Mumbai: Over the past decade, many angel investors in India have started their own venture capital funds in the belief that they can better capitalize on their keen eye to spot companies that can make it big. Mint profiles four individuals who are investing, or have announced their plans to invest, crores of rupees in their own funds this year, in the hope of strengthening the start-up ecosystem and earn good returns from exits when the time is ripe.

SERIES A FLOW

FOUNDER: Rehan Yar Khan

FUND: Orios Venture Partners

FUND VALUE: 300 crore

SET UP IN: September 2014

FOCUS: Domestic technology companies

Rehan Yar Khan has founded three companies, been an active angel (individual) investor and a member of angel groups like Mumbai Angels and Harvard Business School (HBS) Angels India. He has invested in 19 global software companies including Druva Inc., ANI Technologies Pvt. Ltd (Olacabs), Jigsee Digital Media (India) Pvt. Ltd (acquired by VuClip) and PrettySecrets.com.

The funds for Orios Venture Partners have been raised solely from domestic sources. The Small I

Rehan Yar Khan.

The fund also has an advisory board of industry veterans that include Rajan Anandan, managing director of Google India Pvt. Ltd; Anupam Mittal, founder of Shaadi.com; Shujaat Khan, managing director of Blue River Capital Advisors (India) Pvt. Ltd; and Raj Chinai, co-founder of HBS Angels India. The board members are active investors and are looking to add value to the fund’s investing, business strategy, and entrepreneur mentoring process.

The fund made its maiden investment of 15 crore in Ziffi.com—a Mumbai-based appointment-booking portal and second investment of 45 crore in Sapience Analytics Pvt. Ltd, a Pune-based workforce management software maker.

LOANED-OUT FUNDS

FOUNDER: Rahul Khanna

FUND: Trifecta Capital Partners

FUND VALUE: 300 crore

SET UP IN: To be launched in 2015

FOCUS: Tech and online firms that have already raised funding

Rahul Khanna is managing director of venture capital firm Canaan Partners India, where he manages investments in companies like AdNear Pte Ltd, Equitas Microfinance India Pvt. Ltd, Loylty Rewardz Mngt Pvt. Ltd and Naaptol. Prior to that, Khanna was an investment partner in Clearstone Venture Partners.

Rahul Khanna.

Venture debt is a new asset class, provided by the likes of Silicon Valley Bank—a California bank subsidiary and the commercial banking operation of SVB Financial Group, which operates as a non-banking financial company (NBFC) in India.

Trifecta Capital is an alternative investment fund, which will technically make it the first venture debt fund in India. The fund awaits approval from market regulatorSecurities and Exchange Board of India, which Khanna expects by the year-end.

According to him, venture debt providers combine their loans with cashless warrants, or rights to purchase equity, to achieve the target returns for the asset class. Venture capital firms and NBFCs provide debt via structured deals wherein the investor has an option to convert his warrants into equity after a threshold period. Also in some cases, when firms are raising equity capital, venture debt funds provide debt against the raised equity capital.

In the case of Trifecta, along with the investments made through debentures, the fund will also take a small equity option through warrant rights that would be typically 10% of the amount invested. It is looking to deploy 100 crore each year, which would translate to 12-15 investments. “The fund will be looking at investing anywhere between 5-15 crore for 16-18% borrowing, compounded annually, in firms in the technology, consumer and Internet space that have already raised a first or second round of funding," Khanna said.

BACK-TO-BACK BETTING

FOUNDER: Sandeep Murthy

FUND: Lightbox Ventures Management Ltd

FUND VALUE: $100 million

SET UP IN: 2014

FOCUS: Mobile, healthcare, e-commerce start-ups

Sandeep Murthy founded a company when he was just 24, but the venture failed. Four years later, he went on to manage investments for Sherpalo Ventures, backed by Ram Shriram—one of the first investors in Google Inc.—and Kleiner, Perkins, Caufield and Byers (KPCB). During that stint, Murthy evaluated companies in the consumer Internet, mobile and renewable energy sectors in India. He serves on the board of companies such as Cleartrip Pvt. Ltd, PayMate India Pvt. Ltd, Inmobi Solutions Pvt. Ltd and GreenDust Pvt. Ltd.

Sandeep Murthy (centre).

Lightbox has raised funds only from overseas institutional investors. It is looking to make seven-eight investments in mobile, healthcare and e-commerce firms. The company has four partners—Siddharth Talwar, an angel investor who founded and sold Evolv to technology education firm NIIT Ltd and Prashant Mehta—the former chief executive officer (CEO) of Komli Media, a digital media technology platform.

Sunny Rao and Jeremy Wenokur are the US partners. Rao is currently CEO of Zoomin.com, an online photo service firm, and was also co-founder of Half.com, an online portal for sellers that was acquired by eBay Inc. for $350 million. Wenokur was a co-founder of Web directory NewHoo! (now DMOZ), which was acquired by Netscape Communications within six months of operations.

Lightbox Ventures II completed its fund-raising in October and is planning to invest $3-5 million in seven more firms in the next 10 years. The fund may also take re-investment decisions in the existing portfolio worth $10 million per firm at a later stage. Lightbox Ventures II made its first $2 million investment in Embibe.com, a Mumbai-based online test preparation portal specializing in engineering entrance exams.

SEED-LEVEL MONEY

FOUNDER: Anil Joshi

FUND: Unicorn Ventures

FUND VALUE: 100 crore

SET UP IN: To be launched by January 2015

FOCUS: Investing mostly in companies that offer social, mobile, analytics and cloud-based services

Anil Joshi is a former president of Mumbai Angels—an investment network of individual investors based out of Mumbai. As a member, he invested in about 20 firms across sectors. Some of his investments include those in Tonbo Imaging Pvt. Ltd (formerly Serial Innovations), HMS Infotech Pvt. Ltd (hotelogix.com) and ShepHertz Technologies Pvt. Ltd.

Anil Joshi.

Joshi announced the launch of his fund in January. He plans to raise 25 crore by January 2015. The fund will invest between 50 lakh and 5 crore in 30 firms across sectors such as social, mobile, analytics and cloud-based services. “We are looking at investing in companies for a period of three-four years and looking at exiting post that," he said.

Joshi is raising funds from high networth individuals within and outside the country. According to him, accelerators and incubators are creating an ecosystem for start-ups in India because of which the quality of entrepreneurs, the business model and evaluation has improved significantly. Joshi says he believes there is scope for 8-10 early-stage investment funds.

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