The mood within India’s startup ecosystem is grim – venture capital firms are keeping their purse strings tight and companies are cutting costs. However, the investment platform ah! Companies says it’s business as usual and she is looking carefully 300-400 proposals each month.
While the slowdown in startup funding is evident, the early-stage investment category continues to see plenty of action – around $4.5 billion in capital is awaiting deployment.
Ah Mumbai headquartered! Ventures is one of those early-stage investors that sees its business activity remaining constant. “From a network point of view, it’s like nothing has happened, because many startups come to us and we listen to them”, Amit Kumar, Partner, ah! Ventures tells Your story.
In June, ah! Ventures has announced the launch of its first angel fund with a corpus of Rs 100 crore and a greenshoe option of Rs 50 crore to invest in early-stage and pre-Series A startups.
This new fund will be independent of the sector and will invest Rs 3-5 crore each in 30-35 startups.
ah! Ventures, launched by Abhijet Kumar and Harshad Lahotistarted its investment activity in 2012-13 and has so far been part of 140 deals worth Rs 286 crore.
Typically, it enters the initial stage of investment with an amount in the range of Rs 3-3.5 crore.
Amit claims that only 11 seed investments, out of 104, were unsuccessful.
An industry-independent platform, ah! Ventures has backed startups in fintech, edtech, B2B (business-to-business), media, and e-commerce, among others.
The investment company had approximately 14 outputs while 28 of the startups in its portfolio raised a follow-on funding round. He has backed companies such as online fresh fish and meat retailer Zappfresh; baby products and parenting platform Baby Chakra and customer engagement company Exotel, among others.
“We believe in giving anyone the opportunity to come to our platform and as a start-up investor, it’s best to be independent of the industry,” says Amit.
India has several angel investment platforms such as Indian Angel Network and Mumbai Angels along with other accelerators and incubators. According to Amit, the strong point of ah! Ventures is its startup curation process.
As part of its investment process, ah! Ventures generally looks at the 3 Ps—people, product and potential. Amit says it is very important to ah! Ventures to understand the mindset of founders about their passion for running a business.
At the same time, ah! Ventures says it also examines how a startup’s product or service can be turned into a feasible business in the marketplace and ultimately, the potential of those startups.
Amit says, “We don’t close a deal until our industry experts give their opinion on any startup.”
The due diligence process of ah! Ventures, which is done both internally and externally, is rigorous, adds the co-founder.
On top of that, a large portfolio of investors on its platform provides the specialized expertise where at times its core team of venture capital partners may not be properly equipped.
“We have Indian and foreign investors who are happy to invest in startups. There are now more people joining this asset class,” says Amit. According to Ah! Ventures, investors are largely HNIs, UHNIs and family offices.
Asked about advice for startup founders, Amit says the community tends to be enamored with the product without necessarily focusing on market validation.
He says it’s important for a startup to create value before they even start looking for valuation. And finally, Amit wants these entrepreneurs to focus on the financial and business model of their startups.
“The only tangible thing for any business is the numbers,” Amit points out.
The startup ecosystem has seen wild swings from 2020 to present as funding so far in 2022 has been subdued from highs in 2021. According to Amit, investors are cautious, but there are opportunities for the founders to raise capital.
“The VCs have the money, but it will still take time for the positive attitude and feeling to come back,” says Amit.