Angel Investing Is a High Rewards-High Risks Game: Strategies to Stay Ahead

Despite rapid growth, 5,000 startups shut shop in 2024, signaling due diligence risks

- Deepak Bhawnani

With nearly $11 billion in funding, India has emerged as the world's third-largest startup ecosystem. Yet, this rapid expansion comes with significant challenges—around 5,000 startups shut down in 2024 due to funding constraints, scalability issues, market saturation, governance lapses, and regulatory and policy hurdles.

Despite the risks, Indian startups at various stages continue to attract investments from high-net-worth individuals (HNIs) and ultra-high-net-worth individuals (UHNIs).

Angel investors play a critical role in supporting early-stage ventures by providing not just capital but also industry expertise and strategic guidance. Many of India's most successful startups, including Flipkart and Paytm, owe their early momentum to angel investors such as N.R. Narayana Murthy, Nandan Nilekani, Ratan Tata, and Vijay Shekhar Sharma.

However, angel investing comes with inherent risks that require thorough due diligence. Here are critical factors to evaluate before making an investment decision: