Saturday, August 9, 2008

VC or Angel

VC Or Angel:

With the requisite talent already in place in the Indian IT/ITeS and Technology industry, the sight of aspiring ingenious technological start-ups on the domestic terrain certainly does not raise an eyebrow. One thing that is common among these startups is, it is the dearth of funds to kick-start the ventures.

Why Angel, Why Not VC:

Many o f these start-ups need a smaller investment size that does not fall under the purview of Venture Capitalists. 8 out of the 10 start-up’s I came across are planning raise 0.25 to 0.5 million dollars. 19 out of 20 VC’s minimum investment is more than one million dollars.

There is this dearth of angel investors in India. Many of us came VC’s in one or other conferences. It is very hard to come across an angel investor. I fell this is partly attributed to the fact that angel investing is typically done by first generation entrepreneurs. In India, first-generation entrepreneurs are as old as decade or two and it is only now that they are turning towards angel investing. If I go by this equation the number of angel investors are too less to fund the scale of innovation happening out there.

My suggestion to all the entrepreneurs who are planning to raise less than one million dollars is STOP CHASING VCS, START LOOKING FOR ANGELS. Look for the people who made money in last decade or two, especially in your start-up domain. According Mr.Srinivas Udayagiri MD Lightspeed , in India only 8 out of 1000 proposals were sanctioned VC funds last year.

We should get more successful entrepreneurs than VC to the conferences . Especially in the conferences that are focused on early startups.

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