With traditional asset classes losing sheen since the outbreak of the pandemic, the affluent CXO class have been placing their bets on innovative start-ups, investing as little as ₹2.5 lakh up to ₹15 crore.

Before the pandemic, Inflection Point Ventures (IPV)), an early stage angel investing firm, had 750 investors. That base has grown to 3,500 plus over the last 14 months, of which 90 per cent are CXOs and 1,500 of them are first time investors. Early stage venture capital firm 100X.VC which was founded pre-pandemic in December 2019 has funded 50 start-ups to date and 50 per cent of the 418 investors that have directly invested into these start-ups are CXOs. Five-year old, early stage venture capital firm Venture Catalysts has over 90 CXO investors on its platform, a number that has been growing since the pandemic broke out.

Also read: Consumer tech, IT/ITES and healthcare to see continued interest from PE funds: Bain & Co

Why CXOs are betting big on start-ups

“The media has glamorised start-ups with news of unicorns, multi-billion dollar valuations and investors going home with big returns. CXOs are reading about it every day. However, one of the major reasons for the surge in CXO angels on our platform since the pandemic is that, for the first time in years they have time to sit through our calls, ask hard questions, evaluate and get comfortable with our processes and start investing in start-ups. We conducted Master Classes every Saturday for 90 minutes on various topics on why to invest in start-ups, how start-ups are valued, legal documentation required for start-up investments, etc. And invited speakers like Ronnie Screwvala, Kunal Shah, Rajan Anandan, Shekhar Kapur, Tarun Davda, and founders of Razorpay and Zomato to address these CXOs. The response exceeded our expectations (up to 500) with 1,500 CXOs attending these classes, and we had to get special Zoom licenses to accommodate all these CXOs. We now have CXO investors from 45 countries, primarily NRIs,” said Ankur Mittal, co-founder of IPV.

According to Dr Apoorva Ranjan Sharma, founder of Venture Catalysts, the pandemic has led to an increase in the number of enquiries from CXOs on its platform. “India went on to create over 50 unicorns in just 18 months which gave exits to a lot of early investors who are millionaires. The start-up segment has suddenly become very lucrative. Earlier, it was more of a passion-driven investment for CXOs, but now it is more strategic. Start-up investment is also seen as a “status” symbol, when they get to co-invest with some of the marquee investors of the ecosystem,” said Sharma.

Sanjay Mehta, founder and partner of 100X.VC says many CXOs are directly investing in its portfolio start-ups. “These CXOs are no longer tourists in the venture investing space, they are here to stay. Take, for instance, our portfolio start-up CORA Health, which has raised funding this month, was led by marquee CXO angels including Apurva Parekh (Executive Director, Pidilite Industries Limited), KRS Jamwal (Executive Director, Tata Industries), both in their personal capacity, along with Dhanpal Jhaveri (Vice Chairman, Everstone Group), Amit Chaudhary (Lenskart Founder), Kushagra Pant (Nomura MD), Neha Saraf (Visa Director), Anusuya Roy (Flipkart Director), Ajay Mian (Founder & CEO, All e Technologies), and Headstart Investor Circle.”

Lucrative returns

“Start-ups have become the most lucrative asset class over the last five years. On an average an investor makes 20X IRR(Internal Rate of Return). However, there are aberrations too. Several investors in our network made 80X returns on BharatPe in less than three years. No asset class would give you those kind of returns,” observed Sharma. Of IPV’s first 50 CXO investors who joined the platform in 2018, 24 made IRR between 30–75 per cent, 10 made IRR between 75-150 per cent and 10 made IRR of more than 150 per cent. Sanjay Mehta who has been an angel investor since the past 11 years says his returns are 103 per cent YoY.

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