Most Active Angel Investors For Indian Startups 2022
India’s booming startup scene is centered on angel investors. In assisting startups in the initial stages of their journey, they have played a vital role. Many angel investors come from backgrounds as entrepreneurs, so they understand the challenges and obstacles that any budding entrepreneur faces.
Indian startups continued to prosper in 2022 as the country continues to deal with the effects of COVID-19. In the period between January 1, 2022, and January 29, 2022, home-grown startups received over $4.6 Bn in funding. The amount is five times greater than what was received in January last year.
The month ended with 196 deals. Compared to January last year, when there were only 105 deals, this resulted in an 87% increase in deals.
Many startup enthusiasts have heard the term ‘angel investor’ when keeping up with developments in the community. The pros and cons of seeking out an angel investor list and other topics are discussed in many debates regarding how startups can find investors in India.
Angel investors in India are people who invest their own money into startups at a young age. Angel investors are committed to building products and believe in the founding team. Entrepreneurs, doctors, lawyers, or business people can act as angel investors. They are usually impressed and inspired by young entrepreneurs developing products that can transform an industry or business. Indian angel investors can be approached in many ways.
As shown in the data, 37 deals worth over $1.3 Bn were closed in the first week of January (2022). During the second week, 42 deals worth $700 million were struck, while 50 deals worth $519 million were closed during the third week. Sixty-seven deals worth $1.9 Bn completed in the last week of January contributed 46% to the total amount raised in January 2022.
In January 2022, Enterprise tech pulled ahead in terms of the total quantity of deals executed. Fintech came in second with 30 agreements, followed by the segment with 48 deals. With 29 deals in its kitty, the eCommerce sector came in third.
In overall capital intake, the retail services sector came out on top, with $945 million. It was accompanied by eCommerce, which received $865 million in funding. Enterprise tech, too, witnessed a substantial capital influx of approximately 710 million dollars.
The urge to get in on the continuing angel fundraising race isn’t limited to regular investors. Angel investors who’ve already made large profits from IPOs and mergers and acquisitions are reinvesting their profits in angel syndicates and straight through into capable startups.
Experts have noted that recurring angels are now demanding tougher questions during due diligence and seeking improved voting rights before investing money.
Sharma of VentureCatalysts told FE that when investing in early-stage startups, his angel syndicate normally requires a board seat and holds quarterly review calls between investors and founders to provide financial information. “Because we represent all of the syndicate’s investors, we take a seat on the board and an observation seat in these startups.” On the founder’s equity, we take the ‘tag along and drag-along rights. We are granted information rights, and the creator is required to share evaluation on a monthly or quarterly basis,” Sharma stated.
Swiggy, a food delivery platform, made headlines this month when it raised $700 million in a Series-K investment round headed by US investment company Invesco, boosting the decacorn’s valuation to $10.7 billion.
Fractal, an analytics firm, raised $360 million from TPG Capital, followed by Udaan, a B2B marketplace that raised $250 million from Octahedron, Moonstone, and other investors. Moglix, a B2B eCommerce startup, raised $250 million in capital from notable investors such as Tiger Global. Dunzo, a mobility platform, received $240 million in funding from Reliance Group as well as other investors.
While India created 42 unicorns in 2021, brisk investment helped the trend continue far into 2022. In just four weeks this year, the investor base saw the birth of four new unicorns. Lead School, an ed-tech firm, Fractal, an analytics startup, Darwinbox, an HRtech startup, and Deal share, a social commerce startup, are among them.
Angel investors often demand a 5-10% equity part in early-stage investments, which might increase to 15% if the deal value is higher than Rs 2-3 crore, depending on the magnitude of the fundraising. Angel investors are now exploring ways to invest in new tech startups that aren’t limited to equity financing. Convertible notes, which allow investors to lend financing to startups to convert them to stock in the future, are also becoming more popular. This allows angel and venture investors to avoid overvaluing startups in the early phases of their development until a later investment round.
“There are a lot of firms who need bridge finance but don’t want to dilute their stock because equity is pricey.” As a result, they prefer to raise debt through debentures and convertibles. This also helps investors to have more liquidity, as angel investments often have a 6-7-year exit period. “With debt finance, investors can leave after 12, 18, or 24 months at a 13-18 percent interest rate,” LetsVenture’s Saxena explained.
With large investments in the pipeline, the Indian startup environment continues to attract global VC firms.
Tiger Global, based in New York, continues to invest aggressively in India, adding a host of new firms to its portfolio. Tiger Global funded eight of the thirteen Indian unicorns last year. This year, the VC company took part in the fundraising round of Deal share, a freshly minted unicorn. Along with Alpha Wave, it also spearheaded a $250 million fundraising round for Moglix.
Furthermore, big VC firms such as LightBox and LightRock have entered into the fray this month, participating in two investment rounds. Dunzo, a mobility firm, and WayCool, an agritech business, were backed by the two.
This month, the majority of investment deals went to early-stage companies. Seed funding attracted the most deals, with 96, trailed by growth stage firms, which attracted 49. Finally, in January, 30 deals were signed by Late Stage businesses, while 21 deals were signed by Bridge Stage firms.
