All of them are professionals who’ve tasted success in their chosen fields. But bitten by a bug, or perhaps, just chasing the joy and excitement of playing midwife and mentor to start-up companies, they have all ventured out of their comfort zones. For some, like Ranjan Kapur, Country Manager, India, WPP, it’s the opportunity to spar with young minds engaged in ideation and channel the creative outflows, while for others, such as Praveen Chakravarty, COO & Acting Head of Equity Research, BNP Paribas India, it’s the adrenaline rush of taking risks and earning rewards. Of course, money is a big motivator. The six angels featured here are not professional venture capitalists or angel investors—we have purposely excluded members of the Band of Angels and other such individuals from this report. But all of them do precisely the same thing— financing and mentoring start-ups with passion.
Banker to start-ups
Take-off point: Was involved with angel networks in San Francisco. On returning to India in 2005, became an active angel investor.
Angel portfolio: Invested Rs 20-25 lakh in mKhoj, a mobile advertising network (2006); invested in Madhouse, a movie rental company that was acquired by Seventymm in 2007 (2004); invested in Atyourprice. in, a reverse auction portal (2006); investing in a financial services information company that will launch operations this year.
Exit plan: There is no definite timeline that Chakravarty adheres to. He says exiting from a venture depends on how well the company is doing. It could be via a VC buying out the venture or a merger with a larger company. “Remember, as a general rule, angels have to make more decisions on when to shut the company down than when to exit,” he says.
Expertise provided: Financial discipline is the foremost, and that’s a no-brainer, really. That said, Chakravarty also helps in sourcing talent, setting up shop, fine-tuning marketing strategies and most importantly, providing referrals to cub entrepreneurs.
As COO, BNP Paribas India, and also its Acting Head of Research, Chakravarty is quite literally dealing in dollops of money, but his stint as an angel investor wasn’t an offshoot of his financial career. “I moved back from San Francisco where I was part of angel networks; so, I started off here, too,” he says matter-of-factly.
So, what drives him—and given his profession, it certainly can’t be money alone. “Getting involved in start-ups gives me a high and you need to have a passion for it as it takes a huge toll on your time,” he says. Plus, angel investors need to have a lot of gumption. “Only one out of 15 ideas will work and justify your faith in start-ups, but potentially, that one profitable idea can cover up the losses on the 14 others that don’t work. It’s a pretty skewed risk-reward spectrum— but greater the risk, more are the rewards,” he admits.
The adrenalin rush of risking everything for possibly nothing, given that a majority of the startups, like Bollywood movies, bomb at the box office. Plus, he says, there’s the excitement of getting involved in a new business.
Putting money in a project that exists only in someone’s imagination is not the end of his job, says Chakravarty. “Investing your own money, perhaps, arouses a sense of involvement,” he says. This may explain why, for instance, when he decided to back mobile search company mKhoj, he not only sourced the CEO from the US and drew up its marketing strategy, but also assisted in locating suitable office space and participated in the recruitment process. “When it warranted, I carried out course corrections midway to change the marketing strategy,” he adds.
Incidentally, it’s not just entrepreneurs who are seeking out angels to fund their dreams. “We also seek out entrepreneurs who could have the craziest of ideas. Angel investing in India is still a very local phenomenon and often involves rolling up your sleeves and doing the job yourself,” he points out.
Considering that Chakravarty has so far invested in four start-ups, he’s probably speaking from personal experience.
The Ad Venture Man
Take-off point: A referral from a venture capitalist for a journalism outsourcing company.
Angel portfolio: Rs 50 lakh in Mindworks, a journalism outsourcing company (2004); Rs 1-2 crore in Tagit, a mobile software outfit (2004); Rs 2-3 crore in Eon PreMedia, an offshoring company in the prepublishing and pre-media space (2006), among others.
Exit plan: Targets an exit horizon of 3-5 years. Exits either when a VC gets interested (Mindworks) or through the IPO route (MIC Electronics) or if bought out by a large company.
Expertise provided: Brand strategy, insights into consumer behaviour, helping get global accreditation (like ISO ratings) and providing contacts and referrals.
Ranjan Kapur, Country Manager, India, WPP, admits that he got into angel investing by accident. “I was contacted by a VC who referred a friend starting a journalism offshoring business, asking me if I would be interested in funding the start-up,” he recalls. The company was Mindworks, started by Tony Joseph, former editor of Business World. That was four years ago. Kapur invested Rs 50 lakh in the company and exited last year when Helion Venture Partners bought into Mindworks. “That gave me the courage to go on,” he says.
What also comes in handy is his expertise in branding and his understanding of the market and consumer behaviour. For instance, reverse auction site Atyourprice.in, conceptualised by Ananth Narasimhan, was originally christened Ghoomo.com.
“But naming it Ghoomo would limit the enterprise’s scope to only airline tickets. But with a name like Atyourprice, you could apply the concept to cinema tickets, hotels and even the media space—even in buying and selling of airtime and print space for advertisements,” says Kapur. Then, “we help open the right doors for these entrepreneurs and also lend a certain credibility to a venture with our association,” he reasons. And that alone can be a huge leg-up for start-ups.
Take-off point: Setting up Frames for FICCI, having angel investors on board his entertainment outfit, Kaleidoscope, and an association with angel networks, which led to him funding the School of Convergence in Delhi.
