Cultivating The Right Mindset For Being An Angel Investor

The Indian startup ecosystem saw a record-breaking $42 Billion investment in 2021 alone. The profiles of investors have also significantly changed -- from institutions, high-net-worth individuals, and some philanthropists to salaried employees, founders, stock traders, finance professionals, and more. This trend is only going to get sharper in the year to follow.

2021 was a great year as I actively looked at investing again - hence, I had the time to meet and interact with many founders. I made around 50% of my overall private market investments in 2021 alone. A recent Inc42 article featuring me and 31 other angel investors in India motivated me to pen down some of my learnings as an investor.

I have spoken to many people who want to dip their toes into angel investing, and there were some common thoughts and beliefs that I think are worth dispelling. Anyone who wants to get into angel investing should remember these five things.

Give Before You Ask

When on a call with a startup to discuss funding, I always think about how I can help the founder. What can I do to support them to grow their brand beyond just financing their efforts?

This could mean connecting them to industry experts, other investors or perhaps getting them in touch with partners. Can I help them define and find prospective clients or suggest avenues they can explore?

Get into the founder’s shoes. Investing in good founders is a privilege as an investor and my belief is that you have to earn your place on the cap-table. This helps you get great referrals over time too! You really earn good Karma while investing :)

Make Quick Decisions

Angel Investing has become more competitive than ever before. Not only are we seeing high-quality founders, but also quality investors who can offer more than just funding.??

Of course, this doesn’t mean you avoid due diligence. DD is a must and could change your perspective about the startup. Communicate and set clear timelines for the founders. Be efficient in your DD, especially if it's something you believe has potential.?

Whether it is the decision to invest or pass on it, make these decisions quickly. If you find founders great and it does not fit your thesis, refer to other angels who might be relevant.

Invest As A Group

Investing in a startup is exciting but can also be intimidating. It is more bracing to invest with a group of people. It is also suitable for a new enterprise to have more investors, as it provides more viewpoints and perspectives.?

A group can also bring in valuable connections. Ultimately, there is a higher collective stake in the company. This is the thought process behind Let’sVenture , which is all about investing and building TOGETHER.?

Be An Early Believer

Early-stage investing is mostly about backing the founder's vision. It is not just the idea we look at, but the capability for execution. Business models, GTM, revenue streams, etc., will change with the market, but a founder’s ability to execute should only improve with time.?

Remember that you have to be an early believer in the founders. This means that sometimes you may not have examples of models you could reference. Some of the best startups don't have a precedent.

Invest In A Cause

As an angel investor, you will be doing more than just helping the startup grow with money and otherwise. You are a part of a larger cause - maybe the reason is directly connected to the domain but, it is also the growth of the economy.?

Your work makes a better life for the collective, the startup employees, the customers, and everyone connected. Pick causes that you believe in.

Remember that it’s more than returns. You are a stakeholder in the growth of an entity.