Indian Angel Network (IAN), earlier known as Band of Angels, announced an undisclosed investment in online library services startup Kwench last week – the 14th in its portfolio. In the IAN model, typically, a group of individuals who are members of the network pool their resources and invest in a startup. It could be a group of three or more than ten. The model, while fulfilling the pertinent need for seed funding in this market, can have its disadvantages – too many cooks tend to spoil the broth more often than not. Anyhow, Kwench’s target market is the corporate sector and has been co-founded by IIM Ahmedabad alumni Sunder Nookala, Prashant John, Krishnan Madhabushi and Mitesh Damania. Too early to talk about the business model – allows corporates to order books online which are then delivered to the client’s offices - but here’s a quick take on the deal from IAN’s point of view by Ajay Garg, who joins the Kwench board as independent director alongwith Shankar Maruwada. Excerpts from the email interview:
What is the approximate size of investment and stake acquired in Kwench?
IAN as a group of nine investors has taken a minority position (IAN declined to disclose the quantum of investment).
How do you assess its scale-up potential?
The company’s business model is a mix of online and offline services and depends on B2B2C marketing efforts. This allows it to scale up significantly.
Books are increasingly competing with online content. Why does Kwench’s business model make sense in this context?
It depends on the renting of books concept and in its library it also contains e-books. The company will benefit a lot if there is a huge shift to e-books as it would reduce its cost of delivery significantly.
To what extent will you (IAN) work actively with the entrepreneur team at Kwench?
The few angels who are involved with the team are finding that they are able to give inputs in the areas of thinking through the marketing pitch, providing some references, bringing in a sense of financial planning and corporate governance…which would make it easier for the company to access further sources of capital.
How did you source this deal?
In most of our deals the entrepreneurs approach the network. Kwench also reached out to us.
Kwench’s founders are IIM alumni. Is that usually an important pre-qualification for looking at a deal?
No. Actually, IIM alumni as a group could be more entrepreneurial…but currently you find that as a very small proportion.
Photo Courtesy: IAN
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