Angel Investors

Angel Investors
Presnted By:
Shivangi Mahajan
24107
Meaning of angel invsetors
• Angel investors are individuals who fund early
stage businesses in exchange for equity in a
company.
• Beyond traditional bonds and stocks, angel

investments provide new ways to diversify
investment portfolios.
• The financial backing they provide may only

be a onetime investment or it could be
ongoing financial support based on
milestones to help the new company grow in
its early stages.
Meaning of angel invsetors
• Angel investors are often looking for a higher return on their
money than they would get if they were to invest in the
stock market.
• Yet, their interest in startups usually goes beyond just

monetary return.
• They might have an interest in working within a particular

industry, mentoring a new generation of entrepreneurs or
using their skills and experience in a new way.
Who can be an angel investor?
• An individual who has both the financial capital and the desire to provide
funding for startups can be an angel investor.
• Most entrepreneurs prefer angel investors for their startups over other
predatory forms of funding because they are less intrusive.
• Angel investors typically invest anywhere from ₹5 lakh to ₹2 crores,

depending on the size of the company.
• Often an angel investor can prefer not to invest more than 5-10 per cent of
their total portfolio amount in a single company.
Education qualification of an angel investor
• There is no certain education qualification one requires to become
an angel investor.
• They come from various backgrounds, like business, engineering

or finance.
• Angel investors are often highly experienced people who know

about the business, equity investments, startups and
entrepreneurial world and risk management.
Role of an angel investor
• Angel investors primarily provide capital for startups at early stages
in exchange or convertible debt or equity ownership.
• Many angel investors invest in companies of the same sectors

where they have the expertise and they help accelerate the growth
by providing strategic inputs.
• As they often get considerable equity ownership, they also play the
role of an active shareholder in annual general meetings of the
company.
Types of angel investors
• Friends and family

• Wealthy individuals
• Groups
• Crowdfunding
• Friends and family: This is the most common source of funding for startups
and is often the first place startups look for funding.
• Wealthy individuals: Depending on the business, individuals who have a

high net worth, such as doctors, engineers or successful business people,
are often ready to invest a substantial amount of money in exchange for
equity in a business.
• Groups: Many angel investors are gradually starting to operate as part of a

group. This increases the potential for a higher amount of investment
significantly.
• Crowdfunding: This kind of funding is becoming more common. It allows

large groups of people to invest small sums of money to help the company
achieve a specific funding goal.
SEBI norms on angel investors
• Angel investors are allowed to be registered as alternative investment funds (AIFs) — a
newly created class of pooled-in investment vehicles for real estate, private equity and
hedge funds, a gazette notification said.
• In order to ensure investment by angel funds is genuine, the SEBI has restricted investment
by such funds between Rs50 lakh and Rs5 crore.
• Among other norms included, angel funds can make investments only in those companies
which are incorporated in India. These funds needs to be invested in a firm for at least three
years, can invest in companies not older than 3 years.
• Further, investee company needs to be unlisted and with a maximum turnover of Rs25 crore
and this firm may not be related to a group with a revenue of more than Rs300 crore.
SEBI norms on angel investors
• Angel funds are required to have a corpus of at least Rs10 crore and minimum investment
by an investor should be Rs25 lakh.
• SEBI said, “The manager or sponsor shall have a continuing interest in the angel fund of not
less than 2.5% of the corpus or Rs50 lakh, whichever is lesser, and such interest shall not be
through the waiver of management fees”.
• The regulator also stipulated that the fund must not have any family connection with the
investee company and that no angel fund scheme have more than 49 investors.
Advantages of angel investors
• The major advantage of receiving funding from an angel investor is that there
is less risk than taking out a small business loan.
• Unlike loans, there is no requirement to pay back the funding from an angel
investor as they take equity in exchange for financing.
• Angel investors typically have experience in investing. They take a long-term

view and understand that they can get a return on their investment after a
long period of time.
• Research shows that angel investors' supported startups are more likely to
have substantial growth and give a higher rate of return.
Other benefits that a startup business can get by taking on an angel
investor are:
• credibility from being associated with the investor
• contacts for potential employees or consumers
• connections with investment bankers, accountants and other professionals
• marketplace knowledge and strategies used in similar companies
• mentorship, guidance and valuable insights for the startup