Nearly 65 percent (over $2.9 billion) of the entire value brought up in January 2022 went to late-stage startups. It was preceded by nearly $1.3 billion in funding for growth-stage startups over a month.
What does an angel investor look for while making a decision?
All of the factors that an angel investor considers are tough to assess. Nonetheless, the team, the problem statement, how to get investors in India, and the short and long-term roadmap are all critical. The following are a few of the issues that Angels list investors are concerned about:
- Is the founder well-versed in their industry? Or are they simply expressing a strong and presumptive opinion?
- Is the concept intended to solve an issue that already exists? What strategy will be used to surpass the existing market leader?
- Is there a schedule for the following six to twelve months? If that’s the case, how excellent is it?
- Is the problem large enough to be solved?
- Will buyers be willing to pay for your solution?
- Will consumers notice a difference if the method is removed from their lives?
- Is there a measurable quantity of clients already?
Types of angel investors
Angel investors come in various shapes and sizes. The designation of “accredited investor” is usually bestowed upon angel investors; however, it is not required. However, it’s important to remember that an authorized investor isn’t invariably an angel investor. Angel investors must be passionate about starting and growing businesses to be considered.
Unlike venture capitalists, angel investors typically invest their own money. This investor fills the gap between startup capital from family and friends and private equity money, which may be needed for a more robust company.
The term “angel investor” refers to a wide range of persons who invest in a variety of ways, such as the following.
Wealthy People: Depending on the business, professionals with a high net worth, such as lawyers, doctors, or successful business people, are often willing to spend a significant quantity of money in exchange for equity in the company.
Families and friends: It is the most frequent cause of startup funding, and it’s often where they begin their search.
Groups: An increasing number of angel investors prefer to work in a group. This greatly increases the amount of money that can be invested.
Crowdfunding is a source of investment that is becoming increasingly popular. It comprises large numbers of people investing tiny amounts of money on the internet to attain a certain financial goal.
Working with an angel investor has its drawbacks.
The main disadvantage for Indian angel investors is that they often own a stake in the firm. As a result, they expect to be more involved in decision-making and the overall operation of the company. When a firm is looking for investors in India, this frequently leads to complications that could damage the entire company.
What role do angel investors play?
Angel investors can come from a variety of professions. They could be a doctor, a lawyer, a business partner, or even another entrepreneur. They are not driven by revenues but rather by the success of the startup.
They aid the firm at every step and take on the role of mentorship because they are enthusiastic about the business. The majority of angel investors are senior executives who’ve already worked at Fortune 500 businesses.
As a result, their mentoring is extremely beneficial to the success of your firm. Angel funding is critical for the startup environment because of their help and mentorship.
Sequoia Capital’s Managing Director is Rajan Anandan. The entrepreneur has invested in more than 50 ventures in India’s growing startup industry. In addition to SaaS, digital media, consumer Internet, big data, healthcare, analytics, and cloud computing, this serial entrepreneur has experience investing in startups in many different technology sectors.
One of his many startup portfolios is Instamojo, a full-stack transactional platform for small and medium-sized businesses. The popxo platform is an online content provider for women and a bus service provider. Many other startups have been launched in the last few years, such as ZipGo, a task manager for personal use. Dunzo, a bicycle taxi service. Rapido, a co-working space provider. Innov8, an eLearning startup. Unacademy, and CroFarm, an agritech company.
Sanjay Mehta belongs to the Venture Nursery, Indian Angel Network, and Mumbai Angel Network organizations. He has invested in over 100 firms, including Wow! Momos, Loginext, Box8, and OYO, where he achieved a 280-fold return on investment when he exited.
Sanjay Mehta, founder and partner of 100X.VC says pivots and innovations can help startups survive challenging times. iSafe investing documentation is iCapital’s first investment in early-stage startups in India. Several of Mehta’s investments include Oyo Rooms Block, among others in India and the US. One, Coolberg, CoinDCX, Box8, Unbxd, LogiNext, FabAlley, WowMomo, and Zippr.
When discussing early-stage investment dynamics, he tells Sudhir Chowdhary that 100X.VC is on a mission to simplify the funding process.
Among India’s most successful entrepreneurs, Kunal Shah stands out as one of the best. Founder and CEO of Cred, his portfolio includes Spinny, Innov8, Unacademy, Zepo, and Bharat Bazaar. An angel investor, he has made more than 200 investments.
Several entrepreneurs in India have created new businesses for the second time, including Kunal Shah. She has previously worked with PaisaBack, a cashback and promotional discount campaign platform for retailers. Shah did her MBA from Mumbai’s Narsee Monjee Institute of Management Studies. The company was acquired by Snapdeal in April 2015 after PaisaBack was closed by him and Sandeep Tandon.
In October 2016, Shah left FreeCharge, after which Axis Bank acquired FreeCharge in July 2017. FreeCharge continued to be run independently under Shah’s leadership.
