Accelerator and incubators have been the buzzword in the Indian digital ecosystem this year. Right from the venerable 500 Startups to GSF, 5 ideas and Kyron, a $50 mn accelerator floated by tech veteran Lalit Ahuja, all seem to have bought into the India story. While most of the incubators/accelerators usually incubate or fund at least 5-6 startups, a year old incubator Angelprime believes in incubating only 2-3 startups.
The idea behind placing lesser number of bets is to get deep and dirty. Hands-on, in other words. Often, Angelprime works with entrepreneurs in two phases – the early incubation phase and the seed round fund. Recently, Mayfield India fund which has dedicated $111 million to invest in early stage companies invested in AngelPrime, as did Chamath Palihapitiya’s Social+Capital Partnership (who also led the series A for AngelPrime’s first company, Ezetap).
Managed by three partners – Bala Parthasarathy, Shripati Acharya and Sanjay Swamy, the incubator has also brought Pramod Varma on Angelprime’s technology board. Varma was the Chief Architect for the UID (Aadhaar). In an Interview with NBW, Sanjay Swamy, Managing Partner of AngelPrime laid out the plan. Edited Excerpts.
NBW: How much equity does Angelprime usually ask of startups in exchange of seed capital? What degree of engagement and mentoring does Angelprime offer to its incubatees?
SS: AngelPrime is a very hands-on incubation model – the three managing partners, Bala Parthasarathy, Shripati Acharya and Sanjay Swamy have all been entrepreneurs and we approach startup incubation as if we were co-founders. Additionally our advisors include people like Dr. Pramod Varma who worked on the UID project and provides very high-end technical knowhow to all our companies – again stressing the hands-on experience.
Entrepreneurs often come to us with ideas and we work with them in two phases:
– Early Incubation Phase – we work alongside the entrepreneurs right from the ideation phase to conceiving/prototyping the product, actively validating it in the market – often leveraging our rolodex of connections, helping find the right co-founders for the team. During this 1-4 month period we cover all operating costs.
– Seed Round Phase – Post the early incubation phase, based on the success, we provide the initial capital of Rs 1-3 crores as required by the company and work on building the team up and the initial product development and go to market strategy. Towards the latter part of this phase (which often lasts 8-12 months) we also help the companies raise their Series A round of funding. This is still a very hands-on involvement on our part.
– In some cases entrepreneurs may have worked on the early prototypes themselves, in which case we rapidly explore the fit between our model and the Seed Round phase.
We typically only work with India-first and high-technology content businesses – ones where it is possible to build strong differentiation through technology. Unlike most others, we are not scared of building hardware and are developing some exciting products that are conceptually similar to Ezetap.
The equity we take is similar to what a regular Angel Investment for this kind of a round – and varies based on the amount of capital and the stage of the company and the caliber of the team.
NBW: So far Angelprime has funded three companies – will Angelprime become more aggressive next year in terms of funding more startups and which segments would be favourite ones?
SS: Our model has always been to work with 2-4 new companies on a 12 month basis – we will continue to work with a similar scale. Mobile/Tablet & Cloud are our technology focus areas – applications of this to a variety of domains including education, healthcare, social networking, commerce, payments, identity etc.
NBW: This year, the industry has seen a lots of incubators/accelerators coming to the fore – how do you see this trend and how Angelprime is different from others?
SS: We place a few big bets and work closely with the select entrepreneurs to help them navigate through the day-to-day strategic and tactical challenges, and mask the support functions. Others are placing a larger number of smaller bets (relative to the size of their funds). We hence have a very high bar – both in terms of what we take on and who we work with. Our success ratio has got to be significantly higher than most other funds – and we hence go the extra mile to try and ensure success.
NBW: From investor or accelerator point of view- which segments in digital space will lure accelerators/ VCs?
SS: Technology wise, we are seeing a tremendous opportunity in moving business processes from various architectures to a combination of Mobile/Tablet for the front-end and Cloud for the back-end. Business applications can vary from Healthcare to Education to Commerce to Payments to Logistics to Energy to ERP to what-have-you.
NBW: Tell us something about future plans of Angelprime.
SS: The NextBigWhat – that’s OUR focus too! We plan to continue to incubate 2-4 great startups with awesome entrepreneurs and are constantly looking for great people with huge ambitions and strong domain expertise.