At a time when the Indian startup space is going through a funding winter, marked by investors tightening their purse strings, angel investments in fledgling firms have maintained their momentum.
While overall deal volumes among startups have fallen, investment activity among the country’s most-active angel investors have been relatively steady.
We Founder Circle (WFC), a Mumbai-based network of angel investors, emerged as the most-active angel investment platform for the second consecutive year in 2023 with 82 investments.
This is up from 71 investments a year ago, according to data from Tracxn, a market intelligence platform.
“Our vision is to create a multi-stage global investment framework to encourage innovation and ideas from a pre-seed stage to a growth stage,” said Neeraj Tyagi, co-founder and chief executive officer (CEO), WFC.
Earlier this year, WFC had launched startup marketplace platform Invstt.com. Tyagi said this has allowed the firm to invest in around 100 startups.
WFC also launched two angel funds in 2023.
“In the coming year, we will be investing in at least 200 startups and catalyse their growth through our multiple funds,” he added.
Gurugram-based Inflection Point Ventures (IPV) took the second spot in the list of most-active angel networks in 2023.
The firm invested in 47 startups during the year, compared to 53 in 2022. Investment platform Mumbai Angels came in third with 18 investments during the year, compared to 31 deals in 2022.
The increased investment activity among angel investors comes at a time when Indian startup funding has fallen 72 per cent year-on-year (Y-o-Y) to a seven-year low of $7 billion in 2023.
This compares to $25 billion that startups raised in the previous year, Tracxn data said.
Simultaneously, the total volume of investments has followed the funding trend.
“We think this is the best time to invest, when good businesses run by strong founders are available at attractive valuations,” Ankur Mittal, co-founder, IPV, told Business Standard.
“We are a platform of CXOs and family offices, who have seen such ups and downs in respective businesses but also recognise opportunities.
"This is also the time where our strong due diligence-led approach can make a difference in the months to come,” added Mittal, who expects investments to pick up in 2024.
Similarly, Nandini Mansinghka, CEO, Mumbai Angels, said that the firm is planning to deploy more than Rs 200 crore in over 50 firms this financial year.
“In the next three-four years, we are targeting to deploy Rs 500 crore per annum to build an overall portfolio of over 500 companies,” she said.
Despite the economic uncertainties, investors said innovative Indian startups continue to present promising growth opportunities.
Emerging technology, such as artificial intelligence (AI), blockchain, and internet of things (IoT) are paving the way for disruptive business models, fuelling investor optimism.
“We are seeing an increasing instance of startups catching market trends way before they become mainstream, both in the technology and consumer spaces,” said Mansinghka.
Going into the New Year, startups demonstrating innovative solutions, disruptive technologies, and a clear path to profitability are expected to find favour among angel investors.
“Our investment thesis is always driven by investing in the right businesses and founders.
"It has yielded us great returns even in 2023.
"We avoid following any trends but expect continued focus on businesses with a well-defined path to profitability,” said Mittal.
