Hyderabad: At a time when early-stage funding for startups is a challenge, Lead Angels Network, an investment platform based in Mumbai, is working towards helping startups get funding, meet compliance/regulatory needs and scale up their business to become unicorns. The network has so far funded Rs 20 crore in 25 startups across India including Hyderabad-based TinMen.
Explaining the funding ecosystem, Sushanto Mitra, CEO, Lead Angels, told Telangana Today, “Indian startups raised $12.68 billion in equity and $1.14 billion in debt in 2018, across 864 deals, surpassing 2017 levels. Late-stage startups took the lion’s share and India welcomed eight new ‘unicorns’. But, pre-Series A deals dipped 20 per cent in 2018 compared to 2017. This reiterates that fund raising remains a major challenge for early stage startups and more importantly there is a growing need for increased rigor in the process adopted to fund them. This increased rigor ensures the right ones get support early on and survive further to reach the state where later funding becomes less difficult.”
To address the funding gap, Lead Angels was started by a team of three, originally from IIT Bombay, in 2014, to provide end-to-end financial services to startups. Lead Angels Network with over 130 members and chapters in Delhi, Mumbai, Ahmedabad, Bengaluru and Hyderabad invests in promising companies after a comprehensive and rigorous process of shortlisting.
Lead Angels’ portfolio of over 25 companies in sectors as varied as Indian snacks to SaaS, has shown resilience and success in raising funds. Its portfolio companies such as SuprDaily (Mumbai), Planet Superheroes (Mumbai), TinMen (Hyderabad) and Shopkirana (Indore) have quickly raised investments providing a 10X exit to investors. Lead Angels has made a cumulative investment of Rs 20 crore in 25 startups so far with an average investment of about Rs 1 crore.
Talking of Hyderabad’s potential, he said, “In a couple of years, Hyderabad has the potential to beat Mumbai in the startup space. Hyderabad has a very good ecosystem and there are some trendsetting companies in the city. There is potential for startups using technology to cater to large untapped markets. Chennai like Hyderabad is also fast catching up.”
The angel investors at Lead Angels Network include Prof C Amarnath, Emeritus Prof. IIT Bombay former Head of SINE, IIT Bombay; Venkat Narayan, partner, Aavishkaar Venture Management services; Dr Dhruv Nath, professor, MDI Gurgaon; Sethu Vaidyanathan, serial entrepreneur; Rahul Shah, investment director, Aditya Birla PE Advisors; Piyush Mathur, Staff Anesthesiologist/Critical Care Physician, Quality Improvement Officer and Chair, Compliance Committee, Anesthesiology Institute, Cleveland Clinic, Cleveland, Ohio; Neeraj Sanghi, CEO, Highway Concessions One; and Prerna Tandon, senior corporate executive with an MNC bank and SVP, State Street Corporation.
On funding patterns, Mitra says, “The average age of startup founders getting funded has moved up from 25 to 30 now, as investors are now looking for experience and domain expertise. The companies which are working on food, public transportation, logistics and asset-light business models are gaining traction today. Prospects of startups getting funding in future, is also becoming very critical.”
Lead Angels is working with certain States to help create right base for scaling startups and investor network.
Lead Angels has had six successful exits and up-rounds in under three years of operation. Lead Angels builds upon its relationship with institutions, incubators, accelerators and venture funds such as TiE, IITs, Nasscom, SINE, FIIT, CII, CIIE etc. It also has affiliate programmes with regional angel networks and incubators to further improve its access to early-stage investment proposals and connecting the dots in the fragmented Indian startup ecosystem.
Its Lead Advisory division helps startups to either get the next rounds of funding or to get acquired. Unlike most established players, Lead Advisory assists fund raising early, right from $1 million upwards. It has access to over 70 funds from financial investors across India, Japan and China, helping startups/companies find the right partner. Lead Advisory has assisted Lead Angels and other angel and venture capital portfolio companies in raising $15 million.
LA Professional Services assists startups across compliance/governance requirements, reporting and review of systems.
“We are looking at training incubator managers as several incubators are emerging in the country. Incubators have evolved in the west and China. Indian incubator ecosystem is still evolving,” he informed.