Angel investor networks anticipate a bumper year in terms of exits in FY15

NEW DELHI: India's two premier angel investor networks, Indian Angel Network (IAN) and Mumbai Angels, are anticipating a bumper year in terms of exits, as they look to cash in on risk capital's renewed interest in the country's startups.

The buoyancy comes at a time when venture capital firms have begun to repose their faith in Indian early-stage ventures, especially in those operating in the product technology and consumer internet sectors, as they look to hedge their bets, take advantage of low entry valuations and invest in companies that can potentially establish a first mover advantage.

"We expect to see more exits than we traditionally have. Given that we are early-stage investors, the exits are more likely to be strategic in nature, or through the secondary route," said Padmaja Ruparel, president, IAN.

In the January-June period, early-stage transactions have risen to $194 million (Rs 1,1,78 crore) compared with $180 million (Rs 1,093 crore) in 2013, according to data collated by Venture Intelligence.

IAN, the country's oldest and largest angel investor network, expects to almost double the number of its exits - full and partial - in the current financial year. In the first six months of 2014, IAN, which on average makes between two to three exits a year, has already exited SaaS and big data analytics venture Peel-Works, clinical research company Karmic Lifesciences, as well as a yet-to-be disclosed third portfolio company.

"Apart from the improvement in the investment climate, the emergence of really high-quality startups from India that have begun to cater to global audiences has been the critical selling point," Ruparel said.

IAN is also an early investor in data protection and security software maker Druva, which raised $25 million (Rs 152 crore) earlier this month. Separately, Mumbai Angels expects up to 10 exits and follow-on rounds in fiscal year 2015, largely driven by a combination of renewed risk capital enthusiasm and the success of a number of Indian ventures in raising large amounts of private equity and strategic capital.




The investor network's portfolio companies, such GreenDust, Myntra and InMobi, are either in the process of raising funds or have raised substantial amounts over the last 12 months.

"Five (exits) have already taken place, the rest are in documentation stage and will be announced soon. We usually have 2-3 exits every year, (but) this year has been exceptional," said Ashpi Gupta, associate vice-president, Mumbai Angels.

The increase in activity has also been stimulated by top-tier mid-to-growth stage venture capital firms, such as SAIF Partners, looking to make an aggressive push towards expanding their seed portfolio.

SAIF, which has been an early backer of companies such as MakeMyTrip and JustDial, plans to make between 7 and 10 seed investments ranging from $200,000 (Rs 1.2 crore) to $1 million (Rs 6.1 crore) every year.

“There is a renewed positive sentiment in the market and venture capitalists are pumping more money into startups now, providing us (with) exits,” Gupta said.