Do you have a stunning idea for creating a product or service that can potentially grow into a thriving startup? If you do, you might be looking for a reliable investor who believes in your idea and is willing to invest to bring your idea into action. Angel investors are the perfect solution for you.
Angel investors for startups specialize in providing pre-seed and seed funding to help them grow and reach their potential. We will discuss the role of angel investors and how they help startups in India.
Who are Angel Investors for Startups?
Angel investors are high-net-worth individuals who invest in promising startup ideas in the early stages. They call themselves ‘angel’ investors because monetary rewards might not be their top priority, unlike other investors and bank loans. They are more focused on helping promising ideas come into action and succeed. They are successful entrepreneurs, industry leaders, or high-net-worth individuals willing to make risky investments.
Angel investors focus on your idea and the value you provide with your startup. They ask for equity and a seat on the board in return for the financial investment, guidance, and networking opportunities they bring with them. Their goal is to lend a hand to early-stage startups by helping them grow with or without a minimal value product (MVP) and make a profit after they have succeeded.
Therefore, angel investors become essential to the startup ecosystem to help the early-stage startup budding with innovative ideas grow and become successful. Thus, they form 53% of the total investors in 2022, as per a study (source). They provide financial support, mentorship, and more to the startup. Let’s understand how they can help startups in India.
What is the Role of Angel Investors for Startups?
Angel Investors play a diverse role in the startup they are investing in. Below are a few roles and responsibilities of angel investors.
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To provide funding in the initial stage
Startups, especially the early-stage startups, often need help with finance. They primarily rely on bootstrapping or raising startup funds from their friends and family. However, when the idea is unique, it requires more finance, which is hard to achieve with bootstrapping. There are many investment alternatives for raising funds. Still, the inexperience of early-stage startups with the lack of product makes it hard to secure funds from banks or venture capitalists. That’s where the angel investment firms come into the picture.
Angel investors for startups are the first external investment they could get. The angel investors provide seed funding to the startups for market research, product development, and initial marketing. The intent is to help startups boost their process to build the minimum value product (MVP) and test it in the market. They can improvise while earning decent revenue before sharing profit with angel investors and look for more investment based on the product’s market performance.
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To guide business management
Angel investors are often experienced individuals from diverse fields. It includes entrepreneurs, business people, industry experts, and more. Thus, they have years of experience to help guide you and provide mentorship along with the investment. Their expertise can help you manage your business operations better. The experts help you understand the market trends to make profitable strategies and avoid mishaps.
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To provide validation and credibility
Running a startup is not a walk in the park. Building a brand image as a new company takes effort, strategic planning, and hard work. In such a high-stress situation, a word of validation from someone with experience can do wonders. The angel investors are mentors who motivate you when needed. They can validate if your actions were proper and help you feel more confident.
Additionally, you gain a competitive advantage when you get investment from reputable angel investors or angel investment firms. The brand image of the angel investors can help you boost yours, enable you to attract more customers, and build credibility for future investment.
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To build your network right
Angel investors are well-established and experienced individuals with a broad network. They are often active in angel investment networks with global angel investors and industry experts willing to help early-stage startups. Additionally, they usually are connected with other startups. The angel investors extended their network to you to help you build your network with entrepreneurs, industry leaders, and potential investors.
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To focus on startup rather than returns
The primary characteristic that makes angel investors preferable for early-stage startups is their intention with the investment. While getting profits on their investment is a goal, it is rarely the priority.
Angel investors are passionate about helping new startup ideas shine and assisting them in their growth. They focus more on mentoring and supporting entrepreneurs in managing startups and their operations with their position on the board. They might begin to take their due profit after successfully launching the product and earning decent profits.
Angel investors work like angels, guiding startups in the early stages of building and marketing a product. But how do you find the right angel investors? We can help!
How can 21BY72’s Angel Investment Network Help You?
21BY72 is an angel investment network bridging the gap between startups and angel investors. We are active in various angel investment platforms and connected with global angel investors to help startups find the right investors for their startups. We organize startup summits with attendees from around the world.
How Can You Benefit From Our Global Startup Summit?
- Angel investment opportunities for investors and startups
- Showcase stall to attract leads and investment
- Build a brand image in the market
- Panel discussion about industry trends
- Interacting with industry leaders
- Guidance from experienced people
- Build your network with diverse attendees
You can connect with fellow entrepreneurs and potential investors by attending our startup summit. Check out our website for more information about our past Global Startup Summits.
Conclusion
Angel investors are essential to the startup ecosystem as they support startups in the early stages. The startup idea will either thrive or disappear in the early stage due to a lack of finances and mentorship. Angel investors provide these two necessities for early-stage startups to grow. They offer funds, mentorship, validation, and a boost in credibility to attract new customers and potential investors by boosting their brand image.
21BY72 is an angel investment network that organizes startup summits to bring startups and global angel investors under one roof. We organize these startup summits with various events for pitching, panel discussions, stall setups, etc. The attendees from across the globe help you build your market presence and connect with potential investors and customers.
FAQs
1. What’s the difference between angel investors and venture capital?
Angel investors often invest in early-stage startups, focusing on helping the startup grow, with profit being their lower priority. Venture capital is a financial institute investing in promising startups with at least an MVP focused on earning large sums of profit. The VC also offers guidance to help the startups grow.
2. How do you find angel investment opportunities in India?
You can find reputable angel investments through online portals. However, to effectively network and find the right angel investors, you can connect with an angel investor network, like 2By72, to find the right opportunity to build your network and find angel investors.
3. Why are angel investors important in the startup ecosystem?
Angel investors help startups in the most crucial time, the initial phase, when they lack a product or managerial setup to run a startup. They motivate and validate the entrepreneurs when needed and offer mentorship to help them grow their startups and bring innovative ideas into action. Thus, they are essential in the startup ecosystem to support startups in the early stages.
4. What does an angel investor ask in return for investment?
The angel investors offer investment in return for equity shares and a position on the board. It enables them to help you in business operations. Once you start making profits, they take their part in the profits.
