The Indian startup industry seems to be on a roll. A recent report in a national daily has revealed that funds worth more than Rs 1,200 crore have been pumped in by high networth individuals (HNIs) into venture capital funds focused on helping early-stage Indian entrepreneurs.
According to the report, Orios Venture Partners, Zodius Capital, Your-Nest Angel, Kalaari Capital and Blume Ventures are the Venture capital funds that have received these investments. These VC funds have together raised Rs 4,360 crore, the report stated.
The above mentioned VC funds have the authority to invest in radio taxi companies, app-makers, food-ordering platforms and healthcare aggregators and such Internet businesses and other Indian startups. In case of some of the funds, over fifty percent of the money raised has been contributed by high net worth individuals.
A high-net-worth individual (HNI) is a person with a high net worth. In the western, and primarily American, private banking business, these individuals typically are defined as having investable finance (financial assets, excluding primary residence) in excess of US$1 million.
This particular trend of investing in startups has been started by businessmen and top executives. This trend is further confirmed by the ET CXO poll on startup investing. According to the poll results, over 60% of the 100-plus CXOs polled revealed that they have already invested a portion of their wealth in startups and another 25% expressed interest in investing in future.
Even though the HNI response to startup funds has been pretty phenomenal, but awareness level about these funds is still very low. These funds haven’t yet faced the popularity enjoyed by equity or real estate funds.
One of the main reasons for increase in investment is that the Individual ticket sizes have also grown over the past few months. Nowadays, an average investment ticket size is of Rs 10-20 crore as the Wealth managers seek larger investments because these funds have a high failure rate.
How does these first batch of funds delivers in terms of returns, is a thing that we will have to wait and see.