How many Angel Investors are Vertical Experts?

I’ve just finished reading the Post More reasons to Go All Angel at GigaOm. It generally talks about “Why taking only the smaller investments from Angels for startups makes sense over VCs”. The views are shared by a serial Entrepreneur and an Angel Investor Ron Conway. The three points that he shares objectively are:

* Angels are not acting as a fiduciary to other investors.

* Angels are often Vertical Specialists.

* They’re only One-degree away from people in their professsional network.

All the points make lot of sense. Especially the second one (Vertical Specialist) caught my attention very strongly. I’ll be honest in saying that I myself have forgotten this in the past and seen at least many of the few Entrepreneurs in my own network, who haven’t valued the investor as a Vertical Specialist more than one with the capacity to sign the hundreds of thousands of dollar cheque. One of the fundamental arguments that these entrepreneurs (including me) have echoed in response are:

All we need is monetary support and we’ll pull it off. Not to worry, we’ve enough potential ourselves

As the experience grows, more are the chances that you’ll mellow down on the above statement.

But what could it actually mean to find a vertical specialist in Indian Scenario?

May be people in US are little better off to have so many success stories that have resulted in numerous vertical specialists they have around. Come to India, you’ll find yourself struggling to find success stories in the first place.

Looking at the fact that pulling off an IT product  business hasn’t been easy, we haven’t had very many product successes in the past (owing to whatever reasons that we all know). And seldom have any product been a result of good research work. Would it be wrong to say that:

Most successful Entrepreneurs in India are not Vertical Experts.

We all know that India has seen Services millionaires in the recent past. Not to undermine their potential, however, I have mostly observed that

* They value direct monetization streams and struggle to even understand the indirect ones.

* Understanding Product Life cycle is a little different game for them.

* They are also little averse to the Volume game.

I may be wrong and there may be many against this generic statement. But do you think they are in majority? Not that we do not at all have successful product entrepreneurs around but they definitely are very few in number. Owing to this lacking support, a few interesting patterns that need to be observed are:

* These few successful entrepreneurs like Sanjeev Bhikchandani, Raman Roy etc. have now become the poster boys for the Indian Entrepreneurial industry. You can observe them almost omni-present, whether it be the Entrepreneurial platforms like TiE, Nasscom etc. or may be the discussions amongst the Entrepreneurs themsleves etc.

And as they say, “What you see is what you believe”. Most Entrepreneurs either think that they are the only guys in the industry around or having one of these names is all it takes to head towards a marvellous success.

Very recently I also met up a representative of a highly renowned Non-Profit Organization, present worldwide. They are aggressively trying to occupy a strong foothold on the Indian landscape and be the part of Indian startup ecosystem. This lady told me that she is talking to some of the industry leaders to be one among the Panel Experts. Believe it or not, the names she echoed were yet again the same. It keeps me wondering if they are really the masters of every domain? Aren’t there really any other experts around?

* These Poster Investors are often the Angel Aggregators as well. Many not-so-known angel investors rather than trying to understand the space by themselves or trying to involve themselves with the startups of their interest, depend on these poster Angels for suggestions and advice or may be for complete analysis.

It is becoming extremely questionable whether the term “Angel” fits Indian Scenario in true sense?

It will be very interesting to learn about more of the Angel Investors, who invest in startups for sheer passion and may be the following reasons:

* Immense interest in a particular domain.

* Vertical Expertise.

* Who enjoys being an angel.

* One who has the appetite to take risks like he/she had while attempting their first startup.

* Who is driven by the intuitions and the gut feeling.

* Believe in the Idea, passion of the team.

* Who believes that monetization can always be built if we can deliver a supreme experience.

While most of the Angels may satisfy both the other two conditions that Conway shares, Expertise in a vertical is a clear gap. Talk about risk, you may not find even a single one as risky as Angels should by definition be.

I hope many of us have different perspectives and experiences on the same. It would be very good to learn more about them and in return build a better perspective on the subject.

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