Recently Mumbai Angels, one of India’s premier angel investor started a Goa chapter. The group is powering the Goa Angels, a network of local industrialists who will be financing new startups in the state. It is a significant development that promises to invigorate the local startup environment. In the interview, Nandini Mansinghka, chief executive officer and managing director, Mumbai Angels Network explains what angel investing is all about. She says to Shoma Patnaik that, she is confident of Goa becoming a startup hub in next few years
- What makes the Mumbai Angels come to Goa, how bullish are you of the investing prospects?
Mumbai Angels Network (MA Network) partnered with Goa Angels Network to launch the state’s angel network. We see tremendous potential in growing Goa as an entrepreneurial hub, both in terms of startups coming out of the state and a deep healthy ecosystem of angel investors looking to partner and invest in local innovative businesses.
- Have you made any assessment of the startups in Goa? Is there a particular sector that interests you in providing investment support?
We as a network are committed to building the startup investment ecosystem in all large cities in the country. The ecosystem has two parts to it. It includes startups from that city or state and investors from that state who are comfortable and passionate about investing. With the Goa government’s active programs we are confident of the state becoming a strong hub for startups in the next few years. Our role is to make sure that investors are ready as these startups take shape, build out and have access to investments.
- Goan businessmen prefer to self-fund. They may not be ready to take the angel’s route. How will you address that possibility?
The new economy is changing. It is being built by young, passionate entrepreneurs with minimal access to legacy capital. The next wave of wealth will be created by people who might or might not have inherited wealth but have the grit and ideas to build from scratch.
Goa, like all other startup ecosystems, will be built both by legacy businesses and new entrepreneurs who will look for external investments at every stage of their growth. This is the role we play as a network. Bringing together these new age businesses to investors looking to invest in niche, innovative businesses is what we do.
- Local startups are worried over losing control after going in for angel funding. How can their concerns be addressed?
The new format of building businesses is to scale rapidly once the initial idea is proven. This requires a completely different mindset and skill set than how businesses have been built traditionally over the past century. In a world without borders, location of where a business is less critical than ensuring the business scales and competes on a country wide or global scale to thrive. The new focus is on wealth creation rather than control which the new age entrepreneur is betting their efforts on. The idea is, do you want to be a 60 per cent owner of a company that does Rs 10 crore revenue or a 20 per cent owner of a business that does Rs 100 crores?
- What mentoring services do you plan to provide to Goa Angels for it to become a robust investor?
Any of our members across cities has access to the same platform they can bank on as they invest. Each Goa Angels member has access to our best in class curated start-up pipeline, evaluating and deciding on which companies to invest in with like-minded peers, access to our research and due diligence before and after investing and our portfolio management for the companies till they exit our portfolio.
- Does Mumbai Angels have previous experience of investing in a Goan company?
We haven’t invested in any Goa based startup yet. We however see an increase in companies applying to us for funding as the local startup ecosystem matures.
- Do you foresee non-Goan investors being part of Goa Angels?
The format we follow is that of local investors from each city having access to all companies and events across all chapters. In that format, we expect investors from other chapters to participate in the Goa events if they are in Panjim during those dates. Otherwise, it is a nationwide network of 300 angel investors collaborating and co-investing in start-ups
- Startups are interested in knowing the exit policy of the angel investor. What exit policy do you follow?
Exits for startups happen in several ways. Most often the company raises the next round of funding from a venture capital fund or a larger player from the same industry. Companies tend to raise several rounds of funding over the next three- five years as their funding requirements increase.
- The startup boom in India is about three years old. How strong is the momentum? Or are things cooling off?
The new India will be built over the next 10 years by companies who are not in existence today. All these companies will start off small by raising small amounts of money from investors at various stages. We are just at the beginning of this growth cycle. So nowhere are we close to things cooling off!
- How is the overall investment climate for startups currently?
We see a significant change in how startups are getting evaluated for funding today vs. the last few years. The primary change is that the ecosystem has become more matured which is resulting in investors asking more difficult and specific questions to the entrepreneur. It is no longer enough to come up with a business plan to burn funds over the next two-five years in the hope of building a set of audiences. Investors now look for demonstrated revenue and profitability plans. Once that is established, we see no dearth of capital for the right start-ups to get investments in their ventures
- In general, how has 2018 been for India startup inc?
The year 2018 is seeing a strong inflow of startup funding. We as a network see between 4,000 to 5,000 companies every year looking for funding. Of these we showcase about 50-60 companies to our investors. Overall too the ecosystem is seeing an increase in the number of quality startups that can get funded at their initial funding rounds
- How important are angel investors in establishing the right ecosystem for startups?
Angel investors across the globe are the critical first set of external investors that partner with a founder. Companies funded by angel investors are looked at more positively by venture funds and the next level investors as they have gone through the rigour of being evaluated by professional investors. As we build out the start-up ecosystem building out the angel investing ecosystem is as critical as these are two sides of the same coin.