Startup investors need to study well before venturing: expert

>> India has only 0.2 investors vis-à-vis 6 in the US who show interest when a startup is to launch

 KSUM_Elevate 1India has only 0.2 investors vis-à-vis 6 in the US who show interest when a startup is to launch, but there is an improvement in the situation in the Asian country of late, according to a leading angel investor.

Yet, given the general mindset of the Indian entrepreneur, it will take time for the situation to change drastically, LetsVenture founder-CEO Ms Shanti Mohan told a workshop organised by the Kerala Startup Mission (KSUM) here.

The average exit horizon for venture capitalists in startups is globally 10 to 15 years, while the usual span of time that investors in India wait for returns good enough to leave business is two to three years, she told delegates at the event titled ‘Elevate’ on Thursday evening.

“It is better to know of the risks involved before signing your cheque (investing) than nurturing wrong hopes without making a good study about a venture,” Ms Mohan said, interacting with potential investors as well as founders of startups. “Due diligence plays a vital role in the matter.”

The speaker cautioned angel investors not to invest in startups that primarily seek to learn the tricks in the trade instead of executing ideas at the cost of investor’s money. To a question, Ms Mohan said it would be unwise to invest in a venture merely going by the ‘popularity’ of the sector. “It’s sometimes business that are nascent and futuristic that become unexpected success,” she added.

Two founders pitched their ideas at the workshop.

Earlier, Mr Vishesh Rajaram, managing partner of Speciale Invest that works with entrepreneurs who make products and services for enterprises and consumers, noted that India had turned a vital chapter in technology in 2009. Today is the time to look at “deep tech investments”, which will have a vital role to play in the next five years, he pointed out while giving a prelude.

While investing in a startup venture, he said, one must accord importance to give-and-take, Mr Rajaram said. “The investor has to treat the founder with dignity. In turn, the founder should realise that the investor put in his money only because of trust,” he explained.

KSUM Project Director Mr P.M. Riyas gave the introductory speech.

‘Elevate’ was held as part of the Startup Investor Education Programme for HNIs (high networth individuals) and potential investors as an interactive platform for the startups and the investors to explore, connect, engage and co-invest. The Kochi event, held a day after a similar event in Thiruvananthapuram with focus on healthcare, came as the second in KSUM’s ongoing series.

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