Silicon Valley’s AngelList at work on India-dedicated fund
‘The Collective’ will deploy about ₹1 crore each across 60-80 companies annually and give access to quick capital to its Syndicate leads.
Sponsors of the fund include, Flipkart’s cofounder Binny Bansal, Salil Deshpande of Bain Capital Ventures, Matrix Partners’ Avnish Bajaj, Tarun Davda and Vikram Vaidyanathan, Navroz Udwadia of Falcon Edge Capital, DST Global’s Rahul Mehta as well as venture funds like Kalaari Capital, FJ Labs, Beenext and others.
The Collective will deploy about ₹1 crore each across 60-80 companies annually and will give access to quick capital to its Syndicate leads. Since the launch of AngelList India Syndicates a year ago, the platform has had 15 syndicate leads and invested over $5 million across 50 Indian startups like BharatPe, Hala-Play, Yulu Bikes and Open Bank.
“India is our fastest growing international region. We have great access— seven markups in less than a year, and set up this fund to let institutional capital back our top India syndicate leads,” AngelList’s founder Naval Ravikant told ET. Ravikant, who has now taken on the chairman’s role at AngelList, is one the most influential angel investors in Silicon Valley having spotted high-profile technology companies like Uber and Twitter in an early stage.
Utsav Somani, partner, AngelList India, Pankaj Jain, ex-partner, 500 Startups India and Nipun Mehra, who was formerly with Sequoia Capital, Flipkart, and Pine Labs would be on the investment committee of The Collective. “We wanted to empower our syndicate leads, who source allocations in hot investment rounds, to deliver institutional capital to talented entrepreneurs. This is not like a typical VC fund that’s driven by management fees. By 2020, we will target larger institutional sources,” Somani told ET .
Since angel funds is a category 1 Alternative Investment Fund, our investments are exempt from angel tax scrutiny as per Sebi rules, Somani said.
The development comes at a time when founders of early-stage startups have raised concerns about the demands to pay ‘angel tax’ to authorities. The Department for Promotion of Industry and Internal Trade (DPIIT) is presently working on a definition of ‘accredited investors’, who may be provided tax incentives for investments in startups.
In the US, AngelList runs Access Fund which was launched in 2016 and is now in its fourth edition.
AngelList has created a pool of entrepreneurs and investors in India such as Kunal Shah, founder of Cred and Freecharge, Jitendra Gupta, MD at PayU and founder of Citrus Pay, Girish Mathrubootham, founder & CEO of Freshworks, Ash Lilani (partner at Sama Capital) and others as syndicate leads. Somani was chosen as the India advisor for AngelList India in 2017.
Essentially, the syndicate lead puts his or her personal money in what works like a mini fund and then approved backers of that syndicate pump in their capital behind them which AngelList deploys across startups. At the time of exits, the lead angel of the syndicate gets a share of the profits from that fund.