Angel investors are amongst the most popular figures in the startup world. I’m sure you might have heard about the likes of Kunal Shah (CRED), Vijay Shekhar Sharma (PayTM) and Rajan Anandan (Sequoia Capital). The aforementioned names are some of the most prolific angel investors in the Indian startup ecosystem.
A question I often hear is: “What do I need to be an angel investor? Does it have any specific criteria?”
While there’s no rule set in stone for this, there are certain criteria you need to fulfill to become an angel investor.
What are they? Let’s find out.
Many people are of the opinion that to become an angel investor in India, a person should have a huge corpus of wealth to invest in companies.
On the contrary, you can start angel investing with a sum as low as ₹20,000. On Captabl, we facilitate anyone to become an angel investor, by starting their investment journey from ₹20,000 and upwards.
Angel investing is quite easy in terms of the investment, and you can utilize this opportunity to back some of the most promising business ventures out there.
Angel investing is a high-risk proposition, which is why the Securities Exchange Board of India (SEBI) has laid down certain guidelines.
Some of them are given below:
● As per the ‘SEBI Angel Fund Regulations’, an angel investor is any individual who proposes to invest in an angel fund and satisfies any of the following conditions:
1. Individual investor with tangible assets worth at least INR 2 crores, excluding the value of their principle residence.
2. Has early-stage investment experience.
3. Previous experience as a serial entrepreneur or,
4. Is an experienced professional/executive with a minimum of 10 years in experience.
There are some other factors too, which come into play, especially if you’re investing as an organization. They include:
5. Is a body corporate with net worth equal to ₹10 crore.
Is an AIF (angel investment fund) or VCF registered under SEBI’s Venture Capital Funds Regulations, 1996.
An angel investor must invest a minimum of ₹25 lakhs over a period of 5 years in the startup through the angel fund.
The concerned angel investor must have completed the one-time KYC with address and identity proof as per SEBI requirements.
An angel investor must have a good network in order to source deals and partnerships for their portfolio companies.
While the factors mentioned in point 2 are essential, the network and professional relationships go a long way in helping the angels not just invest in companies, but also help them grow.
So these were the top criteria for becoming an angel investor in India. If you’re someone who meets any or all of the above criteria, it becomes easier to start angel investing.
You can also use platforms like Captabl.in, AngelList or opt for incubators and other networking groups to find companies to invest in.
We hope that the article offered some clarity with regards to what you need to do, in order to become an angel investor.