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December 02, 2010

Angel Investing: Join a Network or Go Solo?

Economic Times has an interesting article on the emerging trends in the Indian Angel Investing space.
“Without a doubt individual investing is a growing trend but individuals are few and scarce whereas with a network all that an entrepreneur has to do is apply online and gain access to a pool of nearly a hundred,” says Sasha Mirchandani, founder Mumbai Angels who was an individual investor before he set up the angel group.

...“Start-up entrepreneurs usually give up 30-40 % of equity to an angel network and by the time first round of venture capital funding comes round they could be left with just 20% of the ownership and lose motivation ,” says LR Narayanan, whose investment banking firm MasterKey Holdings works with early-stage technology firms. But beyond the money the real draw of individual angels is the personal mentoring they provide.

“For this model to work angels must nurture just two or three start-ups at a time,” says Krishnappa, who is floating a model where individuals put in Rs 25-50 lakh in each start-up for a fifth of the equity.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in