Angel Investors’ Roundtable

Canaan hosted an angel investor roundtable on sidelines of Nasscom Emerge event in Bangalore last month. Key observations:

• Financing pyramid and implications: It seems that angels perceive an increasing cycle to get to next round of (VC) financing.This is increasing the load on angel investors, as well as potentially increasing the risk. Some angel investors are beginning to look at “high velocity” as a key parameter for investing in startups – this refers to startups which can fail fast, or scale rapidly.
• Mentoring skills: There was a distinct feeling that quality of mentoring needs to be improved. There might be an opportunity to put in place structured mentoring training to enable some of this. Besides the process skills around mentoring, domain expertise and go-to-market assistance were outlined as key areas. Finally, “VC literacy” of angel investors and mentors is an important area to focus on.
• Startup selection: In terms of domains, it was pointed out that SMB adoption in India is still slow and might not be a fertile ground for fast growth startups. In terms of entrepreneurs, angels/mentors tended to prefer younger, malleable entrepreneurs with high energy. Note that this could be a selection bias in the group, because we have separately heard about preference for experienced entrepreneurs with solid execution track record.
• In terms of ecosystem enabler, key areas that were highlighted were customer meets, angel liquidity initiatives, availability of working capital, and marketing/pr resources/platforms specifically for startups.

What do entrepreneurs feel about angel ecosystem and what would make more startups succeed?