Introduction
Startups, entrepreneurship, and financing are increasingly becoming discussion topics at Indian dinner tables. Almost everyone has heard of startup investing platforms by now. A startup, for the uninitiated, is a freshly created firm founded by entrepreneurs with a novel concept, product, or service. People are becoming more interested in startups as they better understand them and read about their success in creating revenues and influencing the world.
According to data, angel investors support just 0.91% of businesses, whereas VCs fund only 0.05%. In contrast, 57% of companies are funded by credit and personal loans, while friends and family support 38%.
These figures might be intimidating for companies. On the opposite end of the scale, however, is not just monetary assistance but also assistance with company development.
Finding startup investing platforms’ capital may be a challenging task to handle. But there are various methods and strategies like using a long-term investment calculator etc. Most, however, are unaware of how to locate or contact businesses seeking finance. So, in this blog, we’ll look at it.
Why should you invest in startups?
Previously, investing in startups was primarily an option for the rich with an extensive professional network. It is no longer the case since an investor may now invest in a firm via angel investing sites. While long-term investment strategy with startups is now easier than ever, it is critical to understand why you should invest in Indian businesses.
Early entrance, massive rewards:
If you invest in the right company at the right moment, you may make 2x to 100x returns on your investment. Prominent startup investing platforms such as Zomato, Paytm, Nykaa, and Oyo are examples of companies that have provided significant returns to investors. Furthermore, the cheap overhead capital need and the considerable upside potential make the long-term investment even more appealing. You may read this article to learn more about how investors can double their money.
Portfolio Diversification:
As an experienced investor, most of your assets may be in debt or publicly traded stock vehicles. Startups may offer your portfolio a new lease on life. Investing in startups in India allows investors to diversify their portfolio risk at a low initial cost. Furthermore, startups are less susceptible to market changes than stocks and bonds. However, compared to traditional debt or public-markets stock investment, startup investing is a less liquid asset class, and investors should be conscious of this risk when investing in startups.
Potential for Transformation:
Most companies begin by meeting a critical need or solving a problem. Another motivation to support entrepreneurs is if you feel their product or service will improve society and alleviate people’s hardships. You receive the gratification of helping others in addition to producing rewards.
Angel investing is a popular way to put money into startups. Angel investors finance new businesses in return for a share of ownership. Now for the central question: how does an angel investor locate such potential startup investing platforms? Let’s get started!
Professional Connections:
The best long-term investment strategy for finding excellent businesses for investment is your current professional and social networks. It allows you to get a head start and invest in exciting concepts with a lot of promise. It also helps if you or someone you know can attest to the founders’ business skills and zeal. Never underestimate the networking power of your closest friends and family. The earliest investors in any business are usually individuals from the entrepreneur’s immediate circle of friends and family.
But what if you don’t already have a professional network? It is never too late to begin constructing one! You may start with your office and tap into its existing business network possibilities. Furthermore, sharing shared business interests may help you network with people in your sector. Attending events and seminars and connecting with such folks is one of the most acceptable methods to meet them.
Startup Incubators:
As businesses emerge from all corners of the nation, institutions and organizations have formed incubators to mentor entrepreneurs and assist them in refining their ideas and business models. Incubators assist businesses in their early stages by offering mentoring, advice, and assistance to help them establish their primary business. You can identify the most excellent incubators in the nation by asking around or doing extensive web research. Learn about the businesses incubating, their goods or services, and the company’s current stage. Based on your study, you may contact the creators directly to inquire about long term investment prospects.
Platforms for Angel Investing:
One of the most intelligent and successful methods to locate businesses to invest in is via angel investing networks. Such platforms provide structure to the highly unorganized world of startup funding. These platforms simplify getting information and save you a significant amount of time. The startup onboarding process and the effort to study the company and validate the material are essential differentiators across the various platforms. Thousands of investors, for example, trust Inflection Point Ventures because of their consistent identification of Winning Startups.
Finally, each company evaluates using a defined review procedure that includes 150+ characteristics such as business quality, scalability, competition, and more.
This rigorous approach assures investors have complete faith in the startup’s potential success. Learn how IPV gives angel investors all the information they need to make an informed choice.
Hackathons for Startups:
Hackathons are marathons of idea generation in which the most imaginative and entrepreneurial entrepreneurs collaborate to create a product from the ground up. As an investor, you may attend or monitor such Hackathons to pick from a pool of cutting-edge firms to invest in. Startup Hackathons are a great way to uncover profitable businesses.
Venture Capital funding rounds:
If you are unable to locate startups to invest in, you might seek the services of a seasoned venture capitalist. Venture capitalists identify firms with a high potential return on investment and offer the necessary financing. This capital might be their own or that of other interested parties. If you have enough funds, you may either engage as an investor with a Venture Capitalist or directly become an investor in the investment rounds.
What should your pitch deck contain?
The pitch deck you give potential investors is responsible for your success in obtaining startup investment capital. The more persuasive and focused it is, the more likely you will close the business with them.
When it comes to creating a terrific pitch, here’s what we teach our partnered entrepreneurs:
Demonstrate your market knowledge.
Presenting market knowledge is the best method to demonstrate your commitment to your company. The deck should include information on the target market’s size, the problem area that your product will address, the size and extent of the problem, current solution providers for the challenges, and what differentiates you from them. Having market knowledge is crucial and the best long-term investment for beginners.
Understanding where your market is now and where it will be in a few years, as well as how your firm fits into it, distinguishes an investment-friendly concept from its competitors.
Understand your financial situation.
The financials are the next section of the pitch deck. As an entrepreneur, you should be intimately familiar with every aspect of your company. What sections are profitable, at what cost, and which are consuming your working capital while providing no benefit? You should also understand which expenditure sources are temporary and which are ongoing.
While you are improving your knowledge of your present finances, it is critical to determine how much money you need from investors as startup long-term investment funds. Data-driven business estimates should support the sum. Furthermore, you should have figures around how much of your investment you are ready to give up in exchange for the money you request.
Highlight what the investors stand to gain.
The exit plan is the pitch section that informs investors what they stand to gain. Every investor is wary of investing in a startup; expect that the investor you’ve approached is also. In this case, it’s critical to figure out what’s in it for them. There are two approaches to take.
Give them your future business model estimates, such as if you expect to buy a new firm, grow into a new business, go public, and so on. And include their contribution in each step.
Provide them with an escape plan.
Tell them what they will take away from the table if the enterprise fails.
These variables, when combined, may help you offer a well-thought-out picture of your business to investors, bringing you one step closer to concluding the startup funding & another fundraising process on a lucrative note.
So those are the fundamentals to get you started in the realm of obtaining funding for your company. However, keep in mind that we have just scratched the surface. There is still a lot to learn about how fundraising works, where to locate investors, how to sell them in an impossible-to-refuse manner, and so on.
Bottom Line
The number of companies expands daily, making it harder for independent angel investors to select firms with high growth potential and dedicated founders. Online platforms have come in to relieve investors of this load by taking on the duty of assessing the business and the market.
They also create a reliable environment where prospective investors can interact with entrepreneurs and finance them while knowing they are making long term investment in a high return-to-risk investment opportunity. If you are looking for how to invest in startups with little money, the above guide can help you understanding market knowledge.