Disadvantages of angel investors
• Many entrepreneurs give away between 10 to 50% share of their startups for the investment.
Angel investors may also anticipate a high rate of return on their investment, often up to
tenfold in the first five to seven years. This may put the business and its promoters under
extra pressure. Prior to accepting funding, it is important to determine whether the business
can grow at the rate an investor would expect and establish growth expectations.
• The other drawback is a loss of control in the business. After investing in a startup, most of
the angel investors become actively involved in the business.
• For instance, most angel investors prefer to have an exit plan in place, such as the
business going public or selling the company. They may convince the promoters to sell the
business before they are fully ready. If founders give away high equity in the business, angel
investors may also choose to replace them from their key roles with a more experienced
executive, thereby removing the founder themselves from the company they founded.
Tips for startups before approaching for an angel
investment
• Have a business plan:
Prior to approaching for or receiving funding from an angel investor for the startup, consider
creating a comprehensive business plan. Whether getting financing from a lender or an
investor, the business plan can be helpful. Angel investors typically look for a business plan that
is both convincing and complete. A good business plan often includes financial projections,
strategies and budgeting for marketing the product and specifics about the target market of the
business.
• Be specific about what the investor is offering

Specify in writing what the investor is offering the business apart from funding, as many angel
investors expect to contribute their time and expertise to startups in which they invest. This may
include providing mentorship, taking a role as a strategic advisor, providing benefits of their
networks and connections or serving on the company's board of directors.
• Establish roles
It is important to develop a clear understanding of the roles of each person in
the business. The angel investor may have their own ideas for how to operate
the business and for this, they may want to have clarity about the roles of every
person involved in the business. By establishing roles in the starting, you
reduce the possibility of a conflict at a later stage.
Angel Investors in India
1. Rajan Anandan
Managing Director – Sequoia Capital
2. Anupam Mittal
Founder & CEO – People Group
3. T.V. Mohandas Pai

Chairman – Manipal Global Education, Former Director, Infosys
4. Girish Mathrubootham
CEO – FreshWorks
5. Rohit Bansal
Co-founder of Snapdeal, AceVector and Titan Capital
Rajan Anandan
• Managing Director of Google India and an MIT graduate, Rajan Anandan has been one of
the most active angel investors in 2017. Currently investing in startups spread across India
and Sri Lanka, Rajan is also the co-founder of Blue Ocean Ventures, the first seed fund in
Sri Lanka. By his own admission, Rajan prefers to invest in B2B startups owned in
partnership.
• Major Domains He Invests In: Big data, Analytics, Online health care, Mobile commerce,
Consumer internet, Digital media
• Past Investments: Instamojo, Travelkhana, Explara, Social Cops, Letsventure, LBB,

Anupam Mittal
• The name behind the Founder People Group and the one to bring revolution in the Indian
arranged marriage market. With his very successful venture Shaadi.com, Anupam Mittal has
become a prominent name in the angel investors’ network. Backing up almost 50 startups,
including the very lucrative Ola Cabs, Anupam Mittal’s portfolio has jumped 10-old in the last
couple of years.
• Major Domains He Invests In: Technology, Consumer Internet, Mobile, Healthcare
• Past Investments: HackerEarth, Drivezy, Kae Capital, Letsventure, Ola Cabs, Truebil,
Thankyou!!!!

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Angel Investors

• Beyond traditional bonds and stocks, angel

• The financial backing they provide may only

• Yet, their interest in startups usually goes beyond just

• They might have an interest in working within a particular

• Angel investors typically invest anywhere from ₹5 lakh to ₹2 crores,

• They come from various backgrounds, like business, engineering

• Angel investors are often highly experienced people who know

• Many angel investors invest in companies of the same sectors

• Friends and family

• Wealthy individuals: Depending on the business, individuals who have a

• Groups: Many angel investors are gradually starting to operate as part of a

• Crowdfunding: This kind of funding is becoming more common. It allows

• Angel investors typically have experience in investing. They take a long-term

• credibility from being associated with the investor

• contacts for potential employees or consumers

• connections with investment bankers, accountants and other professionals

• marketplace knowledge and strategies used in similar companies

• mentorship, guidance and valuable insights for the startup

• Be specific about what the investor is offering

3. T.V. Mohandas Pai

• Past Investments: Instamojo, Travelkhana, Explara, Social Cops, Letsventure, LBB,

• Major Domains He Invests In: Technology, Consumer Internet, Mobile, Healthcare

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