Solution for Angel drought in India?

Sarah has a good roundup of lack of angel investing activity in India. Lets get to the more interesting part – how to solve it?

I ran into Vishal Gondal on a flight few weeks back and he had a model that is pretty interesting. And may be there are some other thoughts in the community. So let me try and frame the problem.

How do we get 1000 angel funded startups every year with average initial investment of $100K? That’s collective $100M in angel capital – enough to get started. Some key issues/ constraints/ leeway:

  • Any sector
  • The amount may be available through formalized groups or otherwise
  • Mostly to concept stage businesses, sometimes prototype – definitely no revenue threshold
  • No express requirement for mentor, or active investors (yes, this was a tough one for me to let go)
  • Doesn’t include advisory capital, sweat capital, incubation resources, etc – talking cash here
  • Equity investment with profit motive – no debt, no collateral, no grants

The unstated one of course is sustainability and good choice of ventures – which is a decision that markets can make. Again, I have no included ownership thresholds – markets can decide that.

Smart ideas out there?

17 Responses to “Solution for Angel drought in India?”

  1. ramesh says:

    This will make some interesting reading, thought not very SIGNIFICANT. Few of us got together in Oct 2009, yes, brainstormed & got a medicore Business plan in place. Next, was to get some money & all we could manage was 1500 USD to give shape to our ambitious venture. We got started on 11th November 2009 with 1500 USD as investment/working capital/pocket money . It has been 8 weeks so far & we have managed to get 8 US client projects for web based software work, got 8000 USD revenue in our bank, almost 30 odd clients from US talking to us, got a team of 15 people, working happily & yes a descent Scalable infrastructure ( that will make another interesting story)..We were driven by passion & ambition & without any domain Knowledge but our clients , somehow trusted us for with their projects & upfront payment. We are geared up for 100% month to month growth ( Revenue wise, not bookwise) & plan to expand to 50 Billable developers in next 6 months ,before we come out with our product development Plan..yes. we are a 1500$ IT startup & we are talking to Lowe to convert them as our client.

  2. sandeep says:

    Alok, Interesting note and I can’t agree more with Deepak with his 5 pointers. Most important thing to note is lack of ecosystem. I know of few start ups that managed to raise equity funding from angels/individuals but are struggling to scale not because their business model has a hole or their product didn’t deliver. But because they couldn’t find a seasoned mentor or they struggled with real estate costs or they couldn’t pay hefty salaries to attract quality talent. In other words lack of total start up ecosystem. I believe a platform that can bring multiple start up together can generate benefits like sharing of cost of support function like accounting/HR, easy access to advisory, networking etc. and last not least also can generate deal flow.

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