You can be on Entrepreneur’s cover!

Finding a perfect investor could be closer than you think It is vital for an entrepreneur to find the right investor for their business as this is a symbiotic relationship.

By Ajai Chowdhry

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Shutterstock.com

Over the last decade or so, with the huge success of some of the early startups in India, both Indian and global investors have started showing a lot of trust in the Indian startup industry. In fact as per NASSCOM's report, nearly $5 billion of funding will be coming in 2015, which is a 125 percent growth over the last year.

This is a testimony to the fact that if there is an innovative idea backed by a solid business plan, angel investment is never far away. But who are these angels and what are they looking for? Angels are industry experts who invest in startups, which are either from their own industry or outside but show a lot of growth potential.

Besides investments, angels having vast industry experience also participate in key business processes and help startups enter the growth phase. Hence, it is vital for an entrepreneur to find the right investor for their business as this is a symbiotic relationship.

Today, with startups actively seeking angel investments, here are few points that one needs to keep in mind while looking for an investor:

Know the Angels
It is important to know with whom you are getting associated. You need to research on the investor's previous investments and how their experience has been to make sure that your startup is in same or complementary industry.

Alternatively, you can also consider approaching an angel investor network like the Indian Angel Network, through which you can get access to a larger number of investors.

Good Equation
When you pitch your business idea to an investor, your idea is either just on paper or far from what you foresee it to become. In all probability, at this stage, your angel is assessing the team more than the idea. If the people behind your idea appear passionate and confident about the idea and are open to accepting inputs from the angel, it is easier to get a buy in.

Seek investors who you look up to and who understand you and your ideas. A good equation with your investors will always help.

Industry Knowledge
It is advisable to find an investor who has expertise in your area of business which can be a big advantage for you. Sometimes even a functional expertise can play a vital role. So if your main business challenge is marketing, then finding an investor who has strong credentials in the marketing function can provide you the required support.

Market Requirements
It is crucial that an angel investor sees your product or service matching not only current needs of the market, but also its future needs. Investors will invest if they feel your product is addressing a need gap or offering a better solution than already available in the market or it addresses a future need.

They usually evaluate the market needs before making an investment in a company as it determines how well it will be received by its consumers.

Return on Investment
One also has to consider if his/her business idea has the potential to meet the needs of investors. Investors are also looking for a return on their investment, so if a business does not have good growth potential and an easy exit, then an investor may not go ahead.

The crux of the matter is that unlike borrowing from banks and institutions, angel investors are those who are putting in their own money, and hence take interest in how it is used. Closing the deal with a person or a network who understand your product is vital for finding the right match.

The perfect angel investors are the strongest pillars and best ambassadors for your business.

Ajai Chowdhry

Founder, HCL

Ajai Chowdhry, one of the six founder members of HCL began an exciting journey three decades ago with a dream to give India its very own microcomputer. He has an expertise in business management and administration, and in Information Technologies (IT) sector.
 
News and Trends

IT Firm Happiest Minds Technologies Acquires Macmillan Learning India

The deal will likely be finished by April 30 and will cost INR 4.5 crore.

Science & Technology

This Influencer Has Nearly 150,000 Instagram Followers and Makes Over $10,000 a Month. There's Just One Catch — She's Not Real.

Aitana López has over 149,000 Instagram followers and brands love her. Is she the future of social media marketing?

Starting a Business

6 Effective Funding Strategies for Startups

Navigating startup financing is complex. Entrepreneurs find themselves at the crossroads of innovation and survival, where a single decision can either fuel their dreams or extinguish their aspirations. Here we look at six ways you can finance your startup to support your business for long-term success.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

Microsoft's New AI Can Make Photographs Sing and Talk — and It Already Has the Mona Lisa Lip-Syncing

The VASA-1 AI model was not trained on the Mona Lisa but could animate it anyway.

Leadership

You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.