B2B wealth management firm Finvolve will launch its first sector-agnostic category-1 angel fund worth ₹100 crore this month. The fund aims to invest approximately $1 million on average per start-up over a span of two to two-and-a-half years, a top executive of the company told businessline.

The B2B wealth management firm is a joint venture between business consulting firm Finolutions LLP and the India Accelerator, which was started in 2022 with the idea of offering selective start-up ideas to investors through the B2B route of the wealth managers, according to co-founder Apoorva Vora.

“We will have investors in one of the three formats - (a) through the platform where investors take an independent call to pick the start-up for investments, but through an AIF route; (b) through the fund where the investor allows the AIF to build the portfolio; and (c) larger investors can invest directly on the cap table of the company,” he added.

Sole B2B-focused participant

While venturing into the investment realm is not an unprecedented step, Finvolve claims its distinctive standing as the sole B2B-focused participant, will allow it to leverage a unique position within the market. Furthermore, its emphasis on collaborating with well-established players for co-investments renders it a one-of-a-kind proposition for the wealth and investor segments.

Going forward, the company believes that even the subsequent funds would be of a similar corpus/size due to one structural drawback in this industry. Vora noted that as the funds get bigger in size, it also dramatically increases in the average cheque size. “This affects the track record of identifying good companies in the early stages and will be of no advantage when it eventually reaches the late stages,” said Vora. Therefore, “We are focused to remain in a domain that we understand and are able to exploit better. For us, the impact is more important than the size.”

Overseas investors

In addition to this, the company also plans to bring a newer bunch of investors from overseas into the Indian start-up ecosystem. “We also intend to operate out of Gift City on similar lines to attract capital from outside of India. So both the existing platform structure and a fund structure will coexist,” Vora said.

Talking more about the joint venture, he said, “While India Accelerator is a well-known name in the start-up ecosystem, our expertise lies in educating the wealth management community about various asset classes, particularly with regard to alternate investment assets. Now that this is an extension, start-ups would be nothing different but an extension of alternative assets for someone.”

Currently, it has around 140 wealth managers and plans to scale it to 600 wealth managers by the end of this calendar year. In terms of the mandates so far, it has raised funds for nine mandates and says that is within striking distance of touching ₹100 crore of mobilisation for these start-ups. According to Vora, the nine start-ups are diversified, ranging from an electric two-wheeler company to a manufacturing tech company to a food business or OTT platform.

Demand environment

In 2022, on SEBI’s platform, there were 49 new category-1 angel funds registered, compared to 28 in the previous calendar year, noted the co-founder.

Although 2022 wasn’t a friendly year for start-ups, if there are so many funds that got registered, “according to us, there will be quite a bit of funds that will come into the market to raise money for start-ups now, irrespective of the winter funding,” he said.

He added, “We have also seen more venture capital funds being registered in the same period, which gives us confidence when it comes to getting exits for these start-ups. There are also an equal number of venture capital funds that are there to absorb this kind of capital.”

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