Sarthi Advisors, an investor group, angel network and incubator services – one-stop shop for startups
Just as startups are key to the entrepreneurial ecosystem, investors also play a critical role. We have heard the investment philosophies of many known investors on YourStory. Today, we write about an investor that is a new entrant in the entrepreneurship space in India, and has been setup by a team that has rich financial advisory experience. Sarthi Capital Advisors was founded in 2009 and is a one-stop shop mainly focused on the SME sector. The company offers a range of services including investment banking, corporate & trade finance and advisory services among others.
The firm has been founded by Deepak Sharma, a veteran in the finance industry. Deepak has worked with IL&FS and TATA and had also served as COO & head wealth business for IL&FS Investsmart, he was also the CEO for SPA Capital Ltd. Deepak is supported by Anand Lakhotia who plays a key role at Sarthi. The firm has offices in Mumbai, Delhi, Pune, Ludhiana & Jodhpur. With a strong network of relationships, they work with clients across these markets.
Talking about starting up, Deepak says that after having spent two decades in financial services, he wanted to do something on his own. “I have been associated with firms which are big names today, but were startups when we started. We started IL&FS InvestSmart from scratch, grew it to a level, where HSBC acquired it to become HSBC InvestDirect. When I had joined SPA Capital, we started from a 300 sq. ft office and could take the business to great heights. Then I moved to Mumbai, joined IL&FS asset management business, which was a laggard and could successfully build and grow the business before its eventual sale to UTI,” says Deepak about his past.
However like most entrepreneurs, he wanted to build something on his own and decided to leverage his vast experience to start Sarthi. He was also nearing 40 years of age, and thought of using this stage in life to do something on his own. During his previous stints, Deepak had noticed the various service and advisory gaps that existed in many businesses and identified SMEs as the space of opportunity. “In a large and growing organization, professional support is there, people who can guide and take the business to the logical direction. But in SMEs this was lacking, we found this as a gap and created a business model to see how we can work with this,” explains Sharma. Sarthi operates in three verticals – transactions, capital market and advisory.
Sarthi started with the transaction business, therefore any form of transaction including buyout, sellout, or structured transactions for smaller businesses was the beginning. In 2010, when the government started SME Exchange, Sarthi also ventured into the SME Listing space to help take SMEs to IPO. They also received their license as Merchant Bankers and have already completed one issue since receiving license. Deepak estimates they will be helping atleast 10-15 SMEs this year through their Merchant Banking arm.
Sarthi Advisors has interest in mainly six sectors says Deepak, namely agriculture and foods, consumer based, clean tech and water, IT and ecommerce, and mobile related applications. While these are the board areas where they have identified the opportunity to lie, Deepak says they will evaluate other sectors if opportunities come by. “Because the markets are cyclical, the opportunities are cyclical and some opportunities like the consumer business I believe will stay for longtime, but in case of other businesses, opportunities will come and go,” he says. Sarthi invests upto $2 million per company and are willing to stay invested for a good number of years.
The firm also recently launched their own angel network to help connect people with capital to the startups. Registered under section 25 of The Companies Act, the angel network will be a non-profit entity which will be working to put together a team of highly experienced individuals with capital.
Deepak claims they receive a good number of applications from startups who want to be invested in and have a team who evaluate the applications, before helping them get in touch with angels who could be potential investors. “We have a secretarial office, which looks at all the applications that come in and then puts it into the correct bucket to make the right connections,” says Deepak. The angel network will also offer mentoring services to startups, who can choose from the pool of angels and associate with the expert most suitable for his business. Angel registration for Sarthi Angel network is open till the end of September.
Another service that Sarthi has plans to start, is pure play incubator services which will not be part of foundation. The services provided here will be optional for the investee companies to opt. The incubation service aims to hand hold startups & SMEs at every stage of their lifecycle. “From website building, to resource creation to feasibility study -- companies can choose and opt from a bouquet of offerings. That will be another support function in the area of SME servicing. We believe our job is to take the incubatee to the end result, so under the Sarthi umbrella, we will offer the entire gamut of services there is,” explains Deepak.
Talking about the growth and the businesses potential, Deepak says he is not just optimistic, but is very sure that only the SME sector has the capability to take India back to the 8-9% GDP growth. “Smaller businesses with higher risk and but high growth potential is the future,” he says.
