Top Players in Early-Stage Startup Investment

There aren't many takers of equity when an early-stage startup pushes an untested product in front of investors. Given there is no market traction to prove the product's viability, big sharks like Venture Capital Firms take the backseat in the initial round of funding (seed).

With big sharks evading the dangerous current, it opens up the window for small aggressive sharks to come forth and capitalize on every promising opportunity that breathes within their reach. And let us warn you, small sharks are critical and demand nothing less of a solid business plan, functional prototype, and a committed team capable of seeing it through. Despite knowing the odds aren't in their favor (90% of the startups fail), they aren't afraid to back a promising startup to make a decent return on investment.

There are different types of investors or sharks in the startup ecosystem whose entry point varies according to the funding stage of the startup. In this blog, we have compiled the list of small sharks that you can approach to raise seed capital -

Angel Investor

These are accredited investors with a net worth of Rs. 2 crores and above (excluding assets - residential). They identify promising startups at the earliest stage and invest their time and money for equity. Apart from the capital injection, an angel investor can put their skillset into use to -

• Offer mentorship to the entrepreneurs
• Endorses the startup idea to their network
• Forge new ideas/strategies for GTM
• Locate opportunities to bring in more investment

Angel Syndicate

Investing in startups can be very lucrative, but recognizing companies worth investing takes wisdom and experience. Angel Syndicate is an investment vehicle headed by a lead investor (prominent angel investor or industry expert), allowing investors to co-invest in startups with other investors.

The prime example of Angel Syndicate is Angelist, where many super angel investors joined the bandwagon of prominent angel investor Kunal Shah.

Angel Investment Platform

These platforms are built to bridge the gap between early-stage startups and investors (angel investors/ micro VCs) who want to invest in startups. Platforms like POD facilitate the process of investment for investors (angel/micro VC/super angel/non-accredited investors) by identifying and onboarding promising early-stage startups and introducing them to the investor network. The smooth process allows investors to invest in the startups from the platform directly.

Family and Friends

Entrepreneurs utilize their funds before raising funds externally to build a viable product. As a result, family and friends inclined towards the entrepreneur's vision sentimentally decide to invest in the idea. Therefore, seeing a family member on board of a startup makes more sense.

As the 'funding in ask' initially is less comparatively, non-accredited investors - friends and family - pitch together to fund the initial round.

Incubator

Startup incubators aim to launch and nurture early-stage startups by providing seed capital, mentorship, etc., in return for an equity stake in the company. In addition to that, they offer a wide range of support during their tenure with the company, including "accelerator" programs to accelerate growth by linking founders with experienced mentors and investors.

Irrespective of the stage a startup is in, it needs a capital injection to grow or sustain! So, if you're looking to raise seed capital for your early-stage startup, submit your pitch deck on POD.