INCUBATION ZONE. Indian Angel Network: a destination for nurturing start-up ecosystem

The Indian Angel Network (IAN) is one of the largest angel investing groups in the country and it was only to be expected that it would have its own incubator. IAN’s incubator took off in 2010 to provide quality mentorship to early-stage start-ups. Approved by the Department of Science and Technology, IAN’s incubator has a base of over 100 mentors who can guide entrepreneurs and their ventures.

IAN’s incubator functions mostly on a virtual platform, considering that physical accessibility is not a deterrent for specialised mentorship. The reason for virtual incubation is that it enables the network to incubate a larger number of start-ups than would have been possible in a physical set up. IAN does have a physical incubator, a 3,600-sq ft facility in Mumbai, perhaps the first to be backed by angel investors.

According to IAN, it will provide office space, computing and other facilities to be shared by all ventures being incubated by it, on a regular basis at announced locations. The IAN is interested in a wide range of sectors, given that it has a large pool of investors and mentors from diverse backgrounds.

On an average, IAN incubates 20 companies a year. It is sector agnostic but has a high affinity towards sector-disruptive technology and services. The ventures admitted for incubation can stay for 12 months, during which time they not only get guidance from mentors, but also get market access making them investment-ready. IAN looks at innovative and disruptive technology, large and high growth market, and a team with relevant domain and business understanding as some of the criteria for selecting the start-ups for incubation.

According to the IAN, an incubator is a major support for an entrepreneur to help refine his or her idea into a start-up in the most vulnerable stage of the venture. The right direction with an enabling support system and at the right time – this can make the difference between success and failure. The virtual incubation programme is focussed on providing relevant domain expertise, access to relevant functional inputs and industry.

According to the IAN, the start-up ecosystem is tracking well and is among the top five in the world. It is also the fastest growing start-up ecosystem – 300 deals garnered $450 million in 2014 and in the first quarter of this calendar year, half as many deals have been closed with $1.7 billion.

The IAN invested over ₹70 crore in 29 start-ups in 2014. In the first five months of 2015, it has invested nearly ₹50 crore in 15 companies.

The success of a start-up ecosystem is endorsed when companies become unicorns and angels/early-stage investors get returns. That, according to the IAN, has started with companies such as Druva, Stayzilla, Inmobi and Flipkart which have raised growth equity money and their early investors have made huge returns.

This is crucial as start-ups need high risk capital and only if angel investors make returns, will they continue to put in money in start-ups.

COMMENT NOW