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5 tips for first-time entrepreneurs

Bhavik Chinai, Director, BVC Ventures Pvt Ltd, and member of CIO Angel Network, discusses the crucial elements an entrepreneur should be aware of when reaching out to an investor. By Shweta Gandhi

“The startup industry can’t get any better,” says Bhavik Chinai, who is an active angel investor, investing through BVC Ventures Pvt Ltd, his family business, and a member of CIO Angel Network. “It is an excellent time for entrepreneurs across all geographies. The startup industry took a leap in 2013-14, and angel investing has boomed too. The availability of capital is immense, and it allows a startup to shape up their services and put their best foot forward with the right team behind them.” Some of the startups Bhavik has invested in are in the space of cloud security, crowd funding, HR tech and communication. Here’s his advice for entrepreneurs who are looking to approach angel investors

1. Dedicate yourself to preparation
“Firstly, an entrepreneur needs to cover his operational points: the startup should’ve got the product market fit right, a good management team and a detailed business plan. Apart from these, entrepreneurs need to do a lot of research about the investor they intend to partner with and have the right reason for the funding. When angel investors speak to any company from an investment perspective, they always look to see how knowledgeable and hands-on the entrepreneur is.”

2. Wait for the right time
“From 2016 onwards, there has been a slowdown in investment. For this reason, entrepreneurs are partnering up with investors who are not the best in their game. Also, some startups come to us with an unsustainable business model and expect that they would be given funding. An entrepreneur needs to know the right time to ask for money is when it will help the business scale, not only discover.”

3. Give attention to the relationship
“Angel investing is like marriage; the investor is going to partner with the company, and is going to be around even post exit. Relationships between an entrepreneur and investor matter because they are not just investing in the company but in the people behind the company as well. Investors are always going to be there for entrepreneurs if they need any recommendations or connections—which is why this relationship is way more crucial.”

4. Pay due diligence to what’s asked of you
“As investors, we have a simple checklist that has the scope of work defined. The list has around 30 items, which makes it easy for an entrepreneur to understand what’s required from them. Clarity and transparency creates a lot of trust here and also helps in saving time, so an entrepreneur should pay attention right from the start and be open in his dealings with the investor. Both are responsible for bringing the correct information to the table.”

5. Plan for the future
“A startup might have just started out and doesn’t know the direction it’s headed in. The entrepreneur is unsure if funding is needed. Even then, the entrepreneur should start ideation for investor pitches as soon as possible. This will help when you get to the stage when you do need funding. Even if the business needs one round of funding post 12 months, entrepreneurs need to extensively start connecting with investors and super angels on LinkedIn. This takes up a lot of time—which is why it’s best that the entrepreneur does the groundwork to save time for when s/he really requires the funding.” 

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