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From the Editor: April 12, 2015

The number of angels in India has more than doubled in the past two years as has the amount of money being invested, and that is great news for the start-up sector.

Prosenjit Datta, Editor, Business Today

Prosenjit Datta, Editor, Business Today

In Roman mythology, unicorns were creatures with the body of a horse, the head of a deer, and a single horn sticking out from the middle of their foreheads. Start-ups that are valued at over a billion dollars are also dubbed as unicorns because they were supposed to be a myth - investors and entrepreneurs dreamt of them, but few had actually seen one. Not any more, though - the US today boasts of over 40 "unicorn" start-ups, and India has at least half a dozen, if not more. Flipkart, Snapdeal, Paytm and Ola are counted among the Indian unicorns.

But for every unicorn start-up that has been valued at over a billion dollars and has raised hundreds of millions of dollars of funding, there are thousands of entrepreneurs and start-ups that are scrabbling to raise a few lakhs of rupees for their operations. Too many promising ideas die out because the entrepreneur has simply not been able to raise the funds necessary to survive the first couple of years before he approaches an institutional investor.

Till a couple of years ago, angel funding - or the first round of non-family, non-friend cash that a start-up raises - used to be a trickle. Now it has turned into, if not a flood, at least a healthy gush from the tap. That is because a huge number of former and current entrepreneurs is digging into their pockets to give money to great ideas and start-up teams they come across.

The new angels range from entrepreneurial legends such as N.R. Narayana Murthy, Co-founder and Chairman Emeritus of Infosys, to the co-founders of the current unicorns - Kunal Bahl and Rohit Bansal of Snapdeal, and Sachin and Binny Bansal of Flipkart.

The number of angels in India has more than doubled in the past two years as has the amount of money being invested, and that is great news for the start-up sector. Most of these angels are not looking at making money from these investments - quite a few see it as a means of giving back something to strengthen the entrepreneurial ecosystem.

The rush of new angels is one of the few bright spots in the current economic environment. Despite the programmes started by the Modi government and its much-repeated intentions to make business easier in the country, few big corporations have actually started new projects. In fact, the corporate activity in the country currently is primarily focused on mergers, acquisitions and consolidation of plants and other businesses. So in a way, few new companies or projects are being started by major business houses in the country.

That is why the onus of starting new businesses has almost entirely fallen on first-time entrepreneurs with new ideas and a lot of fire in their bellies. While it is a given that many of these start-ups will inevitably fail, some will go on to become billion-dollar businesses, hiring thousands of people and becoming blue chips in the equity markets. First-time entrepreneurs might have ideas, but most need some money as well - and that is why the rush of angels is so welcome while it lasts.

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