If this isn’t a positive cursor on India’s start-up evolution, then nothing else could be better – 500 start-ups – a leading start-up fund cum accelerator – who have so far invested in more than 360 start-ups across 20 countries (investing on an average of USD 50K to USD 100K) and have on its platform a tightly-knit network of more than 190 global mentors – is finally looking bullish on India and working to strengthen its presence in the country through hiring a full-time team to identify potential Indian start-ups and coordinate with its Silicon Valley based headquarters.
DARE caught up with the very busy Paul Singh – one of the three co-founders of 500 start-ups (the other two being legendary Dave McClure and Christine Tsai) during one of his whirlwind tours in India – meeting up with various angel investors here and sharing their ‘Moneyball Angel Investment’ strategy. 500 startups see India as one of the countries they’ll be investing in. In this interview, Paul Singh lends his thoughts on the Angel Investment scene in India, crowd-funding, domains that he’d be interested in investing and 500 start-up’s route-map in India.
Speaking on how and why 500 startups was initiated, Paul Singh says, “We began with the inherent belief in the potential and power of start-ups. We believed that if we built a platform offering capital, usable design, customer-focused metrics and strong online distribution we could really empower these internet-based young ventures to take that next leap – or ‘blow them up’, as we officially say at our platform! Our first fund was for about USD 30 Million which took us almost a year to raise. The follow-up fund was for USD 50 Million, which we managed to raise within few months. We started operations a little before two years. So far we’ve invested in 360 companies across 20 countries and have made around 20 exits already. One of our first investments – Wildfire Interactive – got an exit at an investment of USD 350 Million”.
A safe assumption among start-uppers is that investors identify potential businesses by actively following-up on the new entrants into the start-up ecosystem and the novelty of their ideas. Paul Singh and Co-founders - Christine Tsai and Dave McClure, completely contradict this behavior by strictly turning down direct applications for investment. “We only screen deals that come to us through strong referrals amongst our partners and mentor networks. We are firm believers in mentors and investors supporting start-ups in the same or closely-related domains in which they have gained proficient professional experience as that ensures careful analysis and knowledge of the start-up’s potential”, says Paul. 500 Startups believes in extensive track data streams on entrepreneurial activity across the world. “Indeed, at any given point, we almost track 40,000 founders and try to study their projected business paths. Post identification, one of us three co-founders chat with the identified start-ups and initiate some basic due-diligence. Thanks to our standardized legal and diligence processes, we on an average are able to close a deal within about 2 weeks of it being identified”, says Paul.
500 Start-ups believes that start-ups are at core of any economic development and so the angel investing activity will continue to grow strong. Speaking on the Indian Angel Investment scene, Paul believes that the scenario in terms of risk appetite, investible talent and the corpus and resources available are definitely getting better and that is a big reason behind their seriously considering the Indian market. “It takes time for the eco-system to get built, and now we see that this ecosystem is all set to thrive. We are noticing this trend of super angels rising from angel networks in the country which again reflects the maturity of the ecosystem and more evolved investors, willing to take more risks! We are willing to partner and co-invest with existing investors”, says Paul. “Our preferred domains for investing are areas that include Web Infrastructure, start-ups helping SME and Middle-level companies and Family-targeted start-ups (which could be in domain of say health, education and related fields)”.
Talking about crowd-funding as an interesting way of funding start-ups, Paul sees it as refreshing development as it really facilitates more development for start-ups across the world. “But then, start-up funding is now no more just about the capital. It is also more about the functional expertise that an effective angel can bring to the table. So I guess even crowd-funding at the end of it will only help to up the ante for investors”.
500 start-ups have already made around 5 investments in India and are on to meeting some leading angel investors and investor groups in the country, apprising them on some of their investment philosophies as well as evaluating feasibility of making joint investments. “I have been making lot of visits to India lately. We have already identified one person who will be leading our presence here and would be appointed soon. We’ll also be expanding the team as the investment activity picks up. I have not come here with a predefined investment limit. We are open to invest in possibly all good opportunities”, says Paul.
Author of the article, Poonam Kulkarni