Till a few years back, rich Indians, especially from tier-2 and tier-3 cities invested in real estate, gold and equity since they presumed these investments to have assured returns. Today, this trend is slowly changing to make way for investing in startups. Individuals with dispensable money are slowly being aware of the advantages of getting big returns by being an angel investor. While angel investing does not have an assured rate of return and the risks are higher, people do not want to lose out on such opportunities. This is due to the startup industry being a part of e-commerce, big data and mobile app marketplace – all three of which are booming right now.
Initially starting with major cities like Bangalore, Mumbai and Delhi, angel investments are now shifting to other cities and even smaller towns. Angel networks are now connecting premier tech institutions and investor communities.
Investing bodies like Lead Angels from Ahmedabad and Ah Angels which recently invested in Jaipur-based education tech startup Logicroots are part of a network that are working with global entrepreneurship networks like The Indus Entrepreneurs and National Entrepreneurship Network that will push the affluent families of India to make angel investments.
These investors also showcase how angel investing in startups can be profitable in short terms. For example, Ah Angels exited Chennai-based Harness Handitouch with handsome returns garnered in two years.
Tier-II cities like Pune, Kochi, Jaipur etc. have not seen any major VC attention since they lack the ecosystem and support needed for the early-stage development of startups. “For entrepreneurship to thrive, one needs a large pool of talent, and facilitators such as incubators and co-working spaces. You also need a culture that, in the best case, encourages entrepreneurship, and in the worst case, does not look down upon starting up. In addition, seed investors, angel investors, and VCs have to provide the necessary risk capital. The three top metros have an abundance of all these ecosystem participants. But other cities too have woken up to the possibilities of starting up. So things are headed in the right direction,” explains Ajeet Khurana, an angel investor who has invested in Pune-based gaming company Rolocule and snack firm Snack Experts.
These angel networks are in good terms with student entrepreneurship cells and alumni networks of institutions since many of them are located in smaller cities. This creates a great deal for startups who are not only mentored but also need the angel investing for early-stage development.
“Successful entrepreneurship is all about identifying customer pain points, and creating solutions. There is always the hope that some of the solutions from non-major cities would address problems that aren’t necessarily felt in the metros,” Khurana points out.
(With inputs from TechInAsia)
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