Kerala's Angel Investment Landscape: Opportunities, Insights, and Challenges

This panel discussion features leading Kerala angel investors discussing the state's investment landscape. The panelists share their experiences, investment strategies (including average check sizes and sector preferences), and advice for both aspiring founders and angel investors. Key themes include risk assessment, mentorship needs within the Kerala startup ecosystem, and the benefits of joining an angel network versus becoming an LP in a VC firm. A panel discussion concluded, with thanks given to all participants and the moderator, Santos. Awards were presented. start. you could probably keep this right? Hey, thank you, Santosh. Uh, good to be here. Um, to give you a background. Uh, i'm a part of, uh, about four or five different angel networks, Uh, in India and outside, uh, a few of them outside the country and uh, but in the context of, uh, huddle, I would say what is most relevant would be sparks. Angel network, which is an angel network mostly comprising of people from Kerala. We have a few people outside Kaa as well We've done probably 50% of our more than 50% of our investments would be Would have been done in Kerala but we are open to investments everywhere Uh sparks um, we've done 17 investments so far Average check size quite small uh 40 50 lakhs probably 50 lakhs right now Uh And uh, we're sect di-agnostic. We come in very early um, probably that's why that's And really excited to be here. So this is the third huddles I am here. Uh, my background is into banking and financial services. I am based out of Dubai. Uh, Phoenix Angels got started in 2022 So we are just new compared to all other investors. So we have invested around into three companies. uh, we invested into mare. That was our F investment. Our average check size is one cr. So we' have invested around four to five CRes as of now. That would be like half a million dollar. Uh, uh, 50% of the, uh, investors are from Dubai and 50% from Trish. So because we started from Trish, uh, 50% mostly are from Trish based out of Trish in from Dubai and Trish. So we are looking to any kind of sectors basically not specifically into tech sector or there is no specific sectors actually. And uh, that's it. And just for clarification, the term Phoenix in all right. So I'm AIt m entrepreneur by profession and uh about the network, Uh, uh, k angel network. I'm happy that we we formed it. uh, as was the founder president Uh with a ample support from my colleagues. Roy is here come and uh, we founded it in uh, November 1st of 2019 Uh k days when was also part of so he's part of the many networks that is so um, but typically effectively 2020 you can see we are a n network just four years old s 70 plus members, uh, out of which three women uh and uh, deal subscription. I mean, yeah, we have done, uh, invested in 14 startups 24 deals. Uh, because many follow on deals and uh, uh, in this span of four years our collective investment, some of them are co-invested with other networks. Uh, so collectively cumulatively we have done $15 million. Yeah, uh, of which I think exclusively if you take the can part participation it would be about uh, I think 35 40% Uh, still yeah. so that's the kind of, uh, funding space that we have done. Uh, you have no, I think 24 deals in four years is a spectacular number. You might be one of the most active angel networks in K at the moment. Well, thankfully, you know, yeah, in fact, you know, the profile of our members are good. I mean, they all want to, they all realize this is a highrisk investment class, but you you don't want to go there now, Uh, but there are four family offices also part of this 70 members, which we we are very optimistic to take it to 100 within probably, um, the end of this financial year W all all Kerala family, the membership is, you know, uh, all spread out around Kerala. Uh, but principally kin Trandum and uh, yeah, but we have from everywhere, uh, anything else I did not mention a tech background. I started my career in Vikram Sarai Space Center and I was there for 9 years after that I got into entrepreneurship. Um, so so I was part of a company which we grew and then that was LAt acquired by Neelson Media. So after that, the, the thing is like this. The story is like this. So this must be sometime in 200 10 or something, you know. So there we used to see a lot of entrepreneurs coming up at that time. This, this, uh, Notion of Angel or, you know, it was like something like an investment, you know, that, that, that notion was not there in this region. And we had lot of entrepreneurs in, particularly in kin, Uh, so who wanted to scale up and the, there, there was no such option available here. And, um, but there were a lot of discussions on doing this, that, and all. So finally, we decided, a group of us decided that, you know, let us start something, you know, without, and the first one was almost a disaster. And we'll try to learn something by doing it rather than, you know, going into the theoretical part. So we started there and only one