Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: If you could give one piece advice to angels about how to become more successful, what would your advice be?

Padmaja: That’s a tall order. I must first say this with a bit of a rider. Angel investing in India is very young. It’s not as old as what is happening in the United States or the United Kingdom. So, keeping that in mind, I think per se, angel investing is a new phenomenon for people here. There are very few angels invested in the true sense. So, one thing that does happen – because the VC industry is a decade and a half or more older – the VC lens is sometimes used more than the angel lens.

If you’re a VC coming in with let’s say a $5 million to $10 million investment, you’re obviously looking at a company that’s got a history, that’s got some traction, that’s got some success. So, a VC would invest, looking at the past, and also taking a punt on the future. On the other hand, if you go to a bank that is giving a debt, or any debt financing agency for that matter, it largely looks at the past of the company.

But angel investment, if you think [about it, is] a little is different and is based on the venture’s future. I think that’s where the risk lies. Other than the team, you may not have anything else to take a punt on.

I think that may be what in India – and I’m being very specific to India – is where for angel investors, there’s a bit of a learning curve that needs to come. And I think it will come. It’s probably experience and exposure that is required. Also the entrepreneur ecosystem in India, though the traction is high, is in its very early stages.

The United States is a brilliant example, but think about how many years and decades of entrepreneurial activity have been going on there. India it’s almost the first generation, middle-class entrepreneurs largely from IT industry about two decades ago. And they started off and it was only about a decade later that we had icons coming out … sort of exited the companies, made money out of the entrepreneurial ventures. So, that, I think, is something which we would gladly move into, taking a little more risk on a few more unknowns.

Irina: And, of course, they should join your network because that’s the best way to learn, right?

Padmaja: I would say, yes, of course. Because I think, if I look at the Indian angel investing scenario, we probably have the most experienced angels in our network and we have the most varied domain expertise. And those are two things which only help to risk your hedges, de-risk your investments, create a higher probability when you are talking to a network which is spread across the country and overseas.

A good example is last year when we invested in one company some time in April, they came to us with four clients. By December, they had 65 leads. Whether they convert – they did convert quite a few – but to have 65 solid leads in eight months is not mean.

This segment is part 8 in the series : Seed Capital From Angel Investors: Padmaja Ruparel, President, Indian Angel Network
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