Coverage by Bhat Dittakavi of Variance.AI on “Investor-Startup Connect” at T-HUB on 10th January 2017
The panelists for todays investor connect:
Abhishek – Director of Endiya Partners
Tom Thomas – IIIT-H CIE [http://ift.tt/2iAaF2J]
Satish Kataria – Cattapooolt
Satish Kataria: Crowd funding expert. One model is either all or none. The other model is the project gets the money even if we could only raise 80% of the money. Third model is to give the option to contributors if the project is short funded. We helped Pune based company called CarIQ that makes your car connected. They raised 4.5 lakhs on our platform an year ago. Another startup takes old sports shoes and converts them to slippers. They got crowd funded through us. We have done 70 projects. We are partnering with payback companies so you could redeem money to invest.
We can’t accept international projects for regulatory issues. Crowd funding is twisted ecommerce as you are buying a product here.
Neel Vohra: 300 crores raised just in past 18 months!
Neel) How IIITH raise funds for startups?
Tom Thomas: 2.5 crores grant we got Tom the government, we invested in 12 startups portfolio. 2 sold, 5 hang on, 5 shut.
We made 20-25 lakhs at 6-8% equity before. Now, if we decide to invest, 50K Ventures will match us and together we invest the whole amount as a convertible. If you meet the target set for 6 months, traditional investors like Endiya can chip in.
We have 17 research centres and if professors can contribute to the startups, they get priority. We want entrepreneurs who are coachable and are not rigid on the idea.
Our investment panel comprises couple of angels, VCs and techies.
Q) What do you look for in Startups? Do you encourage startups funded through crowd funds?
Abhishek) We represent early stage capital fund Endiya Partners with local to global startups that are in technology and healthcare. We are the first institutional investments for these startups. We did 4 Invetments with the 12 months.
Venture East: Little Eye Labs we invested in got sold to Facebook. Garage Story is another one.
Cliche response is “Let us wait for the traction”. Crowd funds and active angel funds come handy here. Angels are driven by more passion whereas VC manages the money of others so our passion is more quantified.
We encourage crowd funded startups if they have global flavour. Good deals and good teams can come from various corners.
Q) SEBI’s view on crowd funding?
Satish) SEBI is progressive and supporting in their white paper of equity based crowd funding. Larer SEBI didn’t do much. Later in they sent warning notice. Within SEBI there is difference of opinion between their legal team and operation teams. SEBI is cautious because of abuse by companies like Sahara. Hopefully, new chief of SEBI to come will do better calls.
We are not in equity crowdfunding space so we are fine. But eventually, we need equity based crowd funding and hence eagerly waiting. We are working with media and forming collective view.
Globally, crowd funding is proven and they raised $35B globally.
Individuals can’t invest more than a limit and so is the case with company.
Neel) Do you recommend successful incubators that India can emulate?
Tom) Better mentors with dedicated long term support is the key. Continuous engagement by the mentors is the key. Have them connect for 6 months. We put in place people who can hand hold for entire 6 months.
We need to acknowledge that each participant in our acceleration program is a different startup and we need to customise the program for each of them.
Neel) How easy to raise funds from the government?
Tom) 10,000 crore grant by the government is going to be a co-investments along with bigger VCs. Amount of funds available or is increasing. No of startups fell down in last year and it is a sign of maturing industry. Though Hyderabad university got 1.5 crores granted, they took 5 years to use the funds to invest. Educationa incubators are non-profit.
Neel) Quantun of overall funding has gone diem but number of startups that got invested went up by 3%. Even family offices such as Ratan Tata, Premiji and so on are active.
Abhishek) Ratan Tata’s investments are small. Now that they got an institutions backing these family offices, it adds onto the pool. These family offices are relatively late stage entrants.
Mohan Das Pi does early stage investments.
Neel) VCs see family office as potential LPs hoe about you?
Satish) Lot of small family offices are becoming limited partners for venture funds. Lot of family offices are creating their funds in their own domains for example Lodha announced its own real estate fund for startups.
Neel) Every corporate family office is directly investing in startups. Do you see anything from government on family offices?
Tom) Tata funded our new building. As an institute we piggy back on these family offices and other corporates to help us. We haven’t looked at them as investors of startups.
Neel) Yuvraj Singh got his own startup fund. Peer to peer lending is another one coming. How do you see venture debt?
Abhishek) Venture debt financing is a new model with series B kind of rounds. It is getting to be equity-debt hybrid component. As an equity investor, I don’t want my investment for working capital. In such cases, these hybrid investments can be handy.