difference is that we created two things, one an incubator in canor, you know, it is on a PPP model. and also another thing, which is on a nonprofit model, uh, this angel model. Okay. So our model was that we will bring in liquidity so that this sort of investment, you know, this sort of entrepreneurship, we need this typ of liquidity is available locally so that the local economy will prosper. You know, that was the philosophy behind it. We started this. I think we are almost around 10 plus investments right now. And ticket size goes from maybe 20 lakhs to the the biggest one we have done is almost around 1.5 cr. Okay, so so that is where we are right now. And uh, me and Ajit. You know, we did something yesterday. I don't think we can announce it now. Okay. yeah. Okay, that's it. We are we are all over the place. You know, we have got investors in kin Bangalore Canor, you know, wherever, you know and we have mix of people like in traders. That is how we started. We told some few traders bas in K that we'll do something. Okay. And there was another story. also like we there was one guy who wanted to buy a boat, You know, he was a fisherman. Okay. And uh, we experimented this concept of you, you know, this sort of investment, you know, we gave him 30 lakhs or something, buy a boat and we we found out that this fisherman, one of the problem is that, you know, they are not good in financial planning. They may get all the cats in maybe two months and then remaining they don't have no fishes in the sea. So we put we put a CFO there for a fisherman that whatever money makes that has to come to him and then he will ensure that it is paid across zate. So the people who invested made around 12% return within two years. And that is the motivation of we of this And, and chillin is is it with that money that you bought? You have a as an asset class? See angel investment, you know, that's the highest risk asset class because I'm into mainly into uh, wealth management which I mostly focus on equities. So phys asset class like angel investment or real estate or uh, equities. I angel investment is the highest risk with highest reward. See if everything goes well, you get 10x 20x or 30x in 5 to seven years Otherwise, okay, but don't feel bad but but if you have patience and uh, if you do good due diligence and if you invest in the right sector, we look for normally see uh, like we look for a top-down approach where the where the government is spending more. See, for example now we are looking at defense wind and solar uh, water infrastructure. I think these are the sectors which we'll be interested now. So yeah, that's a very good insight for the founders, you know, try to follow proxy to these sectors which you'll be interested. See uh, previously the investment, what we have done we have done in Ev the more investment, which i told you we invested almost half a million dollar but we invested mostly 50 to 60% into charge moree charing. that's the biggest charging uh-EV company in Kerala right. So if you see asset classes everything is good. I say if if you had invested in Dubai two years back in two years you get 100% return See it's it all depends when you enter and when you exit right See that's that's an issue mean everyone enters at the right time but no one knows to exit which most of the time that's a problem right right. So even where angel investment see you need to have a good exit plan. See that's what in Kerala I don't I know how many of them I think you guys have done the more exit we've gotten lucky because we were there for a bit longer. Yeah. yeah see so you should see, I think seven to 10 years. So that's a patience you required. And and when you look at, uh, the folks that you talk to in Trure and in GCC region, do you see a difference in terms of the risk appetite towards startups Like which region is more is much better? Okay, see like sh was saying, see first he invested in a boat. So people are thinking, see people are thinking to get returns from next month. If you see the kind of investment or people here, they want investment from next month, some something like a dividend or whatever it is, whether it's 1% or 2%, they need something from next month. It is not possible in angel investment. And if you see, especially in Dubai in UA, see why the risk capitate is better. Because see, the per capita income is around $50,000. in Uae They sure it might be, So does have the highest number of HN in K according to Hurun rich list which got I'm trying to convince that's Reon One of our directors is from double horse. Okay, so we have like our network we have got from allied group pully is there right? so we're bringing in Good next generation traditional businesses into the world of startups Yeah, that's very exciting. Yeah. do that? Like did you have any two failed startups before that where I pitched a lot and I couldn't race I wanted to be on the other side of the table. Fair enough. Fair enough. So so now, you know you're you're maybe doing better on the other side probably. Uh, so let's say I'm someone who wants to get