A Small Ticket to Big Growth

While angel investments in India have risen considerably over the years, there are still many entrepreneurs who are not able to access the risk capital to kick start their business, which is worth few lakhs of amount. What India needs now is large volume of small ticket size funding to create more entrepreneurs and encourage innovation.

India’s entrepreneurial ecosystem has seen a sea change over the last few years. Entrepreneurship was the last option as a career choice and today, it is the first choice. This critical shift from “Job Seekers” to “Job Creators” is what India needs. These start-ups will build innovative solutions and create value, wealth and jobs. This upsurge in the number of new ventures with disruptive ideas and scalable business models needs support.

Entrepreneur’s Launch pad

For every start-up in India, access to funds or capital has been one of the biggest hurdles and continues to be one. While the start-up ecosystem has matured considerably, raising money still continues to be a problem - both equity and debt. Also, India's banking system shies away from start-ups and this only adds to funding woes of a company. As such, many young entrepreneurs in lack of financial backing give up even before formally starting their business, which really means we have lost many innovative and unique ideas which have the potential to become big enterprises.

With the angel group Indian Angel Network’s (IAN) Small Ticket Funding (STF) Program, this critical gap is being filled up. At a very early stage, where companies are working on their proof of concept and go-to- market strategy, a small amount of money can get them a long way. It will enable them to refine their product and business model, connect with their customers, team build-up– in other words prepare for a larger round of investment.

A small amount of Rs 25 lakh goes a long way for the entrepreneur by which they are able to not only kick start their venture but also take help from their angel investors to help them strategize, access the first customer – one of the most difficult milestones to achieve for a start-up. And then as they get into the fund raising mode, they leverage their angel investor’s brand and network for a quick raise of funding. Hence, the small ticket funding creates the perfect launching pad for young entrepreneurs and provides a solid foundation for, hopefully, a successful company.

Investors’ Delight

For investors, the STF Program is quite interesting. They can truly breed and fund cutting edge innovation and engage to help build the foundations of large scalable ventures. Angels are typically, first generation middle-class entrepreneurs who have built garage-to-IPO companies. They are engaged in the angel investing as they are not only passionate about entrepreneurship but want to remain connected with the cutting edge innovation, mentor young entrepreneurs and walk their journey. And with small amounts of funding, angels can invest in many more companies, more innovative propositions, leverage IAN’s vast network of investors who are domain experts, based in 10 countries. This allows angels to not only bet on good propositions but also enable them to help lay foundations of global ventures.

Interestingly, the start-up ecosystem in India has moved right across sectors. It is no longer limited to technology or ecommerce sector but has spread across semi conductor, hospitality, manufacturing etc. In each of these sectors, start-ups are breeding not only in tier I metros, but in Tier II, III and IV towns as well – building innovative solutions for India’s problems at a cost which fits the Indian price point!

We are truly in the golden age of innovation and entrepreneurship – and STF programme focuses on funding and mentoring young entrepreneurs to breed global footprint ventures.

The writer fo this article is Padmaja Ruparel, an angel investor and President of India’s first and Asia’s largest group of business angels, Indian Angel Network. The views expressed here are personal.