Angel investments are back again in near-full tilt. The January-to-mid-July period has already witnessed 52 deals worth $12.32 million compared to 54 deals worth $15.97 million in the whole of 2011. That’s a statistic that has warmed up the angle investment circuit, contrary to the lukewarm expectations in the beginning of the year. Given that there is a renewed frenzy to claim the fortunes that can be reaped by funding start-ups, it’s no surprise that an impressive line up of angel funds are rolling out mega bucks for funding these ventures. From niche-sector-focused angel funds, angel networks leveraging on the experience of established entrepreneurs, to service providers who can help start-ups tap investors and incubators for mentoring, the race for funding these new businesses is surely heating up.

Come to think of it, 2010 had witnessed only 21 deals worth $5.13 million and 2009 managed 28 deals worth $5.9 million as per VCCEdge data. With investors like Venture Nursery, Super Angels, The Hatch and First Light Ventures coming into the investment fray in 2011-12, the start-up investment space has begun to pick up pace and that’s a good trend. Established angel funds, such as Indian Angel Network, Blume Ventures, Mumbai Angels, The Morpheus who have had their share of success in the investment gambit find it a definite positive for the industry. Padmaja Ruparel, president, Indian Angel Network (IAN), says on a qualitative level, they see the environment turning more supportive. ?Since the liberalisation, new opportunities have opened up in India, with a stellar example of over 90% of the IT start-ups having been conceived by first-generation entrepreneurs. Entrepreneurship is being taught in a number of management schools, entrepreneurship cells have sprouted in almost every college, several business incubators have come up and a number of management graduates are skipping campus placements to start their own venture. All of these have been encouraged and supported by a growing angel investing ecosystem.?

IAN, to date, has made 36 investments in an array of sectors. In fact, IAN has already made nine investments in 2012 compared to the last year when in the entire year it made 11 investments. In the last 12 months alone, IAN evaluated over 3,000 business plans and met nearly 1,500 entrepreneurs. The biggest success story for IAN has been Druva, a company that provides continuous data protection and disaster recovery products. IAN invested $5 million in Series A funding along with Sequoia Capital in 2010 and has already made a 11X return on the investment. Ruparel confirms that IAN plans to stay invested in the company for now.

With 54 incubatee companies and 37 active start ups, The Morpheus (TM), established in 2008 is almost redefining the angel investment mantra. Needless to say that they find more folks entering the ring good. ?It gives more credibility to a new domain as well as makes sure that existing players don’t become complacent,? says Sameer Guglani, TM co-founder.

TM added 23 companies in its portfolio in 2011-12 and its revenue increased from R10.6 crore to R12.41 crore in the last one year. Guglani adds, ?We do not focus on business models or ideas. Our 100% focus is on the team. Best founders are one who have irrational passion for the problem they are solving and that in most cases happens when the founders have experienced the pain personally and started out the efforts to solve it.? Out of a corpus of R4.5 crore, TM invests R5 lakh per company as a standard amount. While most of TM’s portfolio is around technology companies, for now, TM is betting big on iimjobs and Posist as the startups of tomorrow. While iimjobs is a job board for B-School grads seeking premium jobs getting two million page views per month, Posist is a SaaS solution for India’s growing restaurant industry offering a comprehensive restaurant management platform. The less-than-one-year-old The Hatch, which started operations in October 2011 has already invested in 11 start-ups and is evaluating five more for the next batch. It also helps start-ups in the business plan, participating in the ‘still planning and yet to formally start’ stage of the ventures. Anupama Arya, MD of The Hatch Fund says that concepts that have the potential to scale, either in revenues or impact, will continue to be the biggest draws. At The Hatch, she adds, ?We encourage entrepreneurs to evaluate if their concepts are relevant just for India, or would they be relevant across the world. If they are relevant across the world, we help the entrepreneurs rethink their scale of aspiration and potential. While we get a number of applications for ‘yet another social media platform’ or ‘yet another e-commerce platform’, as always, concepts which address immediate and obvious needs or opportunities are the biggest draws.? The Hatch has recently backed unique ventures such as Tune Patrol and Mera Gaon Power. While Tune Patrol started by four college students is a platform for independent musicians and bands to upload their music and enabling listeners to listen to this music or buy it, Mera Gaon Power is a social impact venture that creates solar micro-girds in remote villages without power and provides two light bulbs and one mobile charging point in homes in villages without power for R25 per week.

Taking a cue from niche and sector-focused PE/VC funds, now niche angle funds are also making inroads. The latest fund to join the angel investment and incubation space is venturefund.com, a dedicated online mentoring and funding platform for start ups. Not to miss, India’s first telecom business incubator and fund based on the PPP mode, Startup Village Incubator and angel fund. Also in the ranks is, Unitus Seed Fund that makes seed-stage investments in start-ups, which are supporting ideas that impact people living at the base of the economic pyramid. Startup Village that came into being on 15th April, 2012, has already received over 170 applications in less than 100 days, and inducted two companies in its first round of selections. Sijo Kuruvilla George, CEO of Startup Village Incubator, says that since ideas and products keep evolving a lot in the initial stages, the angel fund will step in, in accordance to the need of the venture. The investment range would be around R5 lakh to R1 crore.

Statfacts

Flattering numbers

* January-to-mid July has already clocked in 52 deals worth $12.32 million compared to 54 deals worth $15.97 million in whole of 2011 as per VCCEdge data

* The consistent flow of money in the start-up space is slowly but surely picking up. In all, 2010 had 21 deals worth $5.13 million and 2009 managed 28 deals worth $5.9 million

* Consumer Discretionary, Industrials and Information Technology are drawing maximum investor traction. With Consumer Discretionary clocking in 10 deals worth $7.58 million in 2011 and 16 deals worth $3.15 million in 2012 YTD.