Band of Angels Help Indian Start Ups: "
After the dot-com bust and IT slowdown nearly crushed the startup he co-founded, entrepreneur Alok Mittal realized India’s business environment had a major shortcoming. There was no money for early stage companies. He survived-selling the startup he co-founded, jobsahead.com, to Monster.com for $9 million in 2004—but his five-year roller coaster ride gave him another idea.
With even venture capitalists looking to invest as much as $1 million-$3 million, Indian entrepreneurs badly needed angel investors willing to commit smaller amounts in, and more importantly, provide guidance to, very early stage, pre-revenue companies.
To shore up the gap, together with Saurabh Srivastava and some other people, Mittal informally started Band of Angels, India, modeled on Band of Angels and Angel Capital Association, to provide not just money but also high-quality mentoring to budding entrepreneurs. The group that formally launched this April has 30 investors from a variety of industries and has made three investments.
The only one Mittal will name is Knowcross which makes software for the hospitality industry. The others, he says, are a technology retail chain and a heritage restaurant property that plans to scale up to a chain of high-end restaurants.
GigaOM recently chatted with Alok Mittal, who is also executive director at venture firm Canaan Partners’ India office, about the kinds of companies and the sectors Band of Angels is looking to invest in. Here are some excerpts of that conversation.
- On the minimum investment required by a Band member:
Alok Mittal: There is no real minimum. We are setting an expectation that members will invest about $50,000 a year. Every member doesn’t have to invest in every company. Also, simply some one with $50,000 to spare is not the kind of member we are looking for. We are passionate about entrepreneurship and we want to help build companies as well so we want members with experience and a proven track record.
-On the sectors Band of Angels, India, is looking to invest in:
AM: When we started out, the first set of members was strong in technology. Now only half of the 30 odd members are from the technology space. We always had a broad charter and want to support different kinds of businesses, because ultimately all of us are excited about entrepreneurship. We are looking at the Internet space, telecom technology and embedded domains, media and entertainment, BPO, retail and biotechnology, among others.
-On some proposals they are currently looking at:
AM: We are considering some projects on the Internet side, like e-learning and social networking. These startups need $100,000 to $300,00 and we are well designed to do these smaller investments. We are looking at telecom technology, like billing software, and also at smaller BPO plays but those that have demonstrated success.
-On the Band of Angels members being able to recoup their investments:
AM: This is a very new concept for India where even the venture capital industry is so nascent. Very few companies can really expand with $200,000 from an angel investor. So unless the next stage (venture capital) is available an angel can incur losses. Our success in a sense will depend on how the rest of the ecosystem is developing.
With VC investments increasing in India, this may just be the right time for angel investors, so anyone wanting to approach Band of Angels with an idea read this first and go, get funded.
"
(Via GigaOM.)