Inflection Point Ventures (IPV), one of India’s most active angel investment platforms, started in 2018, has invested close to Rs 100 crore in the last 18 months across 35 companies. While funding has slowed down in the startup ecosystem, IPV has invested over Rs 20 crore in the last 45 days. IPV co-founder Ankur Mittal talks to Sudhir Chowdhary about the rationale behind getting aggressive in funding startups in the midst of the Covid-19 pandemic when other venture capitalists are holding back or even walking away from signed term sheets. Excerpts:
While many investors are tightening their purse-strings, why are angels in your network investing in startups?
History is in favour of startups such as WhatsApp, Flipkart or Groupon that were launched/built scale during recession. Our investors also recognise this opportunity and have reposed confidence in IPV’s extensive due-diligence process led by industry experts sourced from IPV’s investor base. We have also been proactive in engaging with angel investors on our platform providing investor education and building investor confidence towards startup investing as an alternative asset class. More than 200 investors have done their first ever angel investment through the IPV platform. Though the market condition in general is not investment friendly, there are also huge opportunities for certain sectors and IPV is working aggressively to identify such sectors and bring forward the best startups in these segments to its investors.
Which sectors are seeing traction from your angel network?
What history has taught us is that an economic downturn or crisis also presents opportunities. New product solutions are devised to overcome challenges in the crisis. Companies such as Uber and Airbnb rose from the 2008 financial crisis capitalising on need-gaps in that environment. Similarly, certain trends which were already in the works, like e-sports, online delivery or edtech have seen a sharp acceleration in the current environment. Though IPV is sector agnostic, the pandemic has led to increased traction for these and other sectors including health tech, media and entertainment and stay-at-home fitness. Their demand in the market has led to outstanding gain in investor attention. This pandemic has made us value distance-friendly ideas even more. Online centric businesses are receiving better feedback, and is reflected in the type of businesses getting funding from IPV.
You have invested Rs 20 crore across five startups in the last 45 days. What is the pipeline looking like for IPV?
IPV has invested this amount in five startups – Milkbasket (online grocery), Phable (health-tech), Toch (media-tech), Pedagogy (edtech) and FabBox (F&B – healthy snacking). We will also be investing `10-12 crore in six startups soon.
What kind of due diligence process are you following, specially keeping in mind the current situation?
IPV follows a stringent five-stage evaluation process. The due-diligence starts right from the time the startup is added to our evaluation process. Each startup is reviewed by a handpicked team of 15-plus industry professionals with deep investing experience. Positive voting for the startup is followed by live interaction between the founders and the IPV core team and only then the startup gets an opportunity to present to IPV investors. We also solicit feedback from our diverse investors’ base post the startup presentation that gives us excellent data points to conduct deep due diligence on key success factors and risks.
How many angel investors are in your network?
IPV has experienced exponential growth in its investors’ base largely driven by positive word of mouth from our
members and founders of our invested startups. In less than 18 months, we have more than 1,000 actively engaged investors on our platform making us one of the largest angel networks in the country. IPV is also supporting some of the leading engineering and MBA institutions run alumni investment networks and consequently building a strong ecosystem of quality startups, informed investors, strong due-diligence processes and best investment practices.
How do you see angel investment getting back on its feet in the next 12-24 months window?
We at IPV strongly believe that there is no better time to invest in startups than now. By investing in startups now we are giving them liquidity for next 12-18 months where they get a chance to build strong businesses in a cost-controlled environment. VC firms had raised significant amount of capital leading up to January 2020 and they will also be on the lookout, sooner than later, to invest in startups which are expected to succeed in current economic and social environment.