In the three-and-a-half years since it started investing in start-ups here, the Chennai chapter of Keiretsu Forum, a US-headquartered group of angel investors, has completed 56 deals. “It is continuing at a pace that increases every year,” says Rajan Srikanth, co-President, Keiretsu Forum Chennai and Singapore.
For the first half of 2018, he says, the angel investment group has funded six start-ups and invested about $1 million (₹6.5 crore). Last year, it did 20 deals and put in about $1.3 million (₹8.5 crore).
“This year, we are either on track to make 20 deals or probably exceed that, because the first half of the year is generally slow,” says Srikanth.
According to him, this year, in terms of the total size of the investments, Keiretsu Forum has done more in six months than it did in the first part of last year. In the first half of this year, Keiretsu Forum has done three deals of over ₹1 crore each, according to him.
“We are not seeing any slowdown on our side. That is because the profile of the deals that we bring is still different from what most others are able to bring. One, these are deep-tech deals. In some sense, we are the first place that IIT Madras incubated companies come to,” says Srikanth.
That is because of the strong relationship that Keiretsu Forum Chennai members have had with the IIT-M ecosystem. Srikanth, an alumnus of IIT-M, and a number of other Keiretsu members mentor IIT-M incubated start-ups. It is but natural, says Srikanth, that these start-ups should first come to Keiretsu when they are looking to raise funds.
Another reason that start-ups prefer Keiretsu Forum to other angel groups, says Srikanth, is because of the structure of the deals that Keiretsu puts in place. “We are willing to go with CCPS (compulsorily convertible preference shares) where most of the other angels insist on equity deals. Therefore, we put off the difficult discussion around valuation,” says Srikanth.
Keiretsu has just completed two deals with two IITM incubated start-ups. In the first deal, it invested about ₹1.5 crore in Fib-Sol Life Technologies, founded by Kavitha Sairam and Anant Raheja, both PhDs from IITM. Fib-Sol has developed an ultra-light weight, bio-degradabe and water soluble nano fibre carrier for bio-fertilisers. The second venture is Fabheads Automation Pvt Ltd, founded by Dhinesh Kanagaraj, a BTech in Aerospace Engineering from IITM. Fabheads specialises in developing automated technologies for composite manufacturing. Keiretsu has invested about ₹2.4 crore in this venture.
In both these companies, Keiretsu was the first institutional investor and in both the ventures, Keiretsu had a relationship with the founders as their mentors.
35% investments in US cos
According to Srikanth, Keiretsu’s strength is that it is able to curate and provide specialised companies in specific areas. “We are able to bring deep-tech because of our access to companies from outside.” Nearly 35 per cent of the investments made by Keiretsu Chennai are companies in the US, the ventures having been referred to it by Keiretsu chapters in the US.
Both Fib-Sol and Fabheads are in the product testing phase. They have completed product development and both may have some Beta customers, but they do not have any substantial revenue. Both these ventures, according to Srikanth, will need the money and the mentorship of Keiretsu’s members to take the product to market.