Introduction
Hello everyone!
Startups are a fascinating world. And investing in startups is even more thrilling. Few months back, I started dabbling with startup investing, as it is something I wanted to learn & get better at. One of those investments have stood out. So much so, that I am reconsidering investing in it again.
In this blog, I will share my journey of investing in this startup. I’ll talk about:
- Why I chose to invest in this company
- The method of investment I used
- My overall experience with this startup investment so far
Angel Investing vs Asset Leasing
There are various ways for individuals can invest in startups. Traditionally, angel investing has been the most popular method. However, the startup ecosystem is evolving, constantly seeking smarter and more efficient ways to raise capital. One such method that has gained significant traction is asset leasing.
What is Asset Leasing?
In simple words, Asset leasing is a form of debt. Investors lend money to company, and instead of owning equity, investors own tangible assets such as, Taxis, Vending machines, EV batteries and so on.
Here’s how it works:
- Investors invest in company by buying assets for them, which they operate and generate business.
- In return, investors receive fixed monthly repayments based on the amounts invested.
- The tenure can range from 1 to 10 years, depending on the asset’s life and the business type.
- The net IRRs (Internal Rate of Return) typically range from 15% to 25%.
This is, of course, an over simplified explanation. Things can be a bit more more complex than this, but for this blog, I will keep it simple.
Why Do I Like Asset Leasing?
Startup investments are inherently risky. And despite this, even top venture capital funds aim for IRRs around 30-35%, & venture debt funds target 15-20%. So, For someone like me, a beginner in this domain, a deal offering a 20% IRR sounds quite appealing. The EMI style repayments do reduce the net CAGR, but these also mitigate the risk, which is super high in Startups, be it equity based or asset leasing. That’s why I am drawn to asset leasing—it provides a balance of risk and reward. As I get more experienced, I can work on how can I improve this, but right now, it is a great starting point.
My Investment in Daalchini
The company I invested in is Daalchini. It is one of India’s largest & fastest-growing full-stack vending machine businesses. Here’s how my journey unfolded:
How I Found Daalchini
- I discovered Daachlini through a community of angel investors I’m part of.
- I went through their pitch deck, live pitch, Q&A session. I was impressed.
- Being in the same city, I visited their office and met the founder, who was kind enough to answer all my doubts & questions.
The Investment Process
- After understanding the risks & potential upsides, I started with a small investment in August 2024.
- The onboarding process was smooth and much quicker than traditional angel investing, which often involves tedious legalities.
- They informed me that the repayments will start after 2 month, that is, from Oct0ber 2024. And that repayments will happen in first 10 days of the month.
Post-Investment Experience
- All it has been just 4 months till now, I’ve have received repayments for Oct, Nov & December timely.
- I stay in regular touch with their team to see how their business and financial health are doing.
- Recently, I learned they became EBITDA positive. When I first met the founder, she shared that they aimed to achieve profitability by year-end. I am glad to hear they achieve the milestone earlier than projected.
- Because their performance has been consistent with their projections, I am now considering another round of investment with them.
Key Takeaways
- This post is not a promotion for any company or investment style. I am sharing my personal experience for people who, like me, like to explore new opportunities, & might take some benefit from my experience.
- Every investor has unique needs, and investments should align with individual goals and risk appetite.
- Startup investing is not for everyone. It requires proper due diligence and a clear mindset. If approached correctly though, startup investing can be very exciting and rewarding
Share Your Thoughts
If you have any experience investing in startups or asset leasing, I’d love to hear about it. Share your journey in the comments! If you have any specific questions about my experience, feel free to ask.