacked expertise in areas such as social media and technology.
Despite my efforts to find a co-founder, I was unable to locate a suitable tech founder. Consequently, when I decided to close the company in 2015, I recognized the wealth potential within the startup ecosystem.
At that point, I developed a philosophy that revolved around either innovating or investing in innovation. This marked the beginning of my journey as an angel investor.
I started allocating my resources to various early-stage companies. I learned that this particular sector rewards those who exhibit patience and possess a long-term perspective.
Over the past eight years, I have invested in over 110 companies. Throughout this journey, I have emphasized the importance of three key qualities for investors: passion, persistence, and patience.
One must have a passionate drive to invest, along with the persistence to continue searching for promising opportunities. Additionally, patience is crucial as angel investing requires a long-term commitment, with capital that is not needed for immediate financial obligations.
Throughout my angel investing journey, I have had the opportunity to closely work with numerous companies. I have mentored around 20 out of the 110 companies I have invested in. Among them, there have been about three or four companies with whom I have established a strong working relationship.
For these select companies, I have provided extensive support and guidance. I have actively shared my business expertise and connected them with relevant networks to help them navigate real-life situations successfully.
One crucial lesson I have learned is the significance of following a proper process in angel investing. Acting out of FOMO (fear of missing out) or making impulsive decisions based on direct approaches rarely leads to favorable outcomes.
I firmly believe that angel investing should be approached with a systematic and thorough process. It is important to invest in discipline, conduct due diligence, and evaluate the startup's potential based on its merits rather than solely relying on the investor list or the fact that other investors have already invested.
By adhering to a well-defined process and avoiding the FOMO mindset, I have been able to make more informed investment decisions and mitigate potential risks.
This approach ensures that I invest in startups with true potential, increasing the likelihood of successful outcomes for both the entrepreneurs and myself as an investor.
For aspiring angel investors who are embarking on their journey, I would offer the following advice, which aligns with the three Ps I mentioned earlier: passion, patience, and persistence.
First and foremost, it is crucial to have a genuine passion for the startup ecosystem and believe in the potential of India's growth over the next decade.
Angel investing is an active endeavor that requires active involvement with the founders. As an investor, you should possess a passion for building ventures and actively contributing to the enterprises you support.
Persistence is another key trait to cultivate. Angel investing is not a one-time activity that yields immediate rewards. It demands consistent effort and a disciplined approach.
Consider establishing a systematic investment plan, such as committing to writing a specific number of checks every month or year. Stick to this plan for several years, as it builds discipline and increases your chances of finding success in the long run.
Additionally, patience is paramount in angel investing. This asset class requires capital that you are willing to invest for an extended period.
Realize that returns may not materialize for three to four years, so it is essential to maintain a patient mindset. Understand that building successful startups takes time, and your investment journey should align with this timeline.
When it comes to working with founders, it is crucial to strike a balance. While you may have valuable insights and expertise to offer, remember that the founders are the principal owners and drivers of their companies. Respect their autonomy and avoid imposing your will upon them.
Offer suggestions and guidance, but be open to the possibility that they may not always follow your advice. Ultimately, you are placing a bet on their execution abilities, and it is their vision and expertise that will drive the success of the venture.
To enhance your knowledge and stay updated in the investment space, I recommend actively engaging with networks and resources dedicated to angel investing.
Seek out industry-specific events, conferences, and forums where you can connect with like-minded individuals and learn from experienced investors. Participate in angel investor networks or groups that facilitate knowledge sharing and provide access to valuable insights and deal flow.
As an angel investor, it is crucial to establish clear expectations regarding communication and reporting with the startups in which you invest. Setting these expectations from the beginning is essential, whether you invest directly or through an angel network.
Regular updates are vital, and you should communicate this expectation to the startup founders. If necessary, work with an angel network or a group of investors to define a standardized format for information sharing.
This way, even if the updates may not be directly relevant to every investor, the costs and efforts are shared, and valuable insights can be obtained collectively.
Rather than waiting for periodic updates, it is beneficial to proactively engage with the founders regularly. The focus of your communication with them should be centered on how you can provide assistance and support. Avoid overstepping boundaries by trying to micromanage or navigate their business.
Instead, express a genuine desire to help them overcome challenges and achieve milestones. Regarding the frequency of updates, it can vary depending on the stage and needs of the startup. Generally, a monthly or quarterly update can be appropriate.
As an angel investor, my strategies for helping budding startups revolve around the importance of focus and discipline. First and foremost, I encourage budding entrepreneurs to stay focused on their goals. Building a startup requires unwavering dedication and commitment.
It is crucial to remain disciplined and avoid getting distracted by unrelated opportunities or diversifying efforts too early. By staying focused, entrepreneurs can channel their energy and resources toward solving a specific problem and building a robust solution.
In my experience, successful entrepreneurs exhibit three key qualities: passion, hunger, and discipline (PHD). Passion fuels the drive to overcome challenges and persevere through the ups and downs of startup life.
Hunger represents the relentless pursuit of success and the willingness to go the extra mile. Discipline ensures consistent and structured execution of plans and strategies.
While finding a solution is essential, I believe that understanding the problem deeply is even more crucial. Entrepreneurs should invest significant time and effort in comprehending the nuances and intricacies of the problem they aim to solve.
By having a profound understanding of the problem, the path to a viable and effective solution becomes clearer. It is natural for startups to pivot and iterate along the way, but maintaining a strong connection with the core problem ensures that the solution remains relevant and valuable.
To foster growth, budding entrepreneurs should conduct thorough research and homework before starting their businesses. They should dive deep into the problem space, explore various angles, and gain a comprehensive understanding.
This groundwork will provide a solid foundation for their startup journey and help them make informed decisions.
As an investor, I prioritize opportunities over specific sectors because I believe that there are prospects for success in every sector. However, there are certain sectors that currently stand out to me as having significant potential.
Artificial Intelligence (AI) is an area that I find particularly exciting. The advancements and applications of AI technology have immense possibilities across various industries. Another sector that holds great promise is electric vehicle (EV) technology.
India is witnessing an increasing adoption of EVs, and this trend is expected to continue. With the government's focus on promoting EVs and the growing awareness of environmental sustainability, investing in this sector presents a compelling opportunity.
Clean energy, particularly in the form of hydrogen, is another area that I find intriguing. The global push towards clean energy solutions and reducing carbon emissions opens up avenues for innovative technologies and sustainable energy sources.
Furthermore, the healthcare sector in India has inefficiencies that present opportunities for improvement. Investing in health tech startups that address these inefficiencies and provide innovative solutions has the potential to make a significant impact on the healthcare landscape.
Lastly, the agriculture sector, particularly Agri-tech, holds immense potential in India. There are numerous inefficiencies at every level of the agricultural supply chain, from the farm to the consumer's plate.
Addressing these inefficiencies through technological advancements and innovative solutions can significantly enhance agricultural productivity and sustainability.
In summary, while I invest based on opportunities rather than sectors, I find sectors such as AI, EVs, clean energy, health tech, and Agri-tech to be particularly exciting and full of potential.
These sectors align with emerging trends, technological advancements, and the need for sustainable solutions in the Indian market.