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- Ever wondered about the growth of Angel Investing in India? Is it the next big thing or just a short-term craze?
- This week, Khushdeep Sethi, shares excerpts from our interview with Milapsinh Jadeja, an angel investor with 30+ investments in Fintech, Agrispace, and Healthcare/Tech.
- From his investment journey to his evaluation process, There's a lot in store for you!
Riddled? So was I, when I interviewed this week’s investor! He claims to be a big time movie buff and so it seems. I decided to dedicate today’s title with a quote from his favourite movie - Life is Beautiful.
He’s an active Angel investor with 30+ investments in Fintech, Agrispace, and Healthcare/Tech. Meet, Milapsinh Jadeja, an angel investor who got inspired from movies!
Apart from movies, we did talk about angel investing 😉
Ride along with me in his cinematic Investing journey as he uncovers his experience and knowledge.
1. How did you get started as an angel investor? What does your journey look like?
I started in 2016 some time after I did my short program in Private Equity from London school of business. There’s a lot of capital to be deployed in the world rather than people looking for the capital. So that kind of ade me inquisitive and made me interested in this type of business. Coming back to India, Of Course I didn’t have enough money to start investing so I thought How can I have first hand experience in it?
Then I started with crowdfunding platforms like seedinvest ad microventures.
I still remember my first investment was through a credit card! I invested $100 from my credit card and I was elated to receive my first ever shareholding agreement!
So that's how it started in 2016 by the end of it actually. Coming to 2017, I was browsing through Linkedin and the internet and I came across AngelList and LetsVenture. I wrote to them that I want to be an investor. They took me on board. Of course,they have their rules and regulations and processes, which I fulfilled and got on board and fortunately, I came across a few syndicates, which I needed to join. And that's when I came across better capital and prophetic Ventures. That’s how I started as an angel investor.
2. What does your evaluation process for a startup look like?
When I started it was more of the little bit of experience that I had because I had a very limited understanding about how the companies would do. At this time, it's really important to look at this whole investment aspect from a very elevated position.You know, the reason being that today you have options.
If I look at an international aspect, now people from India are investing in the U.S. Similarly, they're investing in the southeast of Asia.
So how would I look at an opportunity that comes to me? And how would I evaluate that?
First and foremost is, of course, Location
Where is the startup coming from? Whether the product is coming up from the US or from Southeast Asia, or somewhere in India.Of course, the majority of my investments are in India as of now. But you know going long term, that is the option every investor has.
Where is the economy growing? How are the policies and the whole ecosystem in that particular country?
When I say this, that's what I mean as an elevated level to look at from a geographical aspect.
Secondly, a particular Sector Market
Do I invest into Agritech, Edtech, Healthcare or e-commerce or sass, right?
Nowadays, AI, Machine Learning, Blockchain and Deep Technology are the fascinating world. Everybody wants to get into those kinds of areas, which I don't understand as of now. So I Have a very limited scope.
For me, It all boils down to the Founder because I believe that every business has a potential, as long as the founder is great. If the founder has the right knowledge and experience, It doesn’t matter what institute they went to. I mean, I never went to IIT or IIM but I gathered loads of experience, relevant experience, for that matter.
Market is always there because you see the total addressable market and an Indian market is all the statistical numbers, even though you give money to people, they would not be able to achieve it at times. So it's very important. I look at the founders the most and for the markets. Yes, If I Invest into SAAS then of course the growth is going to be faster, In retail it may take a while for the growth to happen.
3. How do you feel about the risk associated with angel investing?
We've learned in school. Where there is this, there is reward. It's about how much percentage of risk you want to take. So, there are so many asset classes starting from mutual funds to recurring deposits to stock market, I mean stock market is also a big race today.
You can’t deny that the stock market is not a risk. There you are entering into companies which have already come out with their IPOs which means they’re already kind of validated but still completely failed. There’s a long list of companies where the investors' money has gone down the drain. It's not that there is any asset class which is fully secured.
Coming to the startups. I believe that risk is everywhere. I don't feel that It's a risky Journey. It's not a risky path that one is taking if as long as you have a strategy in place.
So your risk is always reduced if your 10, 15, 20, 30 companies fail. You're losing the minimum amount, but even from the hundred, if two of them take off which I think it will, It could give you the reward. So yes, the risk is the but as long as you have a clear strategy on your mind. It can be balanced.
4. What’s the growth of Angel Investing in India? Is it the next big thing or just a short-term craze?
I look at it from two perspectives. Previously when we talked about startups. It was like, ‘Iska thodi na kuch hoga’. Oh that is just a bubble. People would not believe in startups. Now zomato is coming up with an IPO. Paytm, policyBazaar, all are coming up with their IPOs.
I think that validated this model and showed people how value can be achieved.
So I remember whenever I used Uber or Ola before I was into my angel investment journey. I asked the driver about the money they earn from this. They all used to say, The companies are going insane and giving us the exact amount of money and not cutting any charges.
So I always used to wonder, how is the company really making money out of this and how do they survive? And that’s when I realized that there is an inherent difference between profit and value.
Value is what the startups create on a compound aspect. And profit is something different, which is required to sustain and to kind of maintain and grow.
But as long as you focus on value, maintaining your profits and or maybe maintain your cost, the company will surely grow.
From the founders' perspective, back in the day they had like 2-4 options. They had to seek out the investors for their startups. Now, the world has just suddenly become so small. There’s a range of options available for them. From angel investors to companies like Favcy, who are doing a phenomenal job.
I think the support system that Favcy creates for the founders is just amazing. Your team builds the idea that founders envisions and helps them create the value that they had on paper.
From Investors’ perspective, I feel there’s a lot of competition. Everyone wants a great portfolio of startups. Big VCs and investors are lowering their cheque sizes to invest in early stage startups giving in to the big FOMO.
5. Do you think it’s beneficial to invest in early stage startups? If yes, then why?
I have a thesis where I only invest in pre-seed and seed stage startups. I believe that’s what I am good at. Identifying the potential inside startups and founders, groom and mentor them for the next big level.
What investors do in order to reduce the risk, they invest 5X in the later stages rather than investing smaller checks in early stages which in my perspective is increasing their risk of failed investments. So, this is really subjective. It’s also about the risk appetite you have as an investor.
Ending Note - “I am a moviebuff. I almost watch one movie every day during lunch and I have been very closely associated with Cinema. I produce films also, but why I'm adding this, is that Books and Cinema has made me what I am. I learn a lot from them. People think that it has no value but for me it added tons and will always do. I believe that any person, any angel investor or an entrepreneurial Journey founder, no matter where they stand right now will reach their heights one day. For me, My inspiration lies in Books and Cinema. I hope one day they find theirs.
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