Love and Learning from Angel Investing


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Many who are joining the ever-increasing swarm of angel investors think that any semi-pro gambler with affection for the ‘tech’ world and a flair for networking powerfully over cocktails at one of the countless startup events can become a successful ‘angel’. Well, that’s partly how I started off but I did observe and picked up certain learnings that I thought would be good to share. So here we go –

  • Play with a bankroll in mind – Most important thing in poker or any gambling scenario would be to know how much you have to lose without it affecting your real life/family/well-being. I knew what I was getting into but I really only gave it some serious thought when I was cutting the first cheque.
  • Patience may or may not be a virtue – I have lost out on some “good” deals when I tried to stall an entrepreneur to dig deeper into the sector, space or competition. Sometimes moving fast can be the key to getting into some really competitive deals at the right time.
  • Finance is good to know; Legalities are key – You might have the best financial knowledge and might be a wizkid at excel, but ‘earning’ that good return will boil down to the terms signed on the paper. At such an early stage – fundaments, financial rations, discount cash flow valuations don’t matter at all. In my experience, the negotiation skills really come into play as well as the knack for identifying the favorable termsheets. I am still learning them on the fly (or so I believe).
  • Time is precious, so let’s not waste it – Never waste an entrepreneur’s time by unnecessarily asking questions if you are already tilting towards negative and if you are then let them know so they can be aware of that and at least attempt to address that. Just put yourself in their shoes – you wouldn’t want any guy to waste your time like that. There is enough free knowledge on the Internet these days.
  • Introduction Capital – There is something known as introduction capital in this ecosystem. Sometimes opening doors can be the swing factor.
  • Social Investing – People tend to follow the best-known lead investors in a flock. Find a mentor, learn from them but don’t blindly follow them.
  • Deal-Flow – Getting access and creating the desirable deal flow everyone dreams of takes time. So stick to what works for you and be persistent.
  • To Founders – Since request to not write the amount to be raised in USD (or EUR, SGD etc.) if you are an Indian registered entity. Nobody likes doing extra Maths especially with Forex involved. Remember the rates fluctuate, does your round amount too? So let’s make INR cool again.
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