The Rise of Angel Investing in India
Updated: Mar 17, 2022
Over the last few years, the number of angel investors in India has exploded, owing to the low barrier to entry. In fact, the expansion of angel investments is at an all-time high, with no indications of slowing down. Angel investors are often rich individuals seeking big profits.
Participation of the angel investors in each round has been increasing enormously since 2010, according to the research done by an Indian web publication Techcircle.in . Individual investors, seed investors, and private equity investors are all terms used to describe angel investors.Angel investment is a method for businesses to raise money from private individuals or corporations. There are no obligations with this investment: no debts or equity, no mortgage rates or charges, and no collateral is required. It simply allows investors to join in on the floor level of a company that shows potential through a product or service that addresses a market need, a strong team, and a thorough understanding of their target client and business plan.
India has been sluggish to adopt this technique, being one of the few countries in the world without any rules controlling angel investment . However, India is growing increasingly accepting of it as people recognise that it helps businesses develop quicker than they would otherwise, which implies more employment and other economic advantages for everyone involved.
With a few noteworthy exceptions, such as stars Shah Rukh Khan and Sunil Shetty, angel investors in India mostly came from the technology and banking industries in 2010. The typical investment amount at the time was about INR 0.5-1 crore.
Since then, we've seen a significant rise in first-time angel investors, as well as a great deal of variety in terms of industry and geographic location. Agriculture, healthcare, premium fashion businesses, and motor sports are among the new industries represented. Though many of these new investors are still based in Mumbai, Bangalore, Chennai, Kolkata, and Hyderabad have more venture capitalists. And, the average investment per investor has nearly risen to INR 1-2 crore.
India's economy has traditionally been predominantly cash-based, and the entrepreneurial sector is no exception. Despite the fact that India is recognised for its technology industry, 35 percent of Indians still rely heavily on cash, particularly when it comes to investing. However, there has been a considerable growth in the number of angel investors in India, with a more than 50% increase in the last two years.
Angel investors have been more influential in India over the last couple decades. Their impact on the startup industry has shifted from an afterthought to a driving force. Angel investors have become more important in the backing of startups, and they are frequently responsible for keeping them stable until they can secure more substantial capital.
Since the late 1990s, venture capital has been popular in Silicon Valley and some Western countries, but it has yet to catch on in India. Angel investors, on the other hand, have filled that hole by bringing a plethora of expertise and knowledge, as well as financial capital, to the table. As a result, they may take on more risk than typical venture investors while still making a profit.
Angel investors are frequently drawn from inside a startup's local community. Even if they have no direct expertise with a certain type of enterprise, they may have contacts in that sector who may assist budding entrepreneurs. They could also be able to suggest which aspects of a concept should be developed or which actions should be done next.
If you yearn to be an entrepreneur searching for money, it's critical to understand what angel investing is before pitching them. Individual angels, syndicates, and venture capital firms are the three types of angel investors. Individual angel investors choose early-stage investments with great growth potential; syndicates prefer later-stage investments with the possibility of high returns; and venture capital firms only invest in very late-stage companies that are expected to go public or be purchased soon after funding.
It's no secret that India has seen a steady rise in angel investors over the past decade. Although angel investing is still relatively new, it has come a long way from its humble beginnings.