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Dinesh Agarwal, the founder of B2B (business-to-business) portal Indiamart.com and a contemporary of MakeMyTrip founder Deep Kalra, has invested in over 40 start-ups. He has seen exits in only a tenth of them, including a few star performers like Little Eye Labs which was acquired by Facebook.
Agarwal, who has been investing with GSF Accelerator founder Rajesh Sawhey and The Indus Entrepreneurs (TiE), has tweaked his investment strategy. ‘‘I am staying away from execution-led ideas, and focusing on technology plays,” he says. He had invested in auto-hailing app Autowale. It had a good team, had a headstart but was a large execution play.
These ideas are simple but difficult to execute. For instance, grocery e-tail or e-commerce involve large execution plays and success is difficult to come by. “I am focusing on companies with small teams which can pivot and costs won’t be too high,” says Agarwal. Other angels are also altering their strategy.
Dheeraj Jain, partner, RedCliffe Capital, who invests in seed-stage and pre-Series-A deals of start-ups, has sharply reduced his investments. He has invested in only seven start-ups so far in 2017, down from 25 in 2016 and 10 in 2015. ‘‘No visibility of exits is the main reason. M&As not happening in mid-market space even for 4-5 year old good startups,’’ says Jain.
Jain is focusing on building the existing portfolio and doing follow-on Investments. ‘‘We have concentrated on a few theses that we have grasped over time. One is the consumption story, with a focus on category creators creating disruptions in their sectors,’’ says Jain. He has invested in companies like PeeSafe (Feminine hygiene), BrewHouse (Healthy Beverages). But he is also bullish on deep-tech and believes it is the next big thing.
For many angel investors like Raman Roy, it is about backing the right entrepreneur, team and idea, and what value he can add. Roy has invested $1 million in 50 firms over the past 10 years and earned 40 per cent internal rate of return, which he claims is twice of what venture capital firms earn.
Ankush NIjhawan feels it is a good time for angel investments as valuations now are real unlike previous years which were inflated. ‘‘The most critical is the technology platform that helps to create size; scale and stickiness,’’ he says.