Angel investment in startups up 62% to Rs 113.66; NCR pips Bengaluru

Startups based out of India’s National Capital Region (NCR) have become the most preferred choice for angel investment groups such as Indian Angel Network to back, beating their counterparts in Bengaluru, the Information Technology hub and unofficial startup capital of the country.

According to a study from venture debt firm Innoven Capital, seed stage investments by angel groups scooped up by startups in Delhi NCR surpassed that of startups in Bengaluru in the year ended March 31. NCR accounted for 36% of the overall seed investments that were made during the year, while Bengaluru accounted for just 20%.

The report which tracked investments made by angel groups — Indian Angel Network, Mumbai Angels, Chennai Angels, Hyderabad Angels and Calcutta Angels — found that these groups had increased investments in startup companies over the year. Moreover, it was found that majority of the investments were drawn by startups that had a clear roadmap for generating revenues.

Despite a slowdown in venture capital funding in India during the second half of the previous financial year, the availability of seed investments grew by 62% to Rs 113.66 crore.

These angel groups inked a total of 69 deals in the year, up from 47 in the corresponding 12-month period. These startups also got better valuation than firms who raised money in the past.

Nearly a third of the investments have been in firms that are run by serial entrepreneurs, while one in four firms had a female co-founder, a trend that indicates that more women are taking up the entrepreneurial journey. Three fourth of them had people who started their first company.

In the seed stage, consumer Internet firms attracted the largest chunk of investments totaling Rs 21.16 crore. However, e-commerce startups had the highest average deal size of Rs 2.33 crore. Food tech firms, which saw a bloodbath last year, continued to get funded in the early stages, and raised a total of Rs 14.92 crore in the early stages.

The study indicated that the failure rate of startups that are angel funded have reduced from one in five in fiscal 2012 to 8% in 2014.