Business angel investors are fairly new entities in India and the process they follow while deciding upon which individual to award the funds is also unclear to most. The method involves working with clear objectives that decision regarding the allotment of the amount is dependant upon whether the business plans of the entrepreneurs can succeed in matching the objectives. This process is quite complex and several variables have to be accounted for while allocating the required finances to the deserving candidates. With the increasingly growing interest among entrepreneurs in angel networks for acquiring money for Early Stage Venture , the need of the process involved to be detailed is being felt strongly.
The most important asset of an entrepreneur is his clarity of thought since it drives him to success. In the interviews with Early Stage Investors , the individuals face numerous questions regarding the business idea and how he would propel it in the years to come. The first thing of the discussion is whether the product or service being offered by the startup business would be a necessity or novelty. Then, the question of whether the business idea would have something unique in itself would arise. The individual looking to start new company would have to have clear and concise answers to these queries posed by Business Angel Investors .
Critical mass of the business is an important concern for Early Stage Investors since they would prefer to invest in a firm that has the potential to become a market leader. In order to gain magnanimous number of consumers, the idea would have to not only be unique but also scalable. This means that the members of the angel network would discuss among themselves whether the firm they are awarding the finances to will be able to sustain and supply to large number users. Also, the competitive advantage of the idea in the long run and in face of tough competition would come be a concern for Business Angel Investors .
Next, the concern regarding the operating and management capabilities of the entrepreneur and his team would have to be taken care of. In any Early Stage Venture , the team is instrumental and the dedication of the staff is of utmost importance for growth of the firm. The team members have to be proficient in their work so that the quality of work attracts the customers. After acquiring clients, retaining them is the biggest issue for entrepreneurs and Early Stage Investors alike. The ability to keep the clients all the while attracting more would also answer the questions of break even points and cash flow that might arise in the minds of the investors.
One concern that members of Business Angel Networks have is the lifecycle of the products or services the firm would have. To keep the business on top, innovation and R&D are important and need to be taken care of constantly. Without upgrading the offerings on a timely basis, no company can think about remaining an industry leader, especially one that is simply a startup in the need of cash. After the abovementioned questions are answered satisfactorily, the Early Stage Investors need to know what will be the expected ‘period of exiting’ would be for them. Since they are granting the monies with the purpose of earning for themselves, the return on investment and exit period are major concerns, along with the method of exiting (IPO, M&A or strategic sale). Only after getting suitable answers do the members of angel networks provide the requisite funds to the applicants for his Early Stage Venture .
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