Angel Portfolio: Rs 1.5 crore in School of Convergence (SOC), an institute for media content creation and content management (2001); and $100,000 in Film Finances India, which issues completion bonds for movies (2002).
Exit plan: Either a strategic sale or the IPO route.
Expertise provided: That’s easy, he says. Corporate best practices is topmost, given his years of experience in corporate corridors. Also assists in policy formulation.
Converting masala scripts into silver screen dazzlers is one thing; handholding brainwaves and processing them into profitable businesses is quite another. But it’s a task Bollywood producer Sundeep Singh, aka Bobby Bedi, MD, Kaleidoscope Entertainment, says he’s quite adept at. Bedi is clear that he’s only interested in ventures in the media and entertainment space. “Setting up Frames, FICCI’s annual entertainment jamboree, in 2001, deepened my interest in the media and entertainment space,” he recalls. It was around the same time that Pradeep Gupta, CMD, Cyber Media Group, was setting up his School of Convergence and Bedi ventured in with Rs 1.5 crore. “I am looking now at a strategic sale to someone who wants to invest in the educational space with a return of around 20 per cent on my investment,” reveals Bedi. His B-school background— he majored in finance from Jamnalal Bajaj Institute of Management—and corporate career are advantages in this field. “I’ve been a successful marketing person (he spent more than a few years with HCL, Sony and Philips),” he says. That certainly comes in handy when he decides to sit on the board of a new or early stage venture. Each venture, he says, demands a different reason for investment.
“It can either be a strategic investment, as in the case of SOC, or it can be an investment based on commonality of goals, like, for instance, in Content Flow Technologies, an outfit engaged in developing mobile content,” he points out.
Take-off point: Financing health ships on the Brahmaputra.
Angel portfolio: Has invested in the equity of Aavishkar, Arohan, Sonata and Mimo Finance, all microfinance institutions.
Exit plan: None. “The project may become profitable, but I’m not banking on that,” he says.
Expertise provided: Limited contribution, he says, and that too, on the financial side only.
Let me clarify that I am not an angel investor. I am a social investor,” says Swaminathan S. Anklesaria Aiyar. That means he doesn’t directly invest in start-ups, but instead, puts his money with micro-finance outfits like Aavishkar, Sonata, Mimo and Arohan that invest in socially relevant projects.
Like NGOs? “Certainly not,” he retorts, “NGOs concentrate on raising the standard of living to the bare minimum required. My view is: why not make the poor prosperous?” Aiyar, however, is unwilling to disclose the amount he has invested in these ventures.
The art of investing
Take-off point: A meeting with Pankaj Bansal, an ex-colleague and founder of PeopleStrong, (an HR management and consulting company), who wanted Goyal to join the board (of PeopleStrong).
Angel portfolio: Invested $50,000 (Rs 23 lakh then) in 2006 for a 6 per cent stake in PeopleStrong. Also finalising investment for small-city training company, Making India Employable.
Exit plan: He is not in a hurry to exit as he expects the company to increase its valuations significantly and touch a market capitalisation of $50-100 million (Rs 200-400 crore) over the next 3-4 years.
Expertise provided: Strategising, planning and execution.
When Pankaj Bansal, an excolleague and Founder-CEO of PeopleStrong, asked Aadesh Goyal, Vice President, Humar Resources, Aricent, to invest in his start-up in 2006, he did not need much convincing. PeopleStrong specialises in global HR knowledge process outsourcing (KPO) and process consulting. Of course, Goyal’s more-than-a-decade long association with Bansal (both were part of the founding team of Flextronics BPO) also helped the latter clinch the deal, but that wasn’t the only reason. “In terms of scalability, it is a business model that will only grow with time,” observes Goyal.
His experience with startups— he had served on the Board of JobsAhead.com, a leading job search portal—also came in handy. He had also served as the CEO of Aricent’s BPO business during 2002-04, which he had helped start from scratch. (Hughes Software Systems became Flextronics Software Systems in 2004 and Aricent in 2006).
So, what drives him to risk his hard-earned money? “Being an angel investor is not a very easy job as you can’t disassociate yourself from the business like other investors can. There is a lot of mentoring involved, though admittedly, it’s fun to be there when there are discussions on what will work and what won’t or on what kind of work culture to adopt,” he points out animatedly, adding that he gets a kick from being part of a team that creates companies from scratch.
Betting on technology
Take-off point: “I met them (the promoters of Movico Technologies) at an ASSOCHAM event in Delhi and thought it was a good project to be associated with.”
Angel portfolio: Movico Technologies (a company in the video software products domain) is his latest investment. He has invested in highgrowth social enterprises focussing in rural areas, especially education, health sector, or skill development.
Exit plan: No firm exit policy; may exit if he gets a good price.
Expertise provided: To guide start-up ventures and offer resources (introductions, networks).
Sunil Bajaj is very happy with his day job and has no plans of forsaking it for his own venture. That, however, doesn’t stop him from investing in, among other things, start-ups. In January this year, he invested in Movico Technologies, which operates in the space of integrated multi-purpose video production, storage and broadcast management systems. “I was enthusiastic as technology development is a long-term but rewarding investment area,” he says. His kick? “Low investments and multi-fold returns,” Bajaj admits candidly.
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