Mohandas Pai, Ratan Tata & Kunal Bahl are India’s top angel investors in 2015

Credit: Flickr/GotCredit

When the first wave of Indian entrepreneurs tasted success in the pre-dotcom bust era, most of them either cashed out, or invested the money back in their startups. Helping out other entrepreneurs was not in vogue.

Cut to 2015, and the scenario has changed completely. The new breed of entrepreneurs are chasing higher marketshare, startups are garnering record venture capital investments, and valuations are rising to crazy levels. And one more thing: entrepreneurs who are riding high on valuation are helping out newer startups by investing in seed capital and later rounds. And they are joined by individual angels and successful businessmen, who are chipping in after retirement.

There are exceptions to this rule, as we found when we studied declared individual investments from January to September, based on data from Trak.in.

Ratan Tata, the former chairman of Tata Sons, has emerged as one of the most prolific investors in startups, and has put in undisclosed funds in ventures such as Snapdeal, Ola, Urban Ladder and CarDekho, a portal to sell used cars. Between January and September, he invested in eight startups, same as he did last year, all of which are internet-led.i, the former Infosys board member, who has invested in nine startups including participation in a $2 million round in Zimmber, the online handyman service, and a $400,000 round with other investors in Ressy, a restaurant discount app. His former Infosys colleague Kris Gopalakrishnan has invested in four startups.

Table1
Top Indian investors in Indian startups across sectors

Among entrepreneurs helping startups, Snapdeal founders Kunal Bahl and Rohit Bansal are leading the pack with 8 and 7 investments respectively, as compared with 12 last year. They almost always invest together, but this year Bahl has invested in one more — betaout — with Paytm‘s Vijay Shekhar Sharma, that Bansal was not involved in. Together, Bahl and Bansal have invested undisclosed amounts in innovative startups such as Zenatix, which is creating an internet of things platform, ShadowFax, an on-demand delivery service and participated in a $15 million round in TinyOwl, a food delivery platform.

 

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Graph shows individual investors with the number of investments they made. Mohandas Pai made the most – nine – investments.

Sharma himself has invested in three ventures, including betaout and mobile fitness marketplace Goqii, run by Vishal Gondal, who had founded Indiagames that was later bought by Disney.

Zishaan Hayath, the founder of test prep venture Toppr, has invested in five startups, including participation in a $1.3 million round in Pickingo, an on-demand delivery logistics service and ShadowFax with Bahl and Bansal, for a total of 45 investments in his portfolio.

Rajan Anandan, managing director, Google South East Asia and India, has been an angel investor for years. This year, he invested in eight startups, including Zenatix, Innovaccer and Little Black Book, an online city and lifestyle guide. Including his previous investments, he has funded 29 startups so far.

Anupam Mittal, founder of People Group, invested in five startups — half as many as last year — which included a $5.5 million round in The Porter, with other investors such as Sequoia Capital and Kae Capital.

The latest to tap this network of investors is Rahul Yadav, the former co-founder and CEO of Housing, who is planning to raise $15 million for his new startup. Paytm’s Sharma, and Flipkart co-founders Sachin and Binny Bansal — who invested in five startups this year unto September — are reported to have agreed to invest.

Such angel investors, a mix of successful leaders in Indian corporations and entrepreneurs, have significantly higher money power today than the early 2000s. Founders of companies such as Snapdeal, which has raised over $1.5 billion in ten rounds, have the ability to make significant investments in other startups. They also want to bet on next-gen technologies, which might become huge just like their ventures did in a matter of 3-4 years.

They also like to operate individually, apart from the formal angel networks that have also gained in prominence in the last couple of years. Almost all of them are in the internet-led sector, or technology more broadly, and the entrepreneurs among them are still running the companies they founded, like the Bansals at Flipkart of Sharma of Paytm.

Most of them operate at the angel and seed level, while others are investing in early-stage ventures.”There has been a definite increase in individuals investing in startups, as compared to the scenario a few years back. It is almost as if ‘startups’ have become a new asset class,” said Zuhaib Khan, co-founder, Shopatplaces.com, an e-commerce portal that offers geographic speciality merchandise and raised funding form Indian Angel Network in July. “The expectation for an angel round has increased significantly and people are indeed committing to larger sums as seeds for start-ups,” said Gautam Ghai, CEO, SourceFuse Technologies, which buys stakes in startups in return for technological services.

They are also taking less time to decide where to invest, and have bigger checkbooks. “Funding decisions happen quickly if startups have traction and are looking to raise remaining funds to complete the round with other investors backing them,” said Khan.

However, investing in startups — both at the seed and early-stage levels — remains risky, with just about a quarter of of them succeeding. “It is a very high risk investment. You need to be prepared to lose all the money,” said Manish Singhal, an entrepreneur and angel investor, who has funded logistics automation platform Locus, online coffee delivery firm DropKaffe, and BetterButter, an online recipe sharing platform, in 2015.

It is no surprise that they choose companies which are technology-led, given their own backgrounds. This year, over 39 per cent of angel money flowed in this sector, with the median size growing to 1.38 crore for each round, more than double of the levels seen last year, according to a report by InnoVen Capital India in collaboration with the Association of Indian Angel Groups.

Apart from Indians, there were investors from Japan, Taiwan and the United States who also invested in Indian startups, as the world looks at the nation as the only unconquered frontier for internet-led firms.

(Pramugdha Mamgain contributed to this story)

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.