Tag Archives: Indian entrepreneurs

The rise of the new angel investors in Bangalore, thanks to #successful #startups

At the Lets Ignite event last week in Bangalore, I had an opportunity to meet a few entrepreneurs who have all recently raised between $90K to $250K (50L to 1.5 CR) in India over the last year.

The biggest change from 2+ years ago when I wrote about how to hack your seed round in India, is that the number of angel investors in India, has risen from about 300 to over 1000. Over 30% of these are active in any given year (meaning that they have made at least 1 investment in the calendar year in a startup).

Where did all these investors come from? According to the new investors who I spoke with:

1. Many are the first few employees at large successful startups such as InMobi, Flipkart, Myntra, Manthan etc. At least 3 startups I know of were exclusively funded by current Flipkart employees alone. They formed a syndicate of 10L each to put over 50L in one company alone. I have heard of InMobi employees taking to angel investing (small amounts of < INR 10L) as well.

2. Thanks to the 2 pages of daily startup coverage in the Economic times which has gone from 2 full time employees covering startups to over 13, many businessmen and women from other industries (retail in particular) have started to ask to get in on the action. Many of these folks come from older industries and are keen to diversify, invest and make some money as well. This was something I predicted 3 years ago as well – non technology investors are a key part of the tech angel investment community.

3. Finally a few (much smaller in number than the 2 other categories) of the early employees at Infosys and Wipro, etc. have finally started to get engaged with the technology startup ecosystem in India, creating opportunities for entrepreneurs to raise small early checks.

Of these 3 categories, I am most excited about the first category. This pool is the “smart money” which can offer help (though not necessarily desired advice) and connections to the entrepreneurs in India.

Which makes the advice a lot of investors give students these days, graduating from the top colleges in India more sense – Join an early stage startup, get some wins, then go on to create your own startup.

This advice helps you make a little money (hopefully), and build some relevant connections into the startup – which if successful only helps your raise your seed round.

I think the opportunities this creates for Indian entrepreneurs is awesome. Many of these investors are “off the radar” and tend to only invest in early stage entrepreneurs they know and trust. They also create a forcing function for investors who used to take their time to invest and string entrepreneurs along to move quicker.

Are Indian entrepreneurs “thin skinned” or misunderstood?

There are so many great tech entrepreneurs of Indian origin in the valley who have been successful over the last 2 decades. A last count indicated over 40% of all startups in Silicon valley were either started by or had an Indian cofounder.

This has led to several of them (entrepreneurs from the valley) and a few “industry observers” commenting and comparing the startup ecosystem in India to that in the valley. Most are not encouraging. From the outside looking in it is relatively easy to say “There are too many clueless people running incubators” – actual quote from a self-proclaimed Silicon Valley expert, or “Focus on local opportunities, not on global ones” – actual quote from a Tech Crunch article.

In both cases, many entrepreneurs in some closed Facebook groups that I am a part of, were all up in arms about these broad generalizations. The articles themselves were focused on many aspects of entrepreneurship as well in India, and the quote alone, taken out of context would be construed as a “passing mention”. Nonetheless many entrepreneurs took umbrage and the conversations denigrated into an abyss.

Back to my question about Indian entrepreneurs. Are we just thin skinned or misunderstood?

First, our startup ecosystem is fairly nascent. Comparing it to the valley is not doing either location any good. Both investors and entrepreneurs complain about each other constantly in both locations, though. Many investors claim entrepreneurs lack the depth, knowledge of the markets and understanding of what it takes to build a great business. Many entrepreneurs claim investors are risk-averse, predatory and bean counters without the expertise to build a business.

They are both are right, but both are wrong as well.

Market dynamics and conditions in India force both of them to play hands they are dealt with and I think so far we have done well. Comparing a teenager (Indian startup ecosystem) to a mature adult (Silicon Valley) does not make any sense though.

Second, I do believe that we can be more appreciative of each others positions and show a lot more empathy for our investors and founders. I am not suggesting a group therapy session, but knowledge and understanding of the constrained markets India has and the small exits that we generate does not help investors is important. Neither does expectation of Silicon valley type exits or “traction” help entrepreneurs.

Can we all get a little more thick skinned as well? – possibly. For most parts if you read a “self-professed expert”, such as myself or others, claiming to understand the nuances of the ecosystem, which you believe are incorrect, be direct and point it out, with a cogent argument explaining your point of view, instead of vitriolic comment spewing or worse – name calling without context.