Navigating the Startup Ecosystem: Strategies for Angel Funds and Entrepreneurs
CXOToday has engaged in an exclusive interview withMr. Pranay Mathur, Partner and CEO, Realtime Angel Fund.
How do you remain ahead of the curve and uncover good investment possibilities in the continuously expanding startup ecosystem?
We, at Real Time Angel Fund use an overall approach that leverages our experience, network, and industry knowledge. First and foremost, we are committed to constant learning. We have a team of professionals that are firmly established in various sectors and industries, studying market trends and developing strategies on a daily basis. In addition, we do detailed market research to understand industry dynamics, identify gaps, and discover areas of prospective development. Another pillar of our strategy is networking. We have built a wide, diversified network of industry management, entrepreneurs, and thinking leaders. This network gives us significant insights, access to transaction flow, and the opportunity to interact with entrepreneurs that match our investment thesis. Also, we rapidly seek out start-ups with distinct value propositions and the ability to disrupt the market. We look for founders that have a solid grasp of their industry and the desire and vision to see their projects through to completion. Our thorough due diligence approach allows us to assess not just the startup’s business strategy and market fit, but also its team dynamics and scalability.
What aspects do you examine as a SEBI-registered angel fund when deciding which firms to support?
Real Time Angel Fund’s major aim at is to find and support entrepreneurs with creative concepts and teams with great growth potential and profitability prospects. Our investment approach focuses on companies with innovative business models and scalable goods or services that have the potential to disrupt their respective sectors. We do not restrict ourselves to certain industries, we contribute across sectors like health, finance, green energy, artificial intelligence, and consumer technology. We believe that finance alone will not assure the success of a firm. Therefore, in addition to financial support, Realtime Angel Fund is committed to providing mentorship and operational guidance to our portfolio companies. Our aim is to help them grow and assist them in creating significant value in their respective markets.
Could you provide some success stories or instances of businesses funded by your angel fund?
We have a proven track record of making profitable investments in rapidly developing businesses. We have sponsored and invested in twenty plus businesses since our September 2022 debut, with an average investment of INR 2 Crs. Recently, we made investments in Redesyn and Myway.ai. Thanks to our assistance, both firms have been able to extend their user bases, speed up their growth, and improve their product offerings. We are also proud to be associated with companies like MyMandi, TransportSimple, Punt Partners, FreshoKartz, MeraTractor, MentorKart, LarkAI, CapitalSetu, We360, Woovly, and MyWays.AI, all of which have transformed the industries in which they operate thanks to the impetus we provided through our funding.
Could you comment on your risk management strategy and how you reduce possible risks?
The startup ecosystem may be unpredictable, therefore reducing possible risks is crucial to safeguarding our investments and producing profitable results. Prior to making any investments, we thoroughly analyse potential scenarios to determine how vulnerable the startup is to changing market dynamics and outside influences. We try to understand how the startup may function under various circumstances by modelling alternative scenarios, and we can then modify our plan as necessary. For every investment, we also create precise exit plans. We may handle liquidity risks effectively by being aware of how and when we can potentially depart. Additionally, by maintaining a reliable system for tracking the performance of our portfolio firms, frequent reporting allows us to see early warning signals and move quickly to address them. We also construct our portfolio to be resistant to changes in the market. Diversifying across sectors, regions, and startup phases is necessary for this. A diversified portfolio can withstand shocks in one market or industry while maintaining stability overall.
What are the most significant problems you have as an angel fund helping entrepreneurs, and how do you overcome them?
Although there are constantly fresh obstacles to overcome, companies, particularly those in their first phases, have a high chance of failing. Since many new firms fail during the first few years, angel investors risk losing their whole investment. Diversification can lessen the effect of any single loss on the portfolio in such circumstances. Similar to how having a strong framework for risk assessment might assist resolve this issue.
Additionally, early-stage investments are frequently illiquid, which means that your money is held hostage for a long time. A company may need several years to get to the stage where it may raise money from investors through an acquisition or an initial public offering (IPO). A strategy that aids us in overcoming this difficulty is portfolio management and investigating secondary marketplaces.
Additionally, as an angel fund, we often have little influence over how the businesses they invest in are managed and run. This effectively means that we have no control over how the money is distributed, which makes it challenging for us. We negotiate investment agreements in order to secure certain rights and safeguards for us. We also continue to be actively involved in the start-up’s activities and help out whenever we can.
As an angel fund, how do you intend to overcome the specific obstacles and dangers associated with early-stage investments?
