Over the last couple of decades, angel investing has become a more serious form of finance and the most rewarding asset class among all secure and Government recognized options.
But, the net result is that people who wouldn’t normally hear about angel investing are reading and seeing more discussion, prompting them to ask what it is all about.
Well, an angel investor is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company and with an expectation of extremely high returns. Of course, they are Angels to the startups, but they have an objective of phenomenal profit through “exit”.
Often, angel investors are found among an entrepreneur’s family and friends. The funds that angel investors provide may be a one-time investment to help the business get off the ground or an ongoing injection to support and carry the company through its difficult early stages.
However, the best way to become an Angel Investor is to join an Angel Investment Network like NRI Angels or SL Angels by StartupLanes.
You can become an Angel Investor today!
Angel investors are normally individuals who have gained “accredited investor” status but this isn’t essential. Essentially these individuals both have the finances and desire to provide funding for startups.
StartupLanes welcomes you to become an Angel Investor on a trial basis, without paying any membership fee. You can get fixed returns of up to 24% p.a. on your investments as well as 8-15 times ROI while you sell of your equity in 3-5 years. From connecting with the best startups and the community of experienced Angel Investors in our Angel network, we promise in delivering complete satisfaction to our investors.
From where do Angels bring capital to invest?
Being rich is not the only criteria for a person to consider before investing, you may start with small amounts and that too in installments (tranches).
Your fixed deposits or mutual funds won’t give you a satisfactory return, however, these are low-risk investments. On the other side, Ange Investments are high-risk & high-return (HRHR) investments.
Angel investors typically use their own surplus money, they don’t leverage through borrowed funds, however, many experienced Angel Investors have revealed that they borrow at a low rate from Banks and then invest for high returns in startups as Angel Investor.
Though angel investors usually represent individuals, the investments can also be routed through the entity that provides the funds. It may be a limited liability company (LLC), a business, a trust, or an investment fund, among many other kinds of vehicles.
But Startups Fail! How does this work?
Generally, Angel Investors get 8 to 15 times returns on their investments within 3-5 years, therefore, even if a few startups fail, it doesn’t affect them. It is a calculated risk, if 3 startups out of 10 become successful, then it will be a good profit.
Here is an example of mathematical representation:
Angel Investor Investing INR 25 lakhs in 10 Startups
| Total Investment Per Startup | INR 2.5 lakhs |
| Total Number of Startups Invested | 10 |
| Investment Period | 5 Years |
| Failed Startups | 7 |
| Successful Startups | 3 |
| Average ROI | 8x |
| Amount Lost (assuming zero return 2.5L * 7) | l7.5 lakhs |
| Amount Earned (15x ROI = 2.5L * 15 * 3) | 1.125 crores |
| Net Profit from “Exit” | 87.5 lakhs |
| Percentage Return in 5 Years | 350% |
The above example represents that the Angel Investor invested Rs 25 lakhs in 10 Startups, equally distributing the investments into the ticket size of Rupees 2.5 lakhs.
After 5 years, 7 startups failed completely and 3 startups became successful. The Angel Investor lost 17.5 lakhs in the 7 startups, however, the return in the other 3 successful startups covered the entire loss and turned the investment into a whopping return of 350%.
This might surprise you if you don’t have previous experience of Angel Investing, however, this is a conservative example. Generally, the case might be different, 7-9 of your startup investments will be successful. It will depend upon your experience of selecting the startups and of course the mentorship and guidance that you will provide to the team of a startup with your money.
Being an Angel Investor can benefit you in different ways, seeing it as a big industry in itself.
We could go on all day about the endless benefits that you can gain from being an angel investor. This investment strategy cannot only help grow your net worth, but it can allow you to give back to the community around you. Here are some of the most thought benefits of being an angel investor.
You can grow your money. When it comes to increasing your net worth, it’s fully possible with angel investing. By opting for investing in the right startups, you can see massive returns on your investment over time as the company grows.
You can give back to your community. We all need the ability to give to other people so that we can feel calm inside. As an angel investor, you can choose to give back to entrepreneurs in the form of funding and advice. You can even opt for choosing those who are constructing start-ups in your local town that will bring jobs to many.
You get flexibility in your investment strategy. I am sure, you are aware that maintaining your net worth doesn’t happen on its own. Rather, you must be able to implement a wealth-building strategy that works. When you do angel investing, you can enjoy the flexibility of writing your terms for the money you invest. Plus, you can invest in start-ups whenever you want by simply writing a check.
Being an Angel Investor connects you with the founders of the startups and companies. Anybody who has invested in more than 5 Startups has never lost their money. Becoming an angel investor is an investment trend that has gained a lot of popularity over the last few years.
If you have money to invest, you may want to consider angel investing as a key part of your wealth-building strategy for the future.
Ratan Tata Can’t Be Wrong!
Ratan Tata is the most respected industrialist, philanthropist, and angel investor in India. He has also been conferred with the prestigious Padma Vibhushan and Padma Bhushan awards. He was the Chairman of Tata Group, which consists of companies like Tata Motors, Tata Steel, Tata Consultancy Services, and Tata Power.
His startup portfolio includes names like The Urban Company, Ola Cabs, Urban Ladder, Tork Motors, Snapdeal, Cure.fit, Paytm, Repos Energy, ClimaCell, Abra, CarDekho, Holachef, FirstCry, Lenskart, NestAway, GOQii, Xiaomi, Lybrate, Infinite Analytics, CashKaro, DogSpot, BlueStone, Zivame, Generic Aadhaar, and many more.
Here are a couple of Angel Investors who have made a fortune by investing in startups.
Anupam Mittal
Founder of People Group which includes businesses like Shaadi.com, Makaan.com, and Mauj Mobile, Anupam Mittal is also a prominent early-stage investor. He explores markets in consumer internet, mobile, marketplaces, and SaaS.
Some of his investments are Drivezy, Interactive Avenues, Ola Cabs, Druva, Sapience, Pretty Secrets, and Café Zoe.
Elon Musk
Musk is the CEO and co-founder of Tesla and the CEO and lead designer at SpaceX. Musk’s best investments include PayPal Holdings, Inc., SpaceX, DeepMind, Tesla Inc., and The Boring Company.
In 2020 alone, Musk has added $17 billion to his net worth and is ranked 2nd in a list of the world’s wealthiest individuals.
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