InnoVen Capital, Asia’s leading venture debt firm, announces the release of the ‘India Angel Report 2016’, the latest edition of its annual report analyzing investment trends by major angel groups in the country. The Report has been prepared in collaboration with the Association of Indian Angel Groups (“AIAG”) and is based on data provided by the following member angel groups– Mumbai Angels, Indian Angel Network, Chennai Angels, Hyderabad Angels and Calcutta Angels.
The Report reveals that deal activity by the angel groups grew significantly in FY16, amounting to Rs.1137 Mn in commitments across 69 deals, as compared to Rs.703 Mn across 47 companies last year. Valuations also rose, with the median pre-money valuation in FY16 at ~Rs.100 Mn, up 10% over the previous year.
In our ‘Startup Outlook Report 2016’ released earlier this year, we found that NCR had emerged the preferred destination for entrepreneurs, followed by Bengaluru. The latest Report reaffirms these findings, with NCR accounting for ~36% of angel deals. Reflecting India’s place as one of the largest consumer markets in the world, B2C startups attracted over two thirds of angel group investments, with consumer internet, food and e-commerce as top sectors. In the B2B space, startups in IT / ITES and marketing / advertising sectors received majority of the investments. A strong preference for revenue generating startups observed in recent years continued in FY16 , with ~71% of the startups backed by angel groups generating revenues.
This year, we also demographically analyzed startups and founders funded by angel groups. Our findings reveal that the average startup had two co-founders, and one-fourth of all startups in the sample had at least one female co-founder. Interestingly, the average founder had 8 years of experience prior to starting up and 28% of all founders were found to be serial entrepreneurs. Looking at academic backgrounds, ~67% of founders were engineering graduates and the majority of them had a post-graduate qualification, most commonly an MBA. 46% founders had an MBA whereas 15% had a post-graduate qualification in a technical subject. India’s elite academic institutions were well represented amidst founders – 23% of all engineering graduate founders were from the IITs, while 16% of all founders with an MBA were from the IIMs.
At an overall portfolio level, an analysis of over 150 investments made by angel groups between FY05 and FY15 reveals that of FY16, angel groups had exited 18% of investees, while 7% had wound down, with the remainder still operational, but not exited. More than 50% of these companies have raised follow-on rounds of funding within which 22% raised multiple rounds. Historically, almost 40% of investments made in companies in any given year have gone on to raise further equity eventually with 5% of the portfolio companies having raised more than 5 rounds of capital.
Commenting on the findings, Mr. Ajay Hattangdi, Group COO and CEO India said, “The India Angel Report is the product of our ongoing inquiry into the dynamics of the various components of the venture capital landscape. While by no means comprehensive, the Report seeks to provide some understanding of the trends within angel investing in India. It is meant for use by practitioners in the angel community, by venture capital firms who see the valuation trends as a bellwether for their own deal pipelines, by policy makers who have begun to appreciate the role of angel investments in the development of the entrepreneurial finance system, or by those generally interested in the venture capital industry.”
About the Report
The ‘InnoVen Capital: India Angel Report’ is an annual report that provides analysis and trends on Indian angel and angel group activity. The report has been prepared by InnoVen Capital India Private Limited (“InnoVen Capital”) in collaboration with the Association of Indian Angel Groups (“AIAG”) and is based on data provided by the participating angel groups to InnoVen Capital. The following angel groups participated in this edition of the report – Mumbai Angels, Indian Angel Network, Chennai Angels, Hyderabad Angels and Calcutta Angels. The full edition of this Report can be read here: India Angel Report 2016 and infographic version at http://goo.gl/lQ7mmB. The previous edition of the Report can be read here: India Angel Report FY15.