Part 19 of 21 in A Guide for the First-Time Indian Angel Investor← Part 18Part 20 →
This chapter guides first-time Indian angel investors through their initial twelve months. It emphasizes patience, careful planning, and learning before making investments.
- Avoid investing in the first ninety days to focus on learning and saying no.
- Choose between investing in a single fund or making small direct investments.
- Create a one-page investment policy outlining sectors, cheque size, and refusal criteria.
- Limit investment pitches to four per month and prioritize understanding over volume.
- By the end of the year, have clear investment commitments or a record of refusals.
A pace, a written pass, a lawyer, and a ban on the first cheque for ninety days.
Do not invest in the first ninety days. Use them to become a person who can refuse. Meet founders and say you are not writing cheques yet. You will learn more from the conversations in which you cannot buy your way out.
A bare operating system
- Fix the sleeve in rupees, with a family member who shares the downside, and enter it as already lost.
- Choose one path for year one: a single registered fund, or direct cheques no larger than a twentieth of the sleeve.
- Write a one-page policy: sectors you understand, cheque size, follow-on rule, and the three things that make you pass.
- Keep a pass log. A no with a reason is the product of the year. A yes without a memo is a leak.
- Have one lawyer who has read Indian shareholders’ agreements, not a cousin who “does contracts.”
- Have one chartered accountant who has filed unlisted capital gains before.
- Cap pitches at four a month. Depth beats flow.
- Once a quarter, read the dead companies out loud. If you cannot, you are collecting trophies.
At the end of twelve months you should have either a fund commitment you understand, or a handful of small cheques and a larger pile of written refusals. If you have one large cheque and a story, you have started wrong. Shrink, or stop.
Frequently asked questions
Why should I avoid investing in the first ninety days?
The first ninety days should be used to learn and develop the ability to refuse investments, which is crucial for making informed decisions.
What should my investment policy include?
Your investment policy should include sectors you understand, cheque size, follow-on rules, and reasons for refusing investments.
How many investment pitches should I consider each month?
Limit yourself to four investment pitches per month to ensure depth of understanding rather than focusing on quantity.
What should I have achieved by the end of my first year as an angel investor?
You should have a clear fund commitment you understand or a collection of small investments and documented refusals.