Recently, this city got its newest angel network, Lead Angels. The network, led by Sushanto Mitra, ex-chief executive of Society for Innovation & Entrepreneurship, Indian Institute of Technology (IIT)-Bombay; C Amarnath, retired professor of mechanical engineering at IIT-Bombay; and IIT-Bombay alumnus Bipin Kumar, aims to break the disconnect between investors and investees.
Though Mitra wants this to be an avenue for funds to entrepreneurs of IIT-Bombay and other IITs, he says it won't be limited to IITs alone.
"In India, there is a gap between business ideation, the incubator stage and the funding or angel stage. Students have brilliant business ideas that are incubated at campuses, but they don't know how to take it forward due to monetary issues. We are here to bridge that gap," says Mitra, co-founder and chief executive of Lead Angels.
"Through us, angels will get an early access to the ideas floating around. As a network, we are looking to invest between Rs 75 lakh and Rs 1.5 crore a deal. We're a small network; so, we cannot afford huge investments. Therefore, we will look at companies that are either close to break-even or have achieved break-even," Mitra said.
The company may buy at least 10 per cent stake in the companies it invests in.
Mitra says though angel investors have been around in India for about 10 years, awareness about them is low. Given the US had 700 angels and a country such as Finland had 500, India had the potential to have 100,000 angel investors, he added.
Mitra says between him and the angel firm's board of directors, a pool of about Rs 50 lakh is available for co-investment, with an angel for every deal. Lead Angels is considering opening chapters in other cities from January. It is expected Delhi will be the first on the list.
Lead Angels has already received about 45 requests from entrepreneurs. Of these, two start-ups have made it to the due diligence stage. Through the next year, Lead Angels hopes to invest in one start-up a month; Mitra feels for the entire year, the number will stand at six-seven.
Companies looking for funds won't be the only ones allowed to pitch. The angel firm may also pick a start-up, ask it to pitch and help it find a mentor. Mitra said if such a company was chosen for an investment, there would be a tripartite agreement between the mentor, Lead Angels and the company, and the mentor would be entitled to the payment.
Lead Angels won't restrict itself to any sector.
The themes that may interest it include those on which no company has worked (such as ready directories for health care) or on which there is scope for more work (such as health care offerings through technology for those at the bottom of the pyramid). The advantage Lead Angels has over other angel networks is it is looking at small-ticket investments. Apart from funding, it is also looking to help start-ups with mentors, with or without funding. And, this could come free of charge if there is no funding involved.
Since exiting a company is one of the biggest challenges in India, Mitra said while evaluating a company for funding, Lead Angels would weigh the company's prospects, laying emphasis on who would want to buy its stake.
