Talking To Angels
What angel investors look at before deciding to fund a start-up
- Jun 24, 2019,
- Updated Jun 27, 2019 7:04 PM IST
Saurabh Srivastava, an IT industry veteran and co-founder of Indian Angel Network (IAN), once took out a start-up founder to dinner. "After we sat down, I asked him what he would like to drink. He answered single malt, so I looked down the menu and found a 12-year-old Glenfiddich, which was the most reasonable, ordered it and passed the menu to the founder," Srivastava recounts.
The start-up founder looked at the menu and told Srivastava, "You know, Saurabh, I never drink single malt which is less than 18 years old." Srivastava was left flabbergasted. "I was quite surprised. Is this guy for real? He just saw me order!" Suffice to say, the founder's pitch did not work.
Raman Roy, another IAN co-founder and also known as the father of the Indian BPO industry, has a standard question whenever he meets anyone to listen to his or her pitches. "How did you arrive for the meeting?" The question may seem insignificant but the answer is instrumental to Roy's and Srivastava's funding decision.
"Here, in this room (in Delhi), we met this founder once who had come from a place in Uttar Pradesh. We asked him how he came, and he told us by bus," shares Roy. "Were you travelling the entire night by bus? Did you not sleep?" Roy recalls asking the founder. "No, sir, I slept a bit," came the reply, in Hindi. Unlike the founder with a fondness for single malts, this one not only left with a cheque but was given an amount higher than what he had asked for.
So, what do angel investors look for when listening to a pitch? Is it simply frugality? After talking to some angel investors, we realised it is more complex than that. The decision could depend on something as innocuous as exchanging pleasantries or even ordering from the menu.
Angel investing is the earliest stage of investing in a start-up and since the company barely exists at this point, taking a decision becomes more about betting on the founders and the team. It is also one of the asset classes with the highest risk and hence investors must assess the individual and the team carefully. "An A-plus team can make anything work. They just keep pivoting until they find something, whereas a B-minus team can cost you," says former Google India Managing Director Rajan Anandan, who is one of the most active angel investors in India and has invested in a few companies with very young founders such as Genrobotics, SocialCops, Inclov and others.
Srivastava, whose career spans more than three decades, agrees. "In 1999, we invested in a bunch of guys who were going to be the Charles Schwab of India. It was not a very smart idea but look at what those guys did - that company is Indiabulls," he shares. "It is not some great technology, it is not a breakthrough. It is people who are determined to succeed; they are willing to change whatever it takes."
Saurabh Srivastava, an IT industry veteran and co-founder of Indian Angel Network (IAN), once took out a start-up founder to dinner. "After we sat down, I asked him what he would like to drink. He answered single malt, so I looked down the menu and found a 12-year-old Glenfiddich, which was the most reasonable, ordered it and passed the menu to the founder," Srivastava recounts.
The start-up founder looked at the menu and told Srivastava, "You know, Saurabh, I never drink single malt which is less than 18 years old." Srivastava was left flabbergasted. "I was quite surprised. Is this guy for real? He just saw me order!" Suffice to say, the founder's pitch did not work.
Raman Roy, another IAN co-founder and also known as the father of the Indian BPO industry, has a standard question whenever he meets anyone to listen to his or her pitches. "How did you arrive for the meeting?" The question may seem insignificant but the answer is instrumental to Roy's and Srivastava's funding decision.
"Here, in this room (in Delhi), we met this founder once who had come from a place in Uttar Pradesh. We asked him how he came, and he told us by bus," shares Roy. "Were you travelling the entire night by bus? Did you not sleep?" Roy recalls asking the founder. "No, sir, I slept a bit," came the reply, in Hindi. Unlike the founder with a fondness for single malts, this one not only left with a cheque but was given an amount higher than what he had asked for.
So, what do angel investors look for when listening to a pitch? Is it simply frugality? After talking to some angel investors, we realised it is more complex than that. The decision could depend on something as innocuous as exchanging pleasantries or even ordering from the menu.
Angel investing is the earliest stage of investing in a start-up and since the company barely exists at this point, taking a decision becomes more about betting on the founders and the team. It is also one of the asset classes with the highest risk and hence investors must assess the individual and the team carefully. "An A-plus team can make anything work. They just keep pivoting until they find something, whereas a B-minus team can cost you," says former Google India Managing Director Rajan Anandan, who is one of the most active angel investors in India and has invested in a few companies with very young founders such as Genrobotics, SocialCops, Inclov and others.
Srivastava, whose career spans more than three decades, agrees. "In 1999, we invested in a bunch of guys who were going to be the Charles Schwab of India. It was not a very smart idea but look at what those guys did - that company is Indiabulls," he shares. "It is not some great technology, it is not a breakthrough. It is people who are determined to succeed; they are willing to change whatever it takes."