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Getting Angel Investors: Does Praying Help?
In my previous post, I wrote about how the landscape of angel investors in india is dominated by occasional players. I also emphasized how India’s top investors look for trustworthy entrepreneurs, first and foremost. It is not that some founders are trustworthy and some are not. Like beauty, trust also depends on the eyes of the beholder. Angel Investors are not testing for trust – it does not work that way. Rather, they look for some common factors between them and the founders, the presence of which gives them more comfort.
I have asked many founders how they go about finding their angel investors. Most respond that they adopted a very practical approach. Identify a bunch of angel investors (say 50 or so) whom they have heard about and write to them in one shot. In many cases, the cover letter is not even customized to individual investors. Once they do that, they hope that at least a few of them respond and even make an investment. This approach referred to as “spray and pray”, technically should work if we go by probabilities. But alas, in the same way that god does not play dice, investors do not believe in probabilities.
I mean, one can hear statistics being liberally quoted that business investors invest in only one of 50 or 100 business plans that they come across. But that does not mean that they choose that one investment randomly. We are all familiar with the school probability problem. There is a bag of balls, in which there are 50 balls, one of which is black. What is the probability of drawing a black ball? The answer is one upon fifty. The important assumption there is each ball has an equal probability of getting drawn out. Now, do the investors drop all the business plans in a bag and draw randomly? Far from it.
They make a very careful choice and decide which ones they would invest in and which ones they would not. A few business plans have a zero chance of getting investment from some of India's top investors.
Today we have the necessary intelligence to be able to predict investors who are unlikely to make an investment in a given Business Plan. Therefore, instead of leaving fundraising to a game of chance, it is better to approach it systematically.
Targeting investors who are more likely to invest not only dramatically improves the odds of fundraising but also helps to complete the startup fundraising process more quickly. For that, one has to shortlist the right investors from the large basket with different types of investors using appropriate criteria and then pursue them relentlessly. Previously, entrepreneurs did not have the resources to identify relevant investors. However, with YNOS, entrepreneurs can easily review thousands of investors and identify the most promising in a jiffy.
Now to answer the question of whether praying helps business startup fundraising. Yes, it does. Probably in the same way that it works in exams. For doing well in exams, the student has to study hard in a focused manner. Just praying alone would not do. Fundraising is no different.
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