Early-stage investments do present certain difficulties, therefore we must be very smart in our approach. We create a customised problem-solving roadmap for each obstacle we meet because there is rarely a “one size fits all” type of issue. For the sake of illustration, these investments are high risk, therefore we first carry out in-depth due diligence and attempt to support the investment choice with as many data points as possible. Then, we create a strong framework for risk assessment that enables us to identify businesses with a better chance of success. We also work to diversify our portfolio of firms in order to lessen the effects of a single investment’s failure while we manage this difficulty as a whole.
Do you provide any other value-added services to the startups in which you invest?
The businesses we invest in are turned into success stories by the Real Time Angel Fund’s extensive portfolio of value-added services. Beyond simply providing finance, we pledge to be actual partners in their progress. Our commitment to early-stage entrepreneurs is demonstrated by our premier Seed leap Accelerator Fund Programme, which the Real Time Angel Fund supports. Through this programme, we provide entrepreneurs up to INR 2 Crores (USD 250K) in early capital, providing them the push they require to succeed. But it goes further than that. RTAF also launched its app “Backrr” on January 26th for its investors to help track their investment portfolio and keep up to date about their portfolio startups. We provide practical coaching and operational support to startups since we know the difficulties and complexity they must overcome to expand successfully.
Startups taking part in our programme get access to a world-class network of CXOs and industry experts, opening doors for partnerships and collaborations. The programme concludes in a Demo Day when businesses may present their development to a network of over 300 investors, opening possibilities to further investment and business partnerships. Additionally, as part of our dedication to exposure, we provide entrepreneurs the chance to be highlighted in significant print and online media, strengthening their brand and market presence. Our purpose is to assist businesses to realise their ambitions and reach their goals by giving them the tools, contacts, and support they need to thrive in the cutthroat startup environment. We are their devoted success partners, not simply investors.
What key factors do investors consider when evaluating a tech startup for seed funding?
At Real Time Angel Fund, when we evaluating a tech startup for seed funding, we primarily want to see a few key things First and foremost, we look at the startup’s unique value proposition. Is the technology or product innovative, and does it address a real market need? Investors also assess the team behind the startup. Are they experienced, passionate, and capable of executing their vision? Additionally, factors like market size, growth potential, scalability, and the startup’s ability to achieve product-market fit play a crucial role. We also examine the startup’s business model, revenue projections, and competitive landscape and if they’ve already found a fit with their target customers. Lastly, we consider the startup’s traction and early customer feedback as indicators of its potential for success.
What are some common challenges or obstacles that startups often face when securing seed funding, and how can they overcome them?
In my opinion mostly, Startups often face common challenges when securing seed funding. One major obstacle is the need to demonstrate a compelling market opportunity and proof of concept. To overcome this challenge, startups should focus on building a minimum viable product (MVP) and acquiring early adopter customers. Another challenge is gaining our trust, which can be achieved through transparent communication, a solid business plan, and a strong team. Financial stability can be an issue too, so startups should carefully manage their finances and seek alternative funding sources like grants or angel investors. Finally, competition for seed funding is fierce, so networking, attending pitch events, and refining the pitch are essential strategies for success.
What advice would you offer to entrepreneurs looking to secure Seed capital funding for their startups?
Currently, young entrepreneurs seeking seed capital investment for their firms should consider three crucial pieces of advice, based on my experience.
First, they should strive to assemble a strong team with various abilities and a track record of achievement. The following step is to create a clear and compelling value proposition that meets a large market need. It is also critical to develop a well-structured company strategy with realistic financial estimates and a clear route to success.
Networking should also be prioritised so that they may connect with possible investors, mentors, and advisers. It is critical for entrepreneurs to be well-prepared to present their business clearly and simply, emphasising what makes it distinctive. Furthermore, proving traction and user engagement is critical for demonstrating market demand.
Lastly, entrepreneurs should research the unique investment requirements of seed capital companies and seek those that match their sector and stage of growth.
How do tech startups stay competitive and innovative in a rapidly evolving tech landscape, and how does this impact their funding strategy?
In my viewpoint, being competitive and promoting innovation in the rapidly changing digital world is critical for startups, and it has a significant impact on their fundraising strategy. To achieve this aim, startups should prioritise continuous learning, adaptation, and keeping up with industry advances. Embracing new technology and entering new markets can help to encourage creativity. Furthermore, regularly asking client input and being open to market-driven modifications are critical. This dedication to innovation and adaptation may boost businesses appeal to investors by demonstrating their ability to flourish in a changing market and plan a clear path towards long-term growth.