into, uh, investing in startups You know, I've got one option which is to join an angel network and uh, invest as an angel investor directly. Uh, another option I could potentially take is become an lp and put money in a VC firm. Uh, do you think for someone starting out on this journey one of these is more preferred than the other? Uh, it depends right. It's a function of uh, what the motivations are and what the orientation is also Uh, so if your motivations are purely financial, probably investing getting an allocation with the right fund is a smart idea, right Uh, but if you so I am in the ecosystem primarily to uh, learn to stay connected because after LBS I ended up starting a mining company and I've been in a very, very different space. So it is, I started out investing in startups and engaging with startups to maintain some kind of balance in sanity. So, uh, so for me, the learning was important. Staying connected with the tech world was important and that's what motivates me right now. So for someone like me, I don't think it makes sense to be an LP in a fund, but I understand class if you look at it because in terms of the risk factor, uh, as well as liquidity. So the, uh, if you invest in stocks listed stocks, it's only, you know, how much you make or not but uh, it's liquid all the time, right? So this is not uh, but the gains the are proportionate to the risk also, you know, and even some may fail but but still you can make up from the rest. So the allocation is important. What I would say is the allocation. What we tell everybody you know, you you allocate 5 to 10% of your portfolio, uh, you said 5 to 10%. Yeah, I mean, that's because yeah, of course that is for average risk profile, right? If your risk appetite is more, uh, you definitely go for more. Yeah. So, uh, for example, our current president Rindra Kam, he is not here. Now he would be probably on a much higher level. So it's it varies from person to but you you asked me for So I must speak from the averages, right? Abely, So this is how it is uh uh and of course, there's an inclination uh for people who have achieved something and and I'm like to give back uh but it's not give back in a charity mode, right it's it's a give-back with a profit motive definitely but and then there's also uh, the motivation of contributing in uh, you know other ways to to the progress of the startup by mentoring or investor connect or the market connect all that all those comes as part of the k of the of the angel sorry delete the Kerala for you. Uh, I know you have Phoenix Angels is pretty the new kid on the block, Uh, but based on your limited experience so far with startups etc in Kerala. Do you have any advice to give to the startup founders in terms of how they can help uh, mitigate risks for the investors and give better outcomes for the investors? Like what do you think is missing? Uh, in the Kerala startup ecosystem? Uh, specifically as an advis to startup founders. See I've seen, uh, see most of them have technical kno how but they don't have, they don't know how to lead a team or, uh, market the product Uh, and they don't have means what Whom have seen many of them doesn't have a proper vision. They should have also they should think even how to ex exit strategy. They should keep a exit strategy. Most of them doesn't have they have a vague idea, right? They don't have a long-term mission like to see as we we know to, for an engine investor to exit it takes 5 to seven years, at least. So they should have at least 10 years of vision what to do. And the problem is, another thing is I I feel there is a lack of funding also and they don't know. And many startups they don't use the funds properly, right? See if they get the fund, they might go and get a good office. See, you should know where to deploy the fund. They should have a clear road map of like like at least 12 to 18 months. So I think, uh, and I think even from Kerala startup Mission, I feel there should be some tie up with the angel investors or good people who are retired or like chared accountants to mentor these founders. They should be some way we, I think lot of mentorship is required because many of the startup they, they just passed out from college and they, they starting a business? Yeah. Yeah. I guess because of the immense talent that we have on, you know, the engineering and technology, I guess the focus also becomes too much in in that space, right? Like, yeah, you want to keep building amazing products and you kind of forget about, uh, the business, uh, part of it. And especially when you take external investment, uh, you essentially have a fiduciary responsibility to get returns for your investor. I guess that's what's missing. Yeah. Yeah. And I think, uh, as you said, me, I think I feel mentorship is very important for most of them. because and to retain talent is also difficult to the initial team because, you know when the lack of fund comes the people the initial founder team might live, right, Right. I've seen that. yeah, they want to exit and go got it. got it? Yeah. so that commitment, etc. All