Startup companies and emerging ventures often face difficulty in gathering funds for their business entities. A group of investors who are wealthy and who are interested in new business ideas having potential, always come to the rescue of such startup companies. These investors are angels who not only provide funds at the crucial beginning of an entrepreneurship but also help them with own expertise and contacts in the market. But the question that arises is: What do such investors expect in return and how different are they from the traditional lenders? This paper aims to study the concept of angel investors, their role in startup fund raising and the merits and demerits of angel investment in a startup. The paper gives an overall view of the concept of angel investors and angel funds and the Indian legal framework governing the same.

The Economic Times online newspaper flashed the news “Indian Angel Network to Invest in Startups in UK, Singapore.”1 A curious mind unaware of the concept of angel investors would ponder upon questions like: What is Indian Angel Network? Who are the angel investors being talked about in the news? What is their role in the commercial world? On opening business columns in newspapers, corporate and commercial law blogs, one can easily find many news reports concerning angel investors. On the one hand, there is news like online retailer Snapdeal raises 280 cr through venture capital funds2 and on the other, there are a growing number of angel investor networks in India like R Ramaraj, co-founder of internet portal Sify and Cognizant vice-chairman Lakshmi Narayanan who formed the “Chennai Angels”3, Infosys co-chairman Kris Gopalakrishnan who anchored “The Mallu Angel Network” in Kerala4 and of course the oldest and biggest angel investor network in India “Indian Angel Network”. This paper focuses on angel investors, their role in raising funds for startup ventures and the laws governing them.

Law Review Journal, Angel Funds, The New Type, Alternative Investment Fund, Economic Times, Angel Investing, Layman’s Perspective, Venture Capital Funds, Alternative Investment Funds, India.