SUPER ANGELS OPEN UP WALLETS – Ecommerce Titans Become Lodestar of Angel Investing

Mumbai:
Reputed startup founders first port of call for entrepreneurs seeking money
Saras Agarwal’s main agenda at a networking event early this year was to meet Zishaan Hayath, cofounder and chief executive of education technology startup Toppr. The associate vice-president at VenturEast, among India’s oldest venture capital firms, wasn’t looking to invest in Toppr but discuss startups Hayath had put his money into.“It was a general meet-up from the point of view of deal flow to understand what kind of startups (Hayath) is interested in,“ Agarwal said.

Hayath represents a widening pool of so-called super angels -reputed startup founders who are increasingly becoming the first port of call for en trepreneurs seeking money for their emerging businesses, having been among the earliest to bet on consumer Internet companies such as Ola, Housing, TinyOwl, Grofers and Delhivery.

These entrepreneur-investors are also emerging as a key source of deal flow for larger venture capital funds, becoming a stronger influence in the entire startup ecosystem. Among India’s most influential super angels are Snapdeal’s Kunal Bahl and Rohit Bansal in Delhi, People Group’s Anupam Mittal in Mumbai, Flipkart’s Sachin Bansal and Binny Bansal and Tracxn’s Abhishek Goyal in Bengaluru, and Freshdesk’s Girish Mathrubootham in Chennai, besides Hayath.

Others include Paytm’s Vijay Shekhar Sharma, Zomato’s Deepinder Goyal, Ola’s Bhavish Aggarwal, Housing’s Advitiya Sharma, TaxiForSure’s Aprameya Radhakrishna, redBus’ Phanindra Sama, InMobi’s Naveen Tewari and Freecharge’s Kunal Shah.

“These entrepreneurs are seeing deals early, which are highly curated because it comes from a quality network,“ said Tarun Davda, director at investment firm Matrix Partners. Hayath has built an enviable record as an angel investor, with nine of his more than two dozen portfolio companies having raised follow-on financing. His early bets include cab-hailing app Ola, now valued at about $4 billion (over . 26,000 crore), realty classi` fieds website Housing, online budget stay aggregator Zo Rooms and business-to-business ecommerce marketplace Industrybuying.

What happens when such entrepreneur-investors put their money into other startups is that these firms often are able to pass through the filtering mechanism of venture capital funds, which have been in a rush to close deals early. Some of the largest venture capital investments in the past month were in hyper-local logistics network Shadowfax, used-vehicle marketplace Credr, social shopping network Roposo, user analytics platform MoEngage and Industrybuying, all of which count other entrepreneurs as early backers.

“All venture capital firms take these founders’ recommendations very seriously and these startups become a ready pipeline for them,“ said the managing partner of a seed-stage investment firm, declining to be identified. While there are no formal arrangements between such angel investors and VCs for deal-flow, informal alignments are evident. For instance, Tiger Global, the largest shareholder in Flipkart, has invested in Roposo, News In Shorts, Zopper and Ather, all backed by the online marketplace’s founders.

“Lee Fixel (partner at Tiger Global) is likely to take an introduction from Sachin or Binny more seriously than an introduction from us. And inputs from these angels will be taken as gospel by young entrepreneurs,“ said the unnamed seedstage investor.

While such deal-making may appear incestuous to an outside observer, the arrangement works as early-stage investments are more of a bet on the founders than just their idea.

Tracxn’s Goyal, even as he was running his previous venture UrbanTouch, in 2011 invested most of his money in Delhivery, which was still pivoting from an on-demand logistics company to focus on ecommerce. UrbanTouch eventually was sold and then shuttered, but Goyal’s investment in Delhivery should have grown multifold, with the startup now val . 2,000 crore.ued at over ` Delhivery cofounder Sahil Barua, in turn, is an angel in vestor in Goyal’s startup analytics firm Tracxn, which also counts the Flipkart founders as early backers. Goyal has now formed a micro venture fund Tracxn Labs, which counts entrepreneurs as co-investors and will invest $20,000-50,000 in other startups.

Goyal said he prefers working “with other entrepreneurs who are interested in similar sectors, whom I have worked with before and who have fundamentally shared principles.“ Goyal has invested in Spoonjoy, Eatlo, Qyk, Zoomo and Stayglad, all founded by former UrbanTouch employees. Serial entrepreneurs, too, are placing more faith in the super angels, expecting them to be able to bring more value than regular seed or angel in vestors. Betaout, a marketing personalisation software for ecommerce companies, initially sought to raise most of a Rs 3.2-crore early-stage funding round from an angel fund, but cofounder Ankit Maheshwari eventually decided to include more entrepreneur-investors than institutional investors.

“I wanted to bring in angels who were entrepreneurs for their advice besides money,“ said Maheshwari, whose company has raised capital from the founders of Snapdeal, Paytm, Freshdesk, redBus and Shaadi.com. “Their name also helps bring in customers who see validation with their in vestments.“

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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