that. So see, you know, anyway, initially you'll have to burn a lot. So when the lack of fund comes, I have seen the founder team itself living only the founder will be there back the the other people want to exit their stake. These kind of things. I've seen a lot here now, right? I have I've been only for two years. I think they should be having more experience on this. So I I think Kerala startup mission and like angel networks, everyone together, we should do something for a long term. Yeah. So so maybe you know going back to angel networks aiT. I mean, you touched upon this briefly. Uh, let's say i'm somebody who wants to join Kerala angel network right. How do I go about that? Is there any uh, membership fees? Is there a vetting process or do I just give you my check? Yeah, just I mean, we are network right we we we not a fund I mean, so uh, yeah, we have a very nominal joining fee. I think it's uh 30,000 and equivalent membership fee recurring membership fee. that's annual m ann m Yeah. so that's it You know, that was used to be much lower when we started but now that's but we look at uh, we tell we if anybody who's interested we tell them about uh, the you know, uh, what is in it for him, you know or her you know know uh, the plus and minuses we do breath them and then, uh, of course, you know, most of them who are inclined only approaches, right? Who's interested in this angel investment space, you know, startup investment space. So uh, initially initially though I would say, you know, we there was always this, you know, even when we started the network, we had this problem of, you know, the first thing is to, uh, getting off an roi mode to know weal creation mode, right? That's a tough pass transition, right? So those investors who are not accustomed to that we do advise them and then we tell them clearly, you know, so it's better to we let them watch the, you know, some of the most of our mean probably all the pictures are online so we allow them to, you know, get a feel of those speeches to get a sense you know, what is it all about. And then before they come on Bo and and I think you mentioned this point like uh to be a member of Khan. you don't have to be a member of Tai. right? No not at all. all even though they are associated etc. No, no, it's just promoted by Tai. Kerala because you know typically most of the well--run chapters in Tai globally we have 66 plus chapters. It's a Silicon Valley based organization right. So uh, they all have attached angel network because funding is a strong pillar of funding mentoring and you know education like that. So therefore it's very important. So that's and and than angels. Now if you ask me what the criteria based on which I could make a judgment like that would be uh, it's it'll take forever. So I'd rather not. No, I, I think yesterday in one of the sessions Robin said, uh, it's borderline insanity if you have to do angel investments, that's what you need to have Yeah, it's a function of uh, so yes, the from the risk perspective it might not always be the most rational decision at every point of time but that's why right? As if it's 100% financial, uh, then n-lp probably being an LP makes sense. You have a lot of people sitting here in the front row who manages funds very efficiently you'd rather give them the money and have them invest Uh, but otherwise if you want to learn if you want to be part of the journey and all that angel investing is right Yeah, thank you so much And speaking of VCs, Uh babu been investing, you know, like, uh, for 25 years it's like a really long time. Do you remember what was the first investment that you made in Kerala? Um, first investment in Kerala I think, uh was care Um, but I've been investing in India. got it, uh, in many, many companies and things like that and and since uh, that time, you know, your early days of investments to now, uh, do you see like a significant, uh, change in the types of startups uh, that are getting formed and reaching out? Yeah. India, Always consumer plays Always you know, focuses on that. Those are the only ones hard for b2B companies to make money in India. You know, like know, we don't respect technology and we don't have the habit of paying for technology. You know, it's always like, oh, I can have somebody here Uh, you know, two people can do it. You know, so so in general we don't respect as a culture, you know, so it's hard and and do do you think that's the reent moves. B2B companies are focus fully on us? Like, you know, we keep hearing us exactly exactly mean I I um, I had personal experiences know So, um, um, back in the early days of is usually uh For Kerala engine networks what are the kind of startups so what is their funding? Uh In terms of value What kind of, uh, you know, bracket is there on an average And if someone wants to become an engine network with Killa engine networks, what is uh, the minimum ticket size which usually the smaller investor takes like in terms of, uh, amounts. Yeah. Okay. Good question. Yeah. So, uh, ticket sizes just minimum is five lakhs and we insist on