The CII ( Confederation of Indian Industry) had organised an Angel Investment Masterclass for corporate executives and businessmen today. I was invited to join the panel as a speaker in this virtual workshop. While talking with fellow panelists , I realised that the startup funding landscape in India needs a disruptive model if we need to make adequate risk capital available to entrepreneurs .
For a country of 1.4 billion people , India has only about 10,000 angel and seed investors. With 40,000 startups registered with the government and newer startups getting established everyday , a great opportunity awaits Fintech entrepreneurs who can find a way to create a new asset class which can be positioned at individuals who are interested in making small ticket investments in this asset class.
Mutual funds industry has made great progress over the last few years and despite chit fund scams the mutual fund industry has managed to grow their AUM ( Assets under management) and their investor base. Keeping this is mind , we must find ways for creating a Systematic Investment Program for small investors in a new instrument for Angel Investing , the corpus of which will back startups and seed stage companies . The entire scheme should be able to provide liquidity as well to investors and the product idea appears to be desirable , feasible and viable.
The same model could be extended for investment by students in student and other startups. The large base of youth must be empowered to invest in this asset class. The pooled money could be deployed where student startups can get priority for investments.
The Indian startup eco system is making rapid progress and is maturing by the day. We now have 50+ unicorns and another 50 in the making . If we need to make rapid strides in creating a robust infrastructure for innovation and global leadership , it is important that we create an eco system that would ensure adequate and faster access to risk capital.
It is also important to provide an equal opportunity to small investors who are completely unaware of this asset class which can provide much better returns to investors in comparison to other conventional investment products.
With blockchain and crypto currency getting more traction and usage , there cannot be a better time than now to open up investments in this asset class ( Seed & Angel Investments) to small investors.
I have always maintained that the small investor in the Indian Stock Markets is the most risk taking venture capitalist . It is time to give them the freedom to take risks in this asset class. I think the number of angel investors could go easily to a million people in the next 3-5 years , if we can create the right products. The total corpus available for investment in startups could go well over $5 billion in the next 3-5 years from an absolutely new and untapped source. Hope to see this transformation soon.
