
Angel investing in India: High rewards, high risks—how to navigate the landscape
With nearly $11 billion in funding, India has emerged as the world’s third-largest startup ecosystem. Yet, this growth comes with challenges—around 5,000 startups shut down in 2024 due to funding constraints, scalability issues, market saturation, governance lapses, 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).
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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:
Adverse media screening: A key component of due diligence, adverse media screening—also known as negative news screening—helps uncover past controversies or reputational risks associated with an individual or entity. Identifying negative media coverage early can protect investors from engaging with potential fraudsters.
Litigation risk: Regulatory compliance is crucial before releasing funds. Investors should verify that the startup adheres to relevant laws and regulations. It is equally important to check directly with courts for any ongoing civil or criminal cases involving the entity or its founders.
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