Indian Startup Ecosystem &

Angel Investing

By: Ashutosh Tyagi Chief Marketing & Strategy Officer ‘Think As Consumer’ ashutosh@thinkasconsumer.com

Indian Startup Ecosystem

More than 3100 startups in India as of 2014

4th largest base in the world after US, UK & Israel

New 800+ start-ups in 2014

By 2020 there would be ~11500 startups; employing over 250k people

Startup ecosystem is expected to accelerate with increase in internet and

smartphones penetration.

Young entrepreneurs dominate the start-up landscape with over 73 per cent

of founders in the age bracket of less than 36 years.

Scaling up and growth hacking-are key priorities for start-ups.

Source: Nasscom Startup Report 2014

Investors Landscape in India 70 active private equity (PE) and venture capital (VC) funds in 2014.

62 active angels in 2014.

Over 80 incubators and start-up accelerators operating in the country at present.

~300 VC/ PE & ~225 angel investment deals worth over USD 2 billion in last 3 years.

Over 20 M&A’s worth ~USD 1 billion in last 3 years

Source: Nasscom

Key players:

Seed/ Angel Pre-Series A Series A Growth Stage Late Stage

Mumbai Angels

Hyderabad Angels

Your Nest Nexus Sequoia Capital

Matrix

Indian Angel Network

Calcutta Angels

India Quotient Seedfund Accel Helion

The Chennai Angels

Blume Ventures

Kae Capital Inventus IDG Ventures

Saif Partners

Angel Investing in India In 2005, there were six angel/seed investment deals, according to VCCEdge. In

2014, there were 200 such deals.

The ecosystem is fast evolving . Entrepreneurship is becoming a top career choice.

New angel networks are opening up.

New persona of angel investors is emerging:

Entrepreneurs turned investors

Second generation family business owners

Global Indians

Corporate MNC

The success of startups such as Flipkart, Mu Sigma, Ola Cabs and InMobi, in terms

of scale, valuation, attention from global investors and strong exits, has also created

a positive sentiment.

Source: various published articles

Key Challenges for Angel Investors Ensuring good deal flow - Angels typically evaluate a large number of deals for

every company they invest in. Therefore its important to have a good funnel of deals.

Providing time for mentorship – For most of the Angels, investing is not a full time

job but instead a side business. Finding time for mentoring the ventures is a

challenge.

Driving growth without over-spending - The challenge is to grow the businesses

by creating a differentiated product that thrives through word of mouth instead of

spending huge money on marketing .

Finding next level of funding/ exit option- Connecting the ventures company with

larger sources of funding, like VCs, PEs etc., to meet the future funding requirements

or exit option for themselves is a tough job.

Key Angel Groups – Comparative Market Standing

Angel Number of individual members

No. of Investments

Mumbai Angels 205 70

Indian Angel Network 332 36

Blume Ventures 110+ 50

The Chennai Angels 63 22

Hyderabad Angels 59 11

Calcutta Angels 41 6

Source: Angel websites

Key Success Factors For

An Angel Network

Create A Strong Brand Positioning Position the network as

A leading network of investors with strong and operational backgrounds who are willing to invest not just money but also time.

A network which not only provides financial support but adds value to the investee companies and also provide them access to their vast networks.

A socially responsible community contributing to the society by promoting entrepreneurship.

Build & Promote The Angel Network brand Create Buzz by aggressively promoting the brand through various marketing activities:

Develop a comprehensive PR strategy and ensure regular presence in the Media

Drive online / digital marketing campaigns

Execute social media campaigns

Participate and ensure active representation in all startups related events and conferences

Publish periodical newsletters providing information about new developments to all the existing and potential future stakeholders.

Objective would be to grow network by reaching out to:

New entrepreneurs seeking financial and professional support

Individual and Institutional Investors with sound financial strength and business knowledge

Also create a strong buzz around the invested companies to keep them in limelight and attract VCs/ PEs for further rounds of investments.

Build a large web of connections Proactively engage with members and other stakeholders to build connections with

Industry bodies,

Government bodies,

Big investor groups (PEs/VCs)

Startup cells and incubators

Leading institutes (IITs/IIMs), international institutes etc.

Maintain a regular communication with the connections, updating them about the developments at TCA through Newsletter, E-mailers etc.

Manage Internal communication & Help Build Member Relationships

Create a channel for regular internal communication within the network.

Create platform for ideas sharing and knowledge transfer within the

network.

Recognize and reward the angels devoting higher time and effort for

mentoring the ventures.

Facilitate Investment – Standardize Processes

Screening process - standardize the screening activity making it an

objective data/ facts driven process

Support to Entrepreneurs - create a framework to support entrepreneurs

in making business plans, pitching presentations and help them prepare for

FAQs

(given that most of the entrepreneurs are young without much experience

in the corporate environment, their lack of presentation and

communication skills should not become a bottleneck)

Due diligence and investments - build resources and create process for

coordinating the activity on behalf of the Investing group

Monitor Investments

Monitor Progress of Investments

Develop a standard process for reviewing performance of the

businesses. This could include assessing

• Progress on timely achievement of business milestones

• Actual vs. target performance on key metrics.

• Gap analysis

Set up a framework for reaching-out to the available network members

for adequate support for businesses as per their needs.

Build a Knowledge Repository

Create a platform to systematically capture and organize the best

practices and learnings for the benefit of all the members.

Facilitate easy access to information and knowledge within the

group.

THANK YOU!