In the time of coronavirus, it’s business as usual for this angel network
Gurugram-based Inflection Point Ventures is an initiative of accomplished CXOs and angel investors who firmly believe that angel investing is for everyoneand everyone can grow with startups.
The early-stage investment group of 300 angels was founded in 2017 by Sathya Pramod, Mitesh Shah, Ankur Mittal, Dipanjan Basu, Adarsh, Vinod Bansal, Sumeet Kapur, Ananya Tripathi, and Ashneer Grover. Its aim is one: to take Indian ideas to the world.
IPV is one of the few angel networks that has been active even during these difficult economic times amid the COVID-19 pandemic.
It has invested in several companies since January, putting in $3.5 million across eight investments in sectors such as healthtech, online grocery delivery, media and entertainment, and online education.
Ankur Mittal, Founding Partner of Inflection Point Ventures
YourStory caught up with IPV Founding Partner Ankur Mittal about how it is helping its startups tide over the COVID-19 crisis, why angel investing continues during the pandemic, and why good ideas will receive funding.
Edited excerpts of the interview:
YourStory: Startups have taken a bad hit amid the coronavirus pandemic. What is IPV doing for its startups?
Ankur Mittal: Inflection Point Ventures is actively working with all its startups to identify different short-term measures that the startups may have to take to survive the next few months. We are advising them on cost reduction and rationalisation plans, and identifying new revenue opportunities like cross-selling among platform companies and tapping into the vast business network IPV has built via its 1,000-plus investor members.
We introduced one of our e-gaming companies to a major startup in the media and entertainment space, whose core business has been significantly impacted because of the shutdown of cinemas and sporting events.
IPV has organised virtual roadshows educating people about investing in US markets for one of its invested companies, which facilitates frictionless investing in US markets for Indian investors. With some marquee stocks now trading at 25 percent discount to a 52-week high and Indian currency depreciating every year, more investors will look at platforms that allow them to invest in US and international markets.
We have also connected some of our startups with leading fintech companies to help them secure business loans. IPV has reached out to its vast network of CFOs to personally work with the startups on cost rationalisation plans, and its network of CHROs and CEOs to guide founders on management of human capital.
Some IPV-funded startups have unique tech solutions that can assist the government in the fight against coronavirus, and we are providing assistance that these startups need to support the initiatives.
YS: How do you see this year when it comes to investments?
AM: A survey by 500 Startups estimates that 32 percent investors are foreseeing a negative impact on early-stage investment this year.
Startups looking to raise follow-on rounds of funding in 2020 may face short-term challenges, and it is important for them to re-align their growth plans and conserve cash to extend their runway, even if this means taking some tough and unpopular decisions.
Historically, some of the biggest companies and businesses have been built post-recession when businesses have access to quality human capital at reasonable costs, and time to improve their technology and processes, and address the needs of price-sensitive customers efficiently.
So, while overall funding may decline, remember that this recession is triggered by a global pandemic and not by a liquidity crunch like in 2008. Many funds are sitting on huge cash reserves that they have raised in the last six to nine months; they will still need to deploy those funds.
Some sectors will be negatively impacted by COVID-19, and we expect funds to flow towardsbusinesses expected to attract greater consumer and business interest like edtech, healthtech, e-gaming, and B2B businesses generating efficiencies and cost rationalisations for their clients.
YS: Despite all efforts being taken, shutdowns are a reality during the pandemic. What should those entrepreneurs do?
AM: Many founders will hopefully exhibit perseverance and come up with innovative ideas to ride out this tough economic environment, but some will, unfortunately, come to the end of their journey. Founders can opt to voluntarily wind up the company at the National Company Law Tribunal (NCLT) if there is solvency (assets can pay for the liabilities).
Those without solvency can go for liquidation; the court will appoint a liquidator and the business can shut down as per the laws of the land.
Both the above options are managed by a court-appointed resolution professional/liquidator, and would be binding upon all creditors and government departments where money is owed. This is a fool-proof way to close the business and not carryover unknown/contingent liabilities, which may put investors or promoters in jeopardy.
However, despite the problems, founders should not lose their passion for building new businesses. Failure is the best teacher, and lessons from one failed venture can significantly help in the next innings, be it as an entrepreneur or a senior executiveat another company.
YS: What do you think will happen to angel investments over the next six months?
AM: Bleeding from the losses in debt and equity markets and long-term underperformance of many mutual fund schemes and portfolio management services schemes, some angel investors may adopt an extremely cautious approach towards startup investing.
However, smart investors will seize the opportunity and invest as some good startups may now be available at more reasonable valuations.
IPV has been growing its membership base exponentially over the last 12 months, adding not only prolific angel investors to its platform but also hundreds of first-time angel investors. We have experienced no decline in growth, but understand that many investors, especially new ones, will be anxious.
IPV is conducting regular master classes on different aspects of angel investing and is using the lockdown to educate its 1,000+ and growing investor base.
A digital-first organisation, IPV has been active even during these difficult economic times and has committed and invested approximately $3.5 million across eight investments since January 2020 in sectors expected to outperform during and post COVID-19 like healthtech, online grocery delivery, media and entertainment, and online education.
In fact, we are in the middle of closing the single largest fund raise by any angel network in the country.