Those who want to become angel investors should be prepared to invest in a portfolio of at least 30 companies, said Nandini Manasingka, Co-Founder and Chief Executive, Mumbai Angels Network- one of the oldest angel investment platform in India. Said in an interview. Mint. Edited excerpts from the interview:
What is Mumbai Angels?
Mumbai Angels is a private investment platform. Most of our investments are in Series A stage seeds. Startups come and pitch our members and some get funded.
What process do you follow?
We get around 800-1,000 offers every month. We conduct a preliminary screening process and allow 10-15 companies to submit their business plans to our members. Now, it happens online, given the pandemic. After this the members usually invest in 4-5 companies. At this stage, we begin third party due diligence and complete the paperwork for the investment. We currently have a portfolio of 190+ companies out of which around 100+ have seen exit/next round of investment. Successful investments include Purple, Axotel, Vahdum Tees and EV (electric vehicle) ride hailing company Blue Smart.
Once the investment is made, we monitor our portfolio companies and have regular discussions with VC funds/family offices and corporates for the next round of investment. After 12-18 months, successful startups move on to larger rounds of funding, sometimes raising money on our platform itself. The average tenure of investments made by our members will be 3-4 years. Last year, we invested approx. 80 crores and we hope to touch 500 crores per year in the next 2-3 years.
What does your membership look like?
We currently have around 650 members from across India and globally. To become a member, you need to pay an initial fee 1.5 lakh and annual fee 55,000.
Those who want to become angel investors should be ready to invest in a portfolio of at least 30 companies and should allocate at least 5 lakh per investment. It at least translates into a portfolio of startups 1.5 crores.
Since startup investing is risky, your actual net worth should be much higher than 1.5 crores.
What kind of returns do your members get?
For our portfolio, the Internal Rate of Return (IRR) is around 25-30% over a period of 15 years. Only 1 in 30 startups actually makes it and you should be prepared to lose money on the other 29.
Is Investing in a Startup Bubble?
Yes, chasing money is foolish for companies without a business model. But overall, no. Today’s increased interest in this segment represents a structural shift in the Indian economy.
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