Vijay Shekhar Sharma
India’s ushering digital payments firm, Founder and CEO of Paytm, Vijay Shekhar Sharma, has helped an array of Indian startups in their journey and is well versed in navigating India’s startup ecosystem. FactorDaily and ThePrint are two of his most prominent investments. Flyrobe is a startup that rents apparel on-demand. Innov8, Unacademy, and TapChief are just some of the advisory platforms based in Bengaluru.
According to the December quarter annual report, Sharma held an 8.9% stake in One97 Communications, owner of Paytm. Additionally, Sharma’s trust company held a 4.8% stake.
After the price of the company’s shares fell to a new low, Vijay Shekhar Sharma’s stake in Paytm fell to less than $1 billion.
On February 15, shares of One 97 Communications, Paytm’s parent company, fell 2.77 percent to a new low of Rs 840.05 on the BSE.
Sharma’s stock has lost almost $1.5 billion in value since it went public three months ago. Since the listing, Sharma’s shareholding has lost an average of Rs 128 crore every day.
Sharma’s share in Paytm is now worth $998 million, down $1.59 billion since the company went public.
Sharma’s net worth is $1.3 billion, according to Forbes’ billionaire list.
According to a company spokeswoman, Sharma owned 57.67 million shares in One 97 Communications, or 8.9% of the firm, as of the December quarter. Axis Trustee Services also owns 30.97 million shares or 4.8 percent of the company.
In addition to his exports, Sunil Kalra had established a leather products manufacturing unit that he used to work with foreign designers. In addition, he has made substantial investments into Internet startups, as well as microfinance and strategic firms as an individual investor. You can find more information about contacting angel investors in India here. During 2014 alone, he invested in over 12 startups.
The following companies have been funded by Indian investors:• TargetingMantra
Industries: Sector Agnostic
Accelyst Solutions Pvt. was founded by Sandeep Tandon. His investments for 2017 include 23 investments and three exits since joining LTD in 2010. Also, a Harvard alumnus, FreeCharge, was founded by him.
Among his notable investments are Razorpay, Unacademy, Zip loan, Pocket Aces, and Tablehero. His main investment areas include internet services, fintech, healthcare, and education. Entrepreneur, investor, and mentor Sandeep Tandon specialize in technology.
His first mobile payment platform, FreeCharge, was one of India’s first. Managing Director at Tandon Group, he provides startup companies in India and North America with resources to help them succeed. A mentor to several technology startups as well as an angel investor, he is very active. In 2020 as of 30 September, he will hold a net worth of over Rs.11.5 crore, having served in the technology industry for over 20 years.
The founder of Ramakant Technologies has been involved in technology-based startups and early-stage investments for over fifteen years. In his career, he has adhered to the belief that technology should be used to describe and solve problems. As a co-founder of notable companies, including Livspace, he has been a major player in the Indian startup ecosystem. He is mentoring over forty startups as well as being an angel investor.
Innov8 is a company that provides co-working spaces. Ritesh Malik is the Founder and MD. The businessman was trained as a physician at Ganga Ram Hospital before venturing into the world of entrepreneurship. Besides being an active angel investor, he also aspires to open his own company.
He has invested in many startups, including My Child, an online platform for tracking children’s growth and development—WittyFeed, an online pump marketplace; and Deyor Camps, a startup for adventure travel.
He has nearly 19 years of experience as an angel investor in India. Current responsibilities include heading the Media & Venture Investment division of the Network18 / TV18 group. As the head of the FMCG company’s private label portfolio, he developed the most profitable portfolio among the Indian retailers. I strongly believe in analyzing, understanding, and promoting consumer behavior in building companies based on data.
Before investing in a business, an angel investor looks at the following factors.
The founders’ genuine convictions and commitments
The founders’ vision and commitment to their consumers are the driving forces behind any firm.
One of India’s top investors, Rajan Anandan, highlights that he would back the core team or founders. He believes he has perseverance, vision, and the ability to establish a team and generate funds and is tackling a real problem.
Your company’s traction and scalability
Business traction is defined as the presence of momentum or evidence of a growing business, such as a quantifiable customer base, increased revenues, and so on. As a result, the stronger the momentum, the more the investors are drawn to the company.
When a company is scalable, it indicates it can grow revenue at a low incremental cost. Software services are the finest illustration. A first copy of the software costs a lot of money, but any number of new copies can be made for a small additional cost.
Employ a competent management staff.
There’s no point in having a brilliant startup idea if your crew isn’t efficient. To assess the founder’s and management team’s quality, angel investors want to interact with them.
Target market size
The source of revenue is solely determined by the target market. Investors will be ready to invest in your concept if your service or product appeals to a broad public.
Reliability in assessing your company plan
When assessing your financial projections for your business plan, be honest. Avoid both overvaluation and undervaluation. Conduct a thorough study to arrive at a realistic valuation estimate.
Exit Strategies That Work
Angel investors are persistent and prepared to put money into a business for the long haul. Even though revenue is not their primary motivation, they still anticipate value for money. As a result, it’s understandable that they’d seek an escape plan to maximize their profits.
The share capital to the company’s primary founders is the most usual exit plan. Another popular idea is to sell the company to strategic investors. Some firms even try to persuade their angel investors to fund an IPO.