Ideas are never enough. You need deep pockets too. Early-stage companies and entrepreneurs usually need cash from well-meaning individuals willing to back their idea. Seven of the country's most prolific angel investors tell Anand J that they're in it for the money -and the fun of working on new ideas
Being an angel keeps me young and inspired
Anupam Mittal , 40 : Founder of People Group and one of India's most successful angel investors with 80 investments in firms including Ola and Druva. He made 17 investments this year
My first investment
Two of my friends came to me with a digital media idea in 2007, saying they need cash. I wrote them a cheque at the airport lounge without an agreement. (In 2013, this digital ad firm Interactive Avenues sold for more than Rs 300 crore.)
Why I do it
When I started investing, I was single and had spare time. I understood the consumer internet segment and saw investment opportunities. My main business (Shaadi.com) was stable and I had liquidity, so I started spending weekends with entrepreneurs. Around 2011, Ola happened. I cannot build all the great products that will have big impact, so the idea is to back people who are doing that. Now, I'm over 40 and this keeps me young and inspired.
In my portfolio
I have all my money in startups. I don't have other investments like real estate. Startups give you the best returns.
The core idea is to let oneself make mistakes
Rajesh Sawhney, 50 Founder of GSF Accelerator, Rajesh Sawhney has made about 50 investments, including in Little Eye Labs (acquired by Facebook), Flinto and Timesaverz
Why I do it
I became an angel investor in late 2010. I saw two global mega trends: The rise of startups and technology investments entering a mobile era. The technology industry is at an early stage of a very big cycle of value creation. A combination of these trends creates great opportunity for wealth creation.
What I look for
I back exceptional founders with disruptive and innovative ideas and deep execution capabilities. Angel investing is primarily about spotting and nurturing unusual talent. A great founder will adapt to build a sustainable business.
What I have learnt
Technology and startup investing makes you humble. Both are fast-paced and high risk. The best way to learn is to unlearn. The core idea is to let oneself make new mistakes.One should be willing to take a loss on many investments in search of a big hit.
I stay away from the big trends as they are overvalued
Rajan Anandan 46: Managing director of Google South East Asia and India, Anandan has money in about 60 companies, mostly early stage technology companies, including crowd funding website Wishberry, online city and lifestyle guide portal Little Black Book
Why I do it
Technology has the power to change the world and the best innovations are done by startups. It is a great opportunity to make the world a better place and I have a passion for technology and startups. I started investing in startups in the 1990s in the US. I moved to India in 2005 and made my first investment in 2006.
How I invest
I understand the sector and co-invest with others. I stay away from the current big trends as they are over-funded and overvalued. I like to get into something early. I have become very selective even though I have been investing in eight to ten firms every year for the past four to five years. The companies that are profitable and public like Infoedge (Naukri) and Justdial have been around for more than a decade. So we have to be patient. It will take four to five years for the investments we make today to become successful.
In my portfolio
Angel investing is not altruistic but it is an illiquid investment portfolio. I am realistic and believe only three to five startups out of my 60-company portfolio will give me somewhere around five to ten times return. When I invest in a venture, I put in a lot of capital.
I get to meet interesting young and old people
Sunil Kalra, 51: He has a portfolio of close to 50 startups, and has been in the space since 2002. He tends to pick technology startups and has money in companies including Blume Ventures, Mobilewalla, Druva, Sapience, Wishberry, MyShaadi.in, Unbxd and Goonj
Why I do it
I am an entrepreneur turned investor. I feel what I do as an angel investor helps nurture a growing ecosystem of entrepreneurship and goes towards creating badly needed jobs. It keeps my mind racing and alert. I learn something new every day. I invested in a real estate development company -it was not a good experience.
I sold my company and was not ready to retire. I was curious about many different businesses and was drawn to angel investing naturally.
What I look for
I am always on the lookout for solid teams, for people who are highly motivated and passionate about what they do, people driven by the impact of what they are doing. This is a constant in my investment strategy. The sectors change as technology advances or as I learn more.
What I have learnt
I have learnt to be patient, and I am getting better at choosing startups I would like to back. I have met so many interesting young people (and some interesting old ones) on this journey, that's probably been the best part.
Startups are by far the best performing asset
Saurabh Srivastava, 68: IT entrepreneur Saurabh Srivastava has made 70 investments, including in India Bulls and India Games, since 2000
Why I do it
India needs 10 million jobs a year and the only way we can achieve that is by creating startups. This can only happen if we have a large number of angel investors who bring capital and advice. I felt this is the best way I could leverage my skills and experience. My first investment was an accident but gave me 100 times the returns.
What I have learnt
No matter how much one analyses a company, no matter how convinced one is about this being the next thing, the fact remains that no one can predict which venture will succeed and which will not. This is because there are many complex factors at play -market, competition, customer preferences, entrepreneurs' ability.
How my strategies changed
If you try to avoid risks, you will never find the winners.Fifteen years ago, I was investing mostly in technology companies focused on the overseas market. Today, my investments cover IT products, consumer internet, telecom, semiconductors, medical devices, health and life sciences, education, hospitality. It is by far the best performing asset, ahead of stocks, mutual funds and real estate.
It gives me a great adrenalin rush
K Ganesh, 53: Co-founder of home medical care provider Portea Medical, Ganesh has money in more than 20 companies, inlcuding Big Basket, Bluestone and Homelane.com
Why I do it
Gambling instinct, the same reason one bets on a horse race. It makes for a great adrenalin rush and heartache. For me, it was the ability to live vicariously through the entrepreneurship cycle without putting in the hard work of being an entrepreneur. It keeps me young, and my brain active and kicking. There is sheer pleasure in having discussions with young entrepreneurs, and living the full cycle through their experience is interesting and satisfying.
My advice to investors
Never bet on one founder. There needs to be a team, at least two co-founders at the early stage. Entrepreneurship is hard and lonely. Co-founders ensure that they support each other through the journey.
More than skills, look at their ability to be flexible and adapt as market and competition change. Second, better invest with two or three others who are putting larger amounts. Third, socialize with venture capitalists as they are the ones likely to come in later in Series A. Models that find no favour with VCs make poor investments as the company and angel investor get stuck.
Is angel investing risky?
Yes. It is the highest risk, most opaque, and unpredictable investment portfolio. Not meant for the faint-hearted or weak-hearted. Only marginally better than gambling or lottery in terms of your ability to influence return or probability of success, but nice way to “get high“ without doing anything illegal or immoral!
The intention is always to make obscene amounts of money
Mohandas Pai 56: Chairman of Manipal Global Education Services and Aarin Capital, Pai has invested in about nine startups just this year. The former Infosys chief financial officer has funded companies such as tax information portal Taxsutra, online news portal YourStory and restaurant discount startup Ressy
Why I do it
Look at the kind of disruption in the business models these startups are achieving using the internet. They require low capital to tap all the new opportunities that have risen using technology. The intention is always to make obscene amounts of money. This is part of my investment plan and it is never altruistic. The application of the investments is altruistic.
How i choose my investments
I try to invest early enough to make sure that the startup will succeed. Execution remains the greatest challenge and needs passion, perseverance and focus while capital can solve only a few problems. There are several `me-too' firms now and we try to stay away from them. We look at whether the idea and the business model is sustainable over time, and whether these startups will be able to attract more capital after getting investment from us.
An idea that took me by surprise
Indians want to buy everything fresh, including meat, unlike the west where frozen meat is popular. Licious is a startup that delivers meat at home and culls the animal only after consumers place the order. They are disrupting a 1,000-year-old business. This is a modern format for Indians that is hygienic too.
