Who are angels? No! I am not referring to the ones who used to dance behind our couples during song sequences of movies. I am referring to people who suddenly crop up in the lives of entrepreneurs and light up their futures. Angels are people who true to their appellation spark up the aspiring entrepreneurs with money (primarily). They also provide numerous other benefits such as connections, mentoring, advice, and suggestions. For all of this, entrepreneurs need to find angels or should I say angels should find entrepreneurs! In today’s fiercely crowded and competitive market, gaining the attention of angels is really difficult. Hence entrepreneurs need to really communicate their stories effectively to reach potential investors.
The angel market is also flooded with people who have extra money. While the intention to use start-ups as an asset class seems fine, they are not really prepared or informed to make investments correctly. Most angels seek some form of security or want to make very small investments for fairly large stakes. Some angels almost want to hedge their investments in these start-ups. The whole spirit of angel investments was to make enable people before they are proven and support them in the hope that they will make it big. But that requires a lot more understanding of the nature of start-ups, about characteristics of entrepreneurs, how to deal with these investments, how to decide which ones to invest in, how much to invest, etc.,.
Angels need more education unless they come from an entrepreneurial background. I have spoken to some angels who have worked with larger investment funds, venture capital funds, etc and then made it out on their own. Such people definitely know their trade and are able to make a dent, but we need a lot more of the angels. Considering a country like India, and the talent pool that she is growing in her schools and colleges, it is absolutely necessary that we have a much larger pool of angels (not only for entrepreneurs) across disciplines. These people can identify talent, goad them into start-up or taking risks and supporting them through the process.
India needs a lot more start-ups and small businesses, so that we can create enough jobs for the many millions who will join the workforce in the coming decades. But for these we need a lot more people starting up. And for these we need a lot more ecosystem players, amongst which the angels seem an important player.
Think about it!