I started making angel investments in 2013 for a very simple reason. I believed that the founders I was investing behind had the vision and tenacity to create powerful brands, and the execution capability to do this in a relatively short time.
I thought my marketing background and experience could offer some value to these young founders. In return, I was getting to participate in India’s startup revolution – because it is nothing short of a revolution. Nearly four years later, my belief and enthusiasm remain unchanged, but there is a discernable shift in the angel landscape.
The X factor
Mid 2014, at a dinner in Delhi, a well-heeled friend complained bitterly that I was ‘not sharing’ my knowledge of the startup scene. He had already made 10+ angel investments, without meeting the founders or understanding what the company did. He was now waiting for his ‘x-factor’, he said.
The startups would raise a round at exponential valuations and he would get multiplex returns. His grouse was that some of the startups I had invested in were getting headlines in the business papers – a sign to him that funding was imminent. His portfolio companies were not ‘visible’ and that was making him uneasy. He had thought deeply about it and come to the conclusion that startups from Bengaluru grabbed more column inches. And here I was, a friend from the aforementioned city, hobnobbing everyday with startups and VCs and still not giving him ‘tips’.
Cut to 2017. The same friend looked at me sympathetically at a recent encounter and asked if I was OK. He had cut short his losses and returned to the safe fold of his wealth manager. I was still persisting with the ‘startup stuff’, he had been told. Very unwise. He promised to give me tips on some hot mid-cap stocks.
There were many others like my friend who viewed startups as a way to make a quick buck (also calling yourself an angel investor is way cooler than saying you play the stock market or invest in real estate). These angels lost sight of the fact that this new breed of entrepreneurs is only doing what generations before them have done –building businesses in response to new opportunities. That takes time and patience and it means overcoming multiple points of failure along the way. Just the way it always has.
Try some déjà vu
I find it particularly surprising that people of my generation have such short memories. Most of us have lived through a couple of business cycles and should know how they play out.
My father was a refugee who came to Delhi after the Partition and like many others, found his life’s work in helping to build the industrial foundation of a young nation. I have lived through the trajectory of manufacturing industries in the 1970s and 80s. I can remember, as a young child, peering through curtains at a mob from the labour union shouting slogans outside our home. My father was always unperturbed, saying it came with the territory and a resolution would be reached. I don’t know if it helped that he didn’t have to deal with headlines declaring him a failure because there was trouble at his plant.
With liberalisation in the 1990s, came another inflection point. Multinational brands entered India and changed the game, but not all local competition was destined for certain death. Campa Cola and the Ambassador car may have faded away, but Amul, Mother Dairy, Nirma, and many more thrived. Banking, hospitality, telecom, FMCG – there are…