Over the past six years, Anirudh Damani has invested in some 51 startups as part of his family office’s push to tap this highrisk high-growth opportunity. Until the middle of last year, these deals were routed through this office and as a member of forums such as Mumbai Angels, a group of early-stage startup backers. Earlier this year Damani — who is the fourth generation of a family with origins in bullion trading — unveiled a formal fund called Artha Ventures, which hopes to help fledgling entrepreneurs with often the first institutional round of funding.
At his bustling office in Kala Ghoda in south Mumbai, Damani is inundated with 200 to 250 proposals a month. As the hoopla over starting up cools and the pretenders disappear, new early-stage backers like Artha find themselves poised to make more realistic deals and give serious entrepreneurs a much-needed funding boost.
Like Artha, there are several other funds that have taken root to provide funding to such startups — mostly as first investors in what is called the seed stage and in follow on rounds called bridge, pre-series A and series A, where big VCs usually enter the scene.
While Damani may have had the backing of his family office, other fund founders come with other varying expertise. For example, Mukul Singhal and Rohit Jain, the cofounders of Pravega Ventures in Delhi, previously ran the tech investment unit for SAIF Capital, a VC that has backed the likes of Paytm, MakeMyTrip and Urban Ladder. In 2016, the duo branched out on their own to set up a fund to bet on ventures even earlier in their development.
If they tout their expertise of a decade in spotting the next big technology upstart, Sateesh Andra of Endiya Partners in Hyderabad offers 15 years as a Silicon Valley entrepreneur and early executive with DFJ’s India unit, a VC fund, as reasons for taking a punt with his own early stage fund.
Others such as Stellaris (formed by former Helion VC honchos Ritesh Banglani, Rahul Chowdhuri and Alok Goyal), Parampara Capital, pi Ventures and family offices of businesses as diverse as Reliance Industries and JSW, have varying early stage investing offerings in play.
These founders may have ridden the wild wave of startup funding between 2012 and 2015, as angel investors and top managers with VC funds, but a rapidly changing funding climate has changed things for entrepreneurs and investors alike.
For starters, entrepreneurs have struggled to raise funds in the past year as returns-hunting investors have slowed investments in cash-guzzling ventures and slammed the door on new investments. While there have been hundreds of very early deals, multiple industry estimates state that a third to a fourth of them have managed to cobble together a first formal or A series round of VC funding. The likes of Tiger Global disappearing from the scene — it made 38 investments in 2015 and just five in 2015 and just five in 2016 — has only darkened the mood further. Entrepreneurs who got used to —critics say spoiled by — easy money from these funds now find themselves hard up or worse, out of business.
Building Networks “The froth has now cleared among India’s startups and there is now an opportunity for funds to agree on more viable valuations for startups and help them survive in a tough market,” says Siddarth Ladsariya, an angel investor in over 100 startups in the past decade. As the market has cooled, early-stage backers like him now give less weightage to valuation alone while taking decisions. This means that other metrics such as viability and domain capabilities have become more important while considering an investment.
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