How do you identify your angel?

Avinash Raghava
Together Fund
Published in
7 min readDec 16, 2021

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Entrepreneurs often take a transactional view of their angels, but they can be valuable partners too.

I will start with a story. I’ll not name the founder out of respect for him. But not too long ago, a founder raised a sizable angel round. He was excited to be funded by some of the biggest names in the business. One of his angels, however, began demanding more. The angel started second-guessing the founder and tried to steer the company their way. The angel demanded dividends as well within three years of setting up.

The founder ignored these attempts of backseat driving. His business grew. And soon enough, he needed another round of capital. A large institutional investor found his company exciting. But the angel’s reputation preceded him. And the institutional investor offered to buy out this angel investor. The angel held firm and refused. The founder was running low on capital by then. There was fear that the company would have to shut down. The institutional investor and the founder offered to pay several times more than the valuation for the angel to leave the captable. Somehow, the investor exited, leaving everyone a little rattled.

If you ask the founder what went wrong, he would say he didn’t pay enough attention while choosing his angel. Finding an angel investor is often thought to be transactional. Founders ask very few basic questions.

  1. Does this person like this sector?
  2. Do they have money?
  3. Can they match my valuation?

And it’s not just first-time founders. Many times, experienced founders fall into this trap too, and make the relationship transactional.

It’s time to take a step back and analyse how founders should choose their angels. There have been a record number of unicorns this year. Thirty-three unicorns, to be precise. The highest in a decade. Some news reports claim Indian startups have raised over $24 billion so far. Some have found their wings this year. There is a lot of enthusiasm to encourage startups. And rightfully so. But founders need to move with a measure of caution. The seeds you cautiously sow now will reap fruits of abundance later.

Not all investors look alike

Before analysing what founders need in their investors, they need to start by looking inwards. What are the skills that need to be augmented? There are some skills founders can hire, such as marketing, but there are others, such as being able to network, which are so unique (or so expensive) that an angel investor may be the right bet. Broadly, there are three different types of angel investors.

  1. Connectors: Those who help you network. Those who can make connections, as your company grows, these investors will be the ones who will make introductions to large VC firms.
  2. Builders: Hands-on investors. People who want to be strategically involved. These investors will help you hire key positions and they will help you build GTM when needed.
  3. Operators: These investors are usually in similar sectors. They’ve been there and done that. They understand the joy of building a business and can advise on how to overcome operational challenges.

How can founders pick investors?

I spoke to Amarpreet Kalkat, the founder of Humantic. He is on his second startup. And knows a thing or two about raising capital from angel investors. Amarpreet compared the process of picking investors akin to the process of picking employees.

“With employees, salary or money plays a role, but not too big a role. What we want to know is if the chemistry works. Will we enjoy working with this employee? There is some of that with an angel too.”

Amarpreet makes a good point because even after an entrepreneur moves forward, she often leans on her early investors to be her guiding light. Others we spoke to believe that it is not just chemistry, it is also where the capital is coming from, ie, is it from a seasoned angel investor or someone who is wading into it for the first time. Both have their pros and cons. Some seasoned investors may have unrealistic expectations, while the novices may not know how to support the founder. But this is still very generic. So, what does a founder need to look for in their angel? Let’s do the internet’s favourite thing. Let’s make a list.

You need some vision

It is difficult to define vision. When it comes to an angel investor, Amarpreet says vision is defined in two ways.

  1. Ability to empathise and see things from your point of view.
  2. Ability to look beyond the now and into the future.

Both are equally important. You want the angel to be able to identify the problem that you’re trying to solve and be able to see beyond everyday tactical issues. Having both is difficult, but that’s the angel you want.

As Amarpreet puts it succinctly.

“How supportive will they be? Does our point of view align? Because the difference in vision will cause showdowns.”

Amarpreet compared the life of a founder to a general going to war. And during a war, you need to be able to trust the general to make the right decisions in the heat of battle. And they need to concede to that on the battlefield, his decisions are going to be one that will help win immediate skirmishes.

But there’s a difference between backseat driving and giving advice. You want your angel to be able to understand market dynamics. So when you’re trying to fend off a competitor, your angel can tell you which front you’ve left open and where you’re vulnerable.

That’s Amarpreet from Humantic

You need some hustle

At least in the very early stages of your company. It’s not just the founder and her team that hustles. It’s everyone, including the angel. The angel will have to turn into an evangelist for your product or service. The angel will have to monitor competition or even scout for talent. Building a world-class company is like raising a child. It takes a village.

Arpit Jain of SplashLearn says his angels don’t ask him for numbers but challenges.

“They ask, what were the execution challenges that you hit and how can I help solve them.”

A good way to know if your angel will help, Arpit says, is if they’ve been founders themselves in the past. These investors understand the difference between an idea and executing the idea.

And that’s when you really answer the question, why has this angel invested in me? Is it me, is it the sector or is it for the pride of investing? Arpit believes that if it is the first two, investors will often help a lot more.

That’s Arpit from SplashLearn

You need some love

And finally, you need love. Being a founder can be lonely. It’s often just you against the odds. Your angel investor at the time isn’t just someone who gave you money, she is someone who will listen to your fears, help you deal with issues you haven’t imagined.

There is a story that does the rounds often in the angel investor circuit. The story of Rajan Anandan. The founders of companies Rajan has invested in always say this.

“All you have to do is text Rajan once, asking for advice or help. And the phone rings, without fail, in two hours. He will find the time to talk to you.”

Arpit has a similar relationship with his investors at Accel. Especially Abhinav Chaturvedi.

“I can talk to Abhinav about my problems in a very open manner, but it is because we have a personal relationship. We know each other and about our families.”

But love is not something only you need to feel. It is something your employees need to feel, too. Arpit from SplashLearn says that even the best founders stumble when it comes to developing deep interpersonal relationships within the larger team. An angel investor with experience can be key in building culture.

“This is very important in Series A or Series B. Setting up companies is hard, finding the right mix of employees is harder. If you can find an investor who can help with this, it is the cherry on top of the cake.”

Building a company is an equal amount of fun and hard work, and the right partner makes it rewarding. A little imaginative thinking in finding these investors can help founders build faster and smarter.

At Together, we want to be a partner in the journey of all founders. Be it in our portfolio or out of it. Our ambition is to help the community evolve and thrive. If you believe you have an idea that has the ability to scale and help solve problems, write to us. We’re always listening.

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Avinash Raghava
Together Fund

Building Community at @SaaSBoomi | Past: Community @ScaleTogether @Accel_India. Co-Founded@iSPIRT(@Product_Nation), @NASSCOM