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Indian Angel Network to bank on overseas investors for final close of early-stage fund

LiveMint logoLiveMint 07-06-2017 Swaraj Singh Dhanjal

Mumbai: Delhi-based angel investors group Indian Angel Network (IAN), which recently announced the first close of its early stage fund, is now looking to focus on raising money from overseas investors for the final close of the fund, said a senior executive of the angel network in an interaction with Mint.

In April, the network announced a Rs175-crore first close for its fund that was raised entirely from domestic investors.

The first close saw participation from institutional investors such as Small Industries Development Bank of India (Sidbi), IIFL and Yes Bank Ltd, as well as family offices and renowned names such as Kris Gopalakrishnan, Sunil Munjal and Google India’s Rajan Anandan, among others.

Mint had first reported in August last year that IAN was looking to set up an early stage fund.

The second close, for which the network is targeting Rs350 crore (with a green shoe option of Rs100 crore), will be raised mostly from overseas investors, said Padmaja Ruparel, president of IAN.

“Now we will also look to raise capital from overseas. We have already started conversations and are seeing good interest. We are looking at both institutional and individual investors, though right now conversations are more institutional,” said Ruparel.

She added IAN will continue to raise capital from domestic investors, though the focus will be on overseas investors.

The fund, which was raised to bridge the gap in the market where a large number of angel/seed-funded start-ups are struggling to raise $1-4 million, works in close association with the almost 450-member network of IAN.

“The fund intends to invest in three buckets. The first is the IAN angel portfolio, in every deal that the angels invest in, the fund will take around 20% of that round,” said Ruparel. Over the 10 years that IAN has been in operation, its portfolio has delivered an internal rate of return (IRR) of 37.5% and the network would like the fund to take advantage of that track record, Ruparel added.

The second bucket of companies that the fund will invest in are IAN portfolio companies that are looking to reach the next level and want to raise $1-4 million. The fund will co-invest with other venture capital funds in these companies.

The third bucket will see the fund invest in non-IAN portfolio start-ups, where it will invite the angel network to invest in 20% of the deal.

“Majority of corpus of the fund will go for the second bucket, around 25-30% for the first bucket and the rest for the third bucket,” said Ruparel.

While the fund and IAN have separate teams, the two will collaborate closely, given that they will co-invest in each other’s deals, she added.

Last week, IAN announced the appointment of former Cisco Systems Inc. director Pratik Bose as managing partner of its fund.

The fund will have a team of around eight-to-nine people.

IAN is also looking to expand its network to new markets. Next on the map for IAN is Israel.

“We are planning to go to Israel in about a month to explore opportunities not just for investing but are also looking at exploring a more operational model there—can we have a team there, can we have constant deal flow from there, can we engage local investors? It is one of the most exciting start-up ecosystems,” said Ruparel.

IAN currently has an operational presence in the UK and a constant deal flow from the US. It has invested in start-ups from about seven countries so far.

IAN has committed over Rs300 crore through its angel network so far, of which around 20% has been to start-ups overseas.

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