Startups’ poster boys turn their focus to VC firms
BENGALURU: Indian entrepreneurs who have become rich after selling their startups or some of their shares in their companies are now investing in venture capital (VC) firms as a means of both multiplying their wealth and building the ecosystem.
Flipkart co-founders Binny Bansal and Sachin Bansal, Citrus Pay co-founder Amrish Rau, TaxiForSure co-founder Aprameya Radhakrishna and Capillary Technologies CEO Anish Reddy have invested at least ₹1 crore each in VC firms such as Blume Ventures, Pi Ventures, Kae Capital, Stellaris Venture Partners, Pravega Ventures and Beenos. Some VC firms — Stellaris, Pravega and Pi — are home-grown ones that have set up shop only over the past year.
There are several other entrepreneurs who invest prolifically in startups in their individual capacity including Snapdeal co-founders Kunal Bahl and Rohit Bansal, Paytm founder Vijay Shekhar Sharma, Freecharge founder Kunal Shah, Tracxn co-founder Abhishek Goyal.
The relatively recent trend of founders becoming limited partners (LPs) or investors in VC firms is beneficial to both. “Angel investing is a full-time activity and I don’t have the time or the expertise to do it so I thought it would be much better to invest in a VC firm,” said Rau, co-founder of digital payments firm Citrus Pay, which was bought by PayU India last September for $130 million. “It is also a way to give back to the startup ecosystem.”
TaxiForSure’s Radhakrishna agrees. “I do both angel investing and investing in VC firms. Having gone through all the stages of running a company, you realise how difficult it is to become successful and the confluence of so many factors that you need. (Investing in home-grown VC firms) helps build the ecosystem,” said Radhakrishna, whose startup was bought by Ola in a $200-million deal in March 2015.
For VC firms, any cash is welcome. Taking money from successful famous entrepreneurs such as the Bansals also adds badge value. “Entrepreneurs represent high-energy cash,” said Manish Singhal, founding partner at Pi Ventures, a VC firm dedicated to investments in artificial intelligence startups. “They want to do something for the ecosystem that has made them and they are very eager investors. Having them as LPs could also be helpful in the sense that if one of your portfolio companies needs help, you have the ideal people who can advise them.”
Another new VC firm, Stellaris, has created a so-called “founder network”, which comprises successful new-age Indian entrepreneurs, corporate executives and fund managers. Nearly 50 entrepreneurs and corporate executives have joined this network at Stellaris, according to co-founder Rahul Chowdhri.