LetsVenture was founded in mid-2013 with an initial vision to create a platform that brings transparency and easy access to startup funding in India. Today, our vision is to be the category leader in the area of early-stage investing in India and be the largest networked platform for the startup ecosystem in Asia.
As I look back on the past year, I want to capture some key characteristics of an ecosystem that is constantly evolving, and has the media watching keenly for success stories.The following lessons learned are based on data from the platform, my personal interactions and learning from engaging and building an online platform. The lessons, of course, are biased by how I have chosen to interpret and represent the data and my learning.
Learning #1: Startup founders straight out of college, raising angel funding purely on an idea, continue to be outliers in the startup landscape in India
As a trend, startup founders in India raising angel funding have an average of over five years’ experience, working in successful startups/companies and gathering enough traction / product validation for their idea before they raise angel funding. All the startups that raised funding on LetsVenture had solutions in beta or close to product market fit. None of them was funded based on a PowerPoint idea. The chaff gets filtered out and the market place dynamics continue to drive validation around business plans and business models.
Learning # 2: Valuations and terms of investing are changing towards a better equity planning approach
The startup ecosystem in India is more connected today. It has founder communities available as resources, easy access to standardized term sheets, greater awareness around equity planning and more options to raise angel funding.
We are seeing more competitive valuations. Founders dilute anything less than 10 percent up to 25 percent in their angel round. However there still continues to be a large number of startup founders that also dilute upwards of 40 percent in their angel round. Almost all startups that raised funding on LetsVenture have dilutions below the 25 percent mark.
LetsVenture also offers standardized open source terms sheets, which have been reviewed and accepted by institutional and angel investors.
Learning # 3: Early angel investors are the unsung heroes of the Indian ecosystem
Talk to experienced angel investors, and you get a sense of the early risks they took to be part of an ecosystem when it was just emerging in India. It was not easy to invest, even as recently as 2013. In the absence of an online platform, getting a referral to be a member of an angel group (which did deter many from investing in Indian startups), taking time out to meet startups, risking one’s own money and leading the way in a market that had seen very few exits does need courage.
Learning # 4: The new angel investor will break barriers and change angel investing in the next five years in India
Platforms like LetsVenture, and several smaller angel groups will see the emergence of a new profile of angel investor investing in India startups. These include
- The global Indian who is keen to participate in India’s growth story
- The entrepreneur-turned-investor who understands how to build businesses in the new digital-age economy
- the second-generation global citizen from a family business
- The senior management of multinational corporations (MNCs) that missed out on the entrepreneurial journey.
Forty percent of investors on LetsVenture are first-time investors, people who are not new to ventures but did not have an easy route to start investing in startups.
We also see almost every emerging tech and Tier 2 city creating their own small angel group ― a trend that could result in more localized startups being funded in spaces that could be very city specific. Whether these will result in large businesses being born in smaller cities is yet to be validated.
Learning # 5: An idea is all about execution – befriend the believers and beware of the skeptics
My biggest realization today is that a founder needs to be insane about execution. You will have an equal number of believers and early adopters and a higher number of skeptics when you attempt something new. Stay true to what you believe. Even if the startup fails, you will emerge a winner with all the learning gathered along the journey.
When I first presented the idea of an online marketplace for startup funding, the questions/comments that came up were many and varied. “Is this legally possible?” “I love the idea but this will never work here.” “This has been tried by many and all have failed!” “I love what you are trying to do and want to fund the idea!” Today, many people who were formerly doubtful about the idea come to me and acknowledge our success, admitting they were skeptical about building a marketplace in India around funding — a country in which there is a trust deficit and where angel investing was considered to be in “a league above the rest.”
Now, all the traction we have gained also casually gets credited to the timing being right! As an entrepreneur, learn to ask for help/advice, listen to feedback, collaborate and believe in your own vision. You will find your early adopters in your employees, customers and investors!
LetsVenture will hold an angel summit April 22-23 in Bangalore, India. For details, check LetsIgnite.
Shanti Mohan is founder and CEO of LetsVenture, an online platform based in Bangalore,which helps startups raise angel round by connecting them to global investors. Founded and beta-launched in mid 2013, LetsVenture is India’s largest online platform for startup funding with 800 investors from 19 countries and 3000+ startups and $6.5m committed online in the first year. Follow her on LinkedIn.