India: Angel investors buck the trend with record number of deals in 2017

The number of investments by individual angel investors in 2017 so far has already surpassed the annual totals seen in 2016, 2015 and 2014. Illustration: Ipsita Ray/DealStreetAsia

With venture capital firms in India having tightened their purse strings, the country’s angel investors seem to be coming to the rescue of startups, with new highs seen in their deal making this year.

According to data provided by research firm Tracxn, the number of investments by individual angel investors in 2017 so far has already surpassed the annual totals seen in 2016, 2015 and 2014.

While a total number of 148 deals were reported by individual angel investors in 2016 and 138 in 2015, the total in the first six months of 2017 has already crossed 162.

Source: Tracxn 

Tata Sons chairman emeritus Ratan Tata, under whose supervision the firm had to contain a management crisis, retained his title as the top angel investor in the country. The 79-year old investor, who made 28 and 27 investments in 2015 and 2016 respectively, has already funded 15 rounds this year.

“The last five months have put me forcibly in the older world. I long to be back in the startup community with a vigour. As of 23 February, I’m back,” Tata had said at an industry event as he handed over the reigns of Tata Sons to N Chandrasekaran who took over as the group chairman in February 2017.

“When I retired in 2012, I hit upon investing and interacting with startups as a new phase. I left the big business behind. I became excited by the innovation, passion. It stimulated me,” he had said.

Apart from a host of smaller startups, Tata’s portfolio includes prominent names such as Snapdeal, Paytm, Ola, Urban Ladder, Bluestone, and Zivame.

Technology sector veterans former Infosys honcho TV Mohandas Pai and former Google India head Rajan Anandan are also named among top angel investors in India.

Other prolific angels in India include the heads of unicorns — or startups with valuations of $1 billion or more — who are keen to grab a slice of the startup pie. These include e-commerce major Snapdeal co-founders Kunal Bahl and Rohit Bansal, SoftBank-backed digital wallet giant Paytm founder Vijay Shekhar Sharma, helpdesk software maker Freshdesk founder Girish Mathrubootham, and matrimony website Shaadi.com founder Anupam Mittal.

Another active investor to feature among the top five angels in the country is former Snapdeal executive Anand Chandrasekaran. Now at Facebook as Global Director of Platform/Product Partnerships for Messenger, he has over 30 angel investments under his belt so far.

Prominent angel investor Mohandas Pai, who is the chairman of Manipal Global Education Services and co-founder of investment firm Aarin Capital, feels that the increase in angel financing has been helped by the presence of angel networks and platforms such as LetsVenture and Indian Angel Network (IAN).

According to Traxcn data, LetsVenture and Indian Angel Network are the most active angel networks in 2017 so far. Other angel networks such as Mumbai Angels and Singapore Angel Network, which were more active last year, seem to have dropped from the radar this year.

“There is always a timing issue between angels and funds due to pipeline. But overall angel financing is seeing a large increase due to more networks and greater interest as LetsVenture and IAN sign more deals,” Pai told DEALSTREETASIA. He expects the year 2017 to only get better in terms of angel investments, with a surge likely in technology deals.

Ace investor Mittal of Shaadi.com says angel investors can be classified into three categories — Super Angels or experienced investors, those who have come into money after liquidating their companies and are looking to get deeply involved with their investee firms, and finally, “angel tourists” who are seen during boom time and subsequently exit the market in case of losses.

“The super angel bracket will just keep getting bigger, which is what we are seeing play out now,” Mittal said.

The rise of individual angels in 2017 is also likely to help plug a gap in early-stage funding created by VC funds. According to a latest report by KPMG, the number of venture capital deals in the country has declined for the fifth quarter in the row in the April-June period, although the total amount invested is much higher owing to the large number of deals.

“There is definitely a correlation but VC investment is still strong, good companies are still being invested in and will continue to be invested in,” said Mittal. “In India even though angel investment has grown, there is still a long way to go. You will see more and more angel investors come in through platforms like LetsVenture. I don’t expect this to slow down any time soon; it’s too small right now.”

Top Angel Investors in a Year 

Also Read:

India: VC investments drop to lowest in 3 yrs in Q2; PE funding up 62%

Top 10 angels invested in 425 Indian startups in last decade; Rajan Anandan leads the pack