The world’s leading angel investor network with over 2,500 investors, Keiretsu Forum, is opening its Mumbai chapter, the third such centre in India. In an interview with BusinessLine , Judith Iglehart, President, International Division, Keiretsu Forum, talks about how the large intellectual capital base in India is driving investments across the globe. Edited excerpts:

How encouraging has been the response from the chapters in Chennai and Bengaluru?

We are extremely upbeat about the chapters in India. In less than a year, they have shown some good numbers. There is a lot of intellectual capital in these two cities. There are a lot of smart people out here. We believe we should be in parts of the world that are going to rival Silicon Valley in the next 15 years. Over 35,000 people have returned to Bengaluru from Silicon Valley. So, why wouldn’t we be here. Our mission is to build communities of like-minded people who trust one another and invest together. There is a need to create new companies and jobs in the community.

There are other such investment communities such as the Indian Angel Network. How different is Keiretsu Forum, or does it do similar kind of work?

Some of these have been around for a long time, but only 10-20 per cent of them have been active investors. We came to India in 2015 and already have more than 50 members. It is not easy to become a member of our forum; even the fee is steep at $3,000. We started as a global entity in 2000; we are still around even after the dot-com crash and the 2008 recession. We are very active and give our members plenty to do so that they are active all the time, invest wisely and have a good opportunity to make more money for themselves.

How much funds has the Indian chapter raised?

The average investment size is between $150,000-$200,000. About 25 companies have got funded so far. But our membership is limited because we are still new here. Once we hit about 100-150 numbers, the deal sizes could become larger and even the pool of investment will grow. At least half of these investments are in US-based companies and all these investors are from Chennai. We are not just focussed on IT. We fund everything as long as they meet our benchmark. As per the recent global rankings, Keiretsu Forum and Keiretsu Capital are the top two active investors during the third quarter of 2016. During 2015, the forum invested in over 130 start-ups worth $71 million. Since 2000, it has invested a total of over $800 million.

We keep hearing about how it is becoming tougher for start-ups to get funding. Is the trend confined to India? Has due diligence become tougher than before?

I think due diligence is unique to angel investing. More the number of hours you take to study a start-up, significantly lower will be the investment risk. If you go through some of the reports, VC funding has fallen 50 per cent in India and over 70 per cent across the world. The VCs are taking that much longer to write cheques. At the same time, start-ups with good traction have been getting good money, and there has been an increase in this trend in the last quarter. The kind of euphoria one witnessed in India in 2015, when you could make a pitch and return with a cheque, is no longer happening. Now is the time for serious investors to get down and carry out some good due diligence. As per our own research, if investors spend a minimum of 40 hours in doing due diligence, they have seven times more chance of making more money.

Keiretsu as a concept is apparently falling apart across the world. So, how has it been for your forum?

The old meaning of Keiretsu, as an association of like-minded people who come together to keep others out, never worked with us. We took the kind of concept which was popular in Silicon Valley in the mid ’80s and brought together like-minded investors; there are no boundaries and anyone can join us depending on certain conditions.

Are Indian investors far more cautious than their counterparts in the US or Europe. What kind of returns do Keiretsu Forum investors generally make?

I think, Indians are just as interested in investing in start-ups as elsewhere. But the point is, everyone is cautious; though at a certain level, Indians are more risk-taking than many others.

However, what is important to note is that most US-based companies get funded much easily than Indian companies because they do a lot of home work before they present their project report. Some of the Indian start-ups don’t even know about their valuations or how much stake they are willing to shed.

Normally, the returns on investment is about 22 per cent, and for real-estate deals, it goes up to 30 per cent.

Related Topics
comment COMMENT NOW