When you think of an angel investor, you perhaps picture someone who has a lot of money and is willing to invest in a few promising startups. Even by definition, "angel investors are high-net-worth individuals who invest in early-stage startups in exchange for equity."
However, becoming an angel investor in India is far easier than you think. You don't need to be a high net-worth individual to become an angel investor. On the contrary, you can become an angel investor by investing as little as INR 20,000 in startups in exchange for equity.
In this blog, we have broken down the complexities surrounding angel investment into bit-sized information. Here are some tips on becoming an angel investor in India -
In layman's terms, an angel investor is someone like you and me who invests a certain sum of money in a startup, usually in exchange for convertible debt or ownership equity. Angel investors typically invest in startups still in the development stage to help a startup grow.
There are several benefits of Angel Investing, including:
Although angel investing looks tempting, it also comes up with certain risks -
Angel investing has become a popular way for individuals to invest in startups. It's a way to get in early on the next big thing that offers the potential for high returns. But it's also a risky venture. Before you decide to become an angel investor, it's important to understand the risks involved -
It is a known fact that even the slightest hiccup in the operations can ruin the company’s operation. A startup's future is unpredictable, and there are chances that a startup may not pick up and crash before making a flight. Therefore, investing in early-stage startups is highly volatile.
Although it's very unlikely that all your money will be lost, it is possible.
Long-term Investment Plan
Since the startup is in the early-stage, it would take years to develop a minimum viable product. Many startups don't make money in their initial years, and even those that do may not generate profits for years, which leaves your fund stuck in a model that will see a return after 3-5 years.
Dilution of Shares
There's also the risk of getting diluted. When a startup raises money, it typically does so in rounds. The founder(s) often own a large portion of the first round, and usually less as the rounds go on and the startup tries to raise more significant sums.
An angel investor usually comes in for at least one round, preferably in the beginning. But if there are a lot of other investors that come in after you during later rounds of funding, you might find your share significantly diluted.
However, you can reduce the risks by diversifying your portfolio by investing in smaller quantities in various promising startups carefully vetted for you by POD.
Before we dive into 'how to become an angel investor on POD,' allow us to introduce POD.
POD is an angel investment platform that democratizes startup funding in India by bridging the gap between startups and investors. On POD, an investor can commence/initiate its angel investing journey with just Rs. 20K.
Start your angel investing journey on POD in 5 minutes -
Congratulations on becoming an angel investor!
POD is owned by Crowdpouch Ventures Services Private Limited and reserves all rights to the assets, content, services, information, and products and graphics in the website but third party content. Crowdpouch does not solicit, advertise, market any of the users registered with POD, neither does it solicit investors by offering leagues/schemes/competitions etc. related to securities markets. POD hereby clarifies that it does not carry any resemblance to the stock exchange nor does it facilitate trading of securities nor does it act like a broker/agent/media for raising funds. Investment through POD does not carry rights of renunciation. Investors are cautioned that POD operates in an unregulated space hence, investment through POD is subject to investment risk. Investments in startups are highly illiquid.