uh, yeah, that when you become a member, we insist on at least one deal in a year at least but many of them do more. So we don't want a sleeping investor or, or member, right? So that's it. And you asked about also the deal, uh, disbursements size. So we have from say, uh, 50 lakhs to says, 2.5 cr. We did raise a big ground, uh once forc round, but we had to the DD did not go well. So we had to and it was subscribed in 48 hours. So typically our investments rounds get subscribed very quickly. Latest one ch was referring to We are going to announce it tomorrow a 2. for year which got in 24 hours. it was subcribed So we have very active participating. Uh C angels Thank you. Yeah. Hi. Um, my name is Adel. Uh so um yesterday someone here mentioned no no, I I'll finish the question. Uh so uh mentioned that uh, many of the startups that is coming from Kerala is on semiconductor space and hardware space and all that. Right. And uh, sir mentioned that you are looking more into where the government is investing and all that but uh, I my startup as an AI startup but I come from insurance background and there's a lot of fintech insure tech insurance as a service space and all those things are happening, right? Uh, and those products are also there companies are also there. So, uh, is there a specific lookout like this kind of sector is what you really like, even though you said that everyone is interested in investing anything but is there a specific industry? Uh, you know, fintech is almost died down. You know, there's a lot of index out there, but I'm saying inch is the next big thing that everyone is talking about, right? So yeah, what's your take on? Anyone can take that? Yeah. Yeah. Um, insur tech. Um, um, you know, there's a lot of opportunities, you know, insurance is still one of those very old lethargic businesses. You know where uh, automation hasn't quite come in. So there is opportunity, especially in in India, You know, so uh, but there are companies know that are um, trying to solve that problem without even ever visiting that person right now taking video pictures or videos and 15sec videos and you can you can know a lot about that person, right? Know there are companies like that that are trying Um, yeah, I think, you know, insurance compared to banking. I would say yes, uh, we as a network, uh, sector agnostic being, you know, this no particular sector we interested in but having said that, you know, there's always flavor of the season. Like Babas just said insur tech and uh, AI. Uh, in our portfolio, there are many uh, tech you know, uh, hr tech U, What is that? Uh, we have d2c companies which they they got a shot in the arm with the uh, quick commerce, the boost in quick commerce growth. You know, many like, you know, uh, blinket and you know, Instamart and all that, you know, coming in. Uh, yeah, so but we remain sector agnos, but so if our network doesn't have the diversity to assess the thing we seek the help of other experts. Also for the screening, it was a it was a VC but for you, it's a engine network. And many individual people are there. So would you you be investing in the same? let's just say AI, you said you have an like a minus an AI startup. So let just say, would you be interested already you have invested in one company? Now if it is similar or on a different tangent but an AI or on the same tangent, would you be investing? Or would you say that, okay, other angels can invest in that or something like that? I can speak for, uh, our network, we don't exclude any deal like that. You know, it's on the merit of largely the founder and the founding team. You know, we look for a metro and founding and the scal of the business idea and and we don't get into the seed rout idea idea stage. Uh, we go in typically when the revenue is past five lakhs or you know, a proven revenue traction. is there past mvp po stage? that's when we but there are certain networks who choose to be there in the SE, you know, idea stage itself but I I will let me pass the micro out. So regarding sector focus, I mean, uh, as a already mentioned angel networks usually are sector agnostic but a lot of VC funds, you'll see uh, they might have specific sector focus, right? So uh, that's that's probably an advice for you. Like if you are in a specific sector, then you can, uh, try to find VCs who invest primarily in those sector there are also companies that have uh corporate venture arms as well right so let's say if it's a health company they might have a venture division as well and they are trying to find startups that are in inating in the health space and they'll invest specifically in that so that's probably an angle that you uh can pursue when you're looking at sector specific uh seeking sector specific investments uh regarding uh an uh investor let's say an angel network that's already invested in something and not investing in something similar so if it's a competitor then yeah typically you wouldn't uh but if it's in the same general industry uh yeah i don't see any reason uh why uh investors wouldn't take on the uh other investor