 "Kerala Angel Network starts operation, expected to help startup ecosystem")
The startup ecosystem in the state of Kerala has received a shot in the arm with The Indus Enterpreneurs (TiE) Kerala Chapter launched an angel network in Kochi.
The initiative, spearheaded by a group of industrialists in the State, is expected to provide funding as well as mentoring to the startups, which is scarce in the ecosystem at present, said experts close to the state's startup movement.
The initiative, spearheaded by a group of industrialists in the State, is expected to provide funding as well as mentoring to the startups, which is scarce in the ecosystem at present, said experts close to the state's startup movement.
The Kerala Angel Network, officially announced in the middle of November, in its first meeting held on December 9, reviewed a couple of proposals for investment, said Rajesh Nair, president, TiE Kerala.
Around 25-30 charter members of TiE Kerala have taken initiative to form the network, he said. The network is flexible since there is no need of corpus fund and each investor will be making investments individually. However, there should be one deal champion from the angels for each of the deal, otherwise, the network will not invest in that company.
"This is a first of its kind attempt and we will come to know about the complications in it only after we have one or two investments. We have received help from members in various angels including from the Chennai Angel Network, to put things in place," he said.
The deal sourcing, how to evaluate and conduct due diligence and rough valuation were structured according to the advise of the Chennai Angel Network experts.
The deal sourcing, how to evaluate and conduct due diligence and rough valuation were structured according to the advise of the Chennai Angel Network experts.
Proposals started flowing in from the end of October itself and after the launch, it received at least 20 proposals immediately. While the first meeting reviewed a few proposals, from next year, the network would hold two deal review meetings a month and would look at more proposals. He said that the best proposals in a new angel network are expected to be in the first three years.
In near future, the plans are to float it as a separate company and hire a fund manager.
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Some of the industrialists have also agreed to mentor the startups, though they many not be active investors into startups. While there were some angel networks formed in Kerala earlier but were not successful in investing in many companies, he said. He added that the startup ecosystem is evolving in the State and the successive governments are supporting startups.
Kris Gopalakrishnan, co-founder of Infosys, recently said that the Startup ecosystem in Kerala is growing and it has several startups working in the Internet of Things (IoT) space.
Rajesh Nair agrees that there are several interesting IoT companies emerging in Kerala and in the last TiECon event, one of the events where more students participated was the IoT related summit.
However, there are challenges in terms of availability of funding and visibility, say industry experts.
Robin Alex Panicker, an angel investor and co-founder of BasilGregory Software Labs, who tracks the startup activities in Kerala, said that the availability of funding and visibility for startups in the State are making the startups to move at least partially to cities like Bengaluru. However, there are signs of evolution in the Kerala startup system and the government is supportive he added.
According to him, investments into startups has grown from $9.05 million in five deals in 2014 to $19.65 million in five deals 2015, in the seed, angel and PE investments excluding the government funding. This year, around $16.62 million has been invested so far, in 11 deals.
A News Corp VCCEdge till June, this year, said that startups in Kerala have garnered 28 Early Stage Funding deals amounting to $18.5 million since 2011. With local HNIs now beginning to consider Private Equity as an asset class, beyond real estate and gold as well as Venture Capital firms scouting to invest in businesses with strong revenue generating models, the flow of funds to startups in Kerala will see a major inflection from 2016 going forward, it said then.