On Tuesday, venture debt firm InnoVen Capital announced the release of the ‘India Angel Report 2016’, which analyses and puts across the investment trends of the major angel groups of the country.
Although not comprehensive, Ajay Hattangdi, Group COO and CEO of InnoVen Capital, believes the report is an effort to highlight the key trends of the Indian angel investment industry. He says,
The main objective is to keep the VCs informed, to avoid mispricing in the future. It is also an ongoing inquiry into the dynamics of the angel investment industry. This report acts as a bellwether for VCs as deals funded by angels will later be funded by venture capitalists. We hear more about the trends in VC funding and less about the angel investment landscape in the country. This report bridges that gap.
Created in partnership with the Association of Indian Angel Groups (AIAG), the report makes sense of the data provided by member angel groups including the Mumbai Angels, Indian Angel Network, Chennai Angels, Hyderabad Angels and Calcutta Angels.
Citing interesting trends, some of the key highlights from the report show that:
The number of deals in the NCR were claimed to be 25; followed by Bengaluru seeing 14 deals; Mumbai saw nine deals while other cities closed 10 deals. The value of the deals was also higher in Delhi-NCR, grabbing a strong 36 percent share, followed by Bengaluru with a 20 percent share of the total investments made.
There was Rs 21 crore invested in the consumer internet and mobile sector, which witnessed a total of 14 deals; next was Information Technology Enabled Services (ITES), seeing Rs 19.4 crore being invested in the sector through a total of 10 deals, with the food sector seeing close to Rs 15 crore in angel investments.
According to Ajay, the report clearly shows that angel investment is a workable hypothesis in India. He states that the rise in investments clearly indicates a healthy trend of added confidence amongst the angel community. Further, looking at the successful exits of some companies, High Network Individuals (HNI’s) are now acknowledging angel investment as a viable option to have, apart from the traditional channels of investment like bonds and funds.
43 percent of the companies funded by angels in FY 11 (2010-11) have already seen successful exits.
According to Ajay, these available data points will help the quantum of investors and risk capital in the ecosystem grow for early-stage companies in the future.
While outlining some key trends for the future, Ajay said,
There also needs to be some caution taken by an angel investor while investing. A lot of individuals are investing and not fully pricing in the risk. Therefore, there is a need for angel groups to be diligent in educating the investors about these risks.
But, with the same old sectors being funded, angel investing in India is a classic example of tried and tested models. But then again, one needs to see if the right infrastructure and environment is in existence before investing in a business. Ajay adds
It is all about the right time, the right product and the right place when it comes to investments. Angel investments is a percentage game, one needs to make enough of them to make them click.
Following are the other findings, from the report:
Graphics by: Niranjan