The country’s largest angel network Indian Angel Network is now looking to expand into Southeast Asia, given the potential for investment in the region.
The network, which has around 400 member investors on board, has a global presence with investments in various overseas companies and has established an office in the UK. It has investors from 10 countries, with an investment portfolio of over 100 companies, spanning 17 sectors across seven countries
The network is now looking at establishing a stronger presence in the Southeast Asian region for which it is evaluating countries like Singapore.
“Singapore has more affinity to the Indian market – it’s a hop skip and jump. We are looking at Singapore companies and will invest in them and the reverse is also happening, where there are Singapore-based investors in IAN who are investing there,” Padmaja Ruparel, President Indian Angel Network, told DEALSTREETASIA in an interview.
On how they formulate their overseas investment strategy Ruparel said, “It’s a mix and match. If some overseas investors like some team they might send it to us, we have overseas companies who reach out to us for the overseas market. We co-invest with other VC funds like we did in Inventus in the US for example and we have also set up operations in the UK. So it’s a hybrid scenario.”
Despite the sluggish growth in VC funding this year, there has been a notable increase in the number of seed and angel level investments as compared to last year. According to Ruparel, out of the 552 deals, 401 were pre-Series A funding rounds.
According to a recent report by Preqin, in the third quarter of 2016 maximum number of deals were done at the seed level. According to Preqin’s findings, a third of venture capital deals were made at the angel or seed stage, with an average value of $1.8 million, 18 per cent higher than the average seen in 2015. Of the total deals, 28 per cent were made at the series A stage, with the average value of these deals rising by 10 per cent compared to last year.
“We see Singapore as a hub to access Southeast Asia and taking our own companies to access Southeast Asian markets. There are a lot of innovation schemes that we can learn from Singapore,” said Ruparel while commenting on the markets Indian Angel Network would be keen on expanding into.
“Though we haven’t reached out yet, there is a lot of innovation happening in Malaysia, Indonesia, and Vietnam. We want to reach out in those countries and see how we can expand there. Angel-stage investing is a very early stage investment, which is very high risk. One of the risk mitigations can be geographic. Since we are global, we’d love to see how we can engage other countries,” she added.
Ruparel said that each market was unique and would require a different and the Angel Network first needs to understand how those markets operate and how they can partner or invest in those countries.
“We need to understand those markets and how they operate and how we can partner with them. We are very collaborative and when you are collaborative you really look at engagement points see which operational structure works. In the US, for example, we have invested in a couple of companies. The UK is different. In Sri Lanka, we’ve partnered with LAN (Lanka Angel Network) where we actually helped to set them up. All the models are different depending on each ecosystem and maturity of each ecosystem,” she said.
Indian Investment Climate
Amid talks of a slowdown in the pace of investments in the country, angel investment in Indian startups hit a five-year high in the year ended March 2016, as venture capital firms and existing angel investors pumped in cash to back the next wave of start-up stars, according to a report by InnoVen Capital.
According to the report, angel investment in India in FY16 stood at Rs.113.6 crore across 69 deals, a rise of about 62 per cent in deal value and 47 per cent in deal volume from the previous financial year. In FY15, about Rs.70 crore was invested across 47 deals, said the report which takes into account investments made by four major angel groups: Indian Angel Network, Chennai Angels, Calcutta Angels, Hyderabad Angels and Mumbai Angels.
“Overall there has been an increase in the number of deals but the amount invested has been a little lower. That in effect is telling me two or three things, first that the startup ecosystem per se is growing, both in terms of quantum and quality because investors will look at quality in terms of the quality of the promoter team and their thinking, in terms of their proposition, problem areas, their ability to build a business plan which is sizeable,” said Ruparel.
“Second part is that businesses are getting more capital efficient and such businesses will always provide better margins. Also, you become more disciplined, you build in more efficiency, better and more robust thinking,” she added.
The Indian Angel Network itself is investing at the rate of one funding each fortnight. The network has already made around 25 investments so far this year including shared accommodations start-up Square Plums Technologies Pvt. Ltd, hotel booking platform FindMyStay, fashion technology start-up Protinus Fashion Networking Pvt. Ltd, media-tech enterprise Little Black Book and entertainment app Roast Media Pvt. Ltd.
“The year has been good, we have made about 25 investments, we are still doing an investment every fortnight, we’re doing well there. We have made some exits like GadgetWood which gave us good cash returns to our investors. It’s significant in the current scenario and some of our companies have received next round of funding,” said Ruparel.
According to a recent news report, Indian Angel Network is looking to raise an early-stage fund of around Rs 150 crore ($22.4m) to co-invest along with its angel network. However, Ruparel declined to give any details on those plans saying “We are very much aligned to that, but you should wait for an announcement on that.”