StartupCentral

Delhi-based Indian Angel Network (IAN) has announced an angel investment of Rs 3.25 crore ($600,000-plus) in Mumbai-based Peel-Works, a cloud-enabled sales force transformation and BPO startup. The investment will be used to expand the company’s product offerings, create technology differentiators and human capital. The company will host productized sales force consulting and transformation solutions on the cloud and charge customers on a pay-per-use basis, said a press release.

Peel-Works was founded in 2010 by Sachin Chabra, a former Hindustan Unilever executive. It offers solutions for very large and medium enterprises in the FMCG, telecom and insurance sectors, which have large indirect sales forces. Even though over four-fifth of the sales in these sectors come in through indirect sales forces, the way companies manage this talent is either completely absent or what exists is not commensurate with the significance of their contribution to business results. This creates a dis-engaged sales force which leads to sub-optimal business results and higher operating costs. Peek-Works aims to address this problem with its solutions.

Following the investment, IAN members Srikant Sastri and Sadeesh Raghavan will join the Peel-Works board, said the press release. Other IAN members who are investors in the company include Harish Mehta and Saurabh Srivastava. In 2011, IAN invested nearly $10 million in ten startups including Jigsee, Groffr, and Vayavya.

Sadeesh Raghavan has been investing in Indian startups as an angel investor for about four years through the Delhi-based Indian Angel Network. His most recent deal was a seed round in WebEngage (earlier known as WebKlipper), which offers online feedback and survey tools to websites. Prior to becoming an angel investor, Raghavan, led Accenture India’s domestic business as managing director of the company. He also sits on the global advisory board and investment committee of Acumen Fund, a US-based venture philanthropy firm. Raghavan, who shuttles between Singapore and Mumbai nearly every week, spoke to Startupcentral about his experience with angel investing here. Edited excerpts:

What made you turn to angel investing?

I became an angel investor by accident. In fact, I took up my last assignment at Accenture because I wanted to get to know the Indian market and move into private equity investing. Then I invested in a couple of friends’ companies and realized that angel investing was more my cup of tea. Private equity is a very spray and pray business. I can’t deal with that. If I invest in a company, it has to be because I care about the business. I can’t go in thinking that it wont work. I have to get involved in some manner.

Apart from IAN, you’re also involved with Acumen Fund. How did that come about?

I actually got involved with Acumen while I was still with Accenture. CSR (corporate social responsibility) was a big topic at Accenture and I reached out to people in the US to find out more. That’s how I got connected with Acumen. They have an employee internship programme with Accenture. I like Acumen’s for-profit model and I think the real breakthrough organizations in India will come from the bottom-of-the-pyramid. I sit on the boards of several of their portfolio companies and get involved at the micro level on the operations side.

Isn’t the focus of investments at IAN very different?

Yes, many of the angels who invest through IAN are interested in technology. IAN, in that sense, covers the top end of the market. But now it has started moving towards bottom-of-the-pyramid businesses. Young graduates are jumping into these businesses, which is something you would not have seen two years ago. It is an encouraging sign.

What kind of companies interest you in the Indian market?

I’m always interested in companies that address the local market. They may have the potential to go global, but the dominant target market should be India.

Do you have a checklist or process for evaluating an entrepreneur prior to a deal?

If the entrepreneur is just looking for money, then I am most likely not going to be interested in the company. The way I think about it is that if his business is so good and he only needs money, why can’t he find a financier? I like to make an entrepreneur think of what they are doing. This usually involves spending a lot of time talking to the entrepreneur. The good ones will always push back. They will not entirely accept everything that you are telling them.

How long does it take to close a deal?

As much time as it takes to really get to know a business. It could be weeks. You have to do site visits, crunch the numbers and really see the business on the ground.

How many companies have you invested in so far? What kind of stakes do you prefer?

About 20, of which maybe 10 are through IAN. I try to keep the stake small. If you take too much then you become the owner of the company and I know that I will never be a good owner. Better off as an advisor!

Image Courtesy: IAN

Pune-based InnovizeTech Software’s four founders – Shirish Deodhar (in photo), Madhukar Bhatia, Swati Deodhar and Hemant Joshi – are preparing for a big year in 2012. Their cloud-based software product Sapience, which began as a just-for-fun project in early 2009, has started to gain traction in the Indian market. Next year, nearly 40 per cent of the company’s overall spends will be channeled into sales and marketing, against 10 per cent now. It claims to have about 50 new customers in the pipeline, of which over 20 are already piloting Sapience.

“We’re now entering the second phase of our growth,” says CEO and co-founder Shirish Deodhar, in an interview with Startupcentral. Sapience allows companies with large workforces to measure and analyze how employees are using computer-based applications such as Excel or PowerPoint. This helps companies to better monitor individual productivity and improve the overall productivity of the organization. The software, which is currently patent pending, can be installed at the customer’s data center or hosted on InnovizeTech’s cloud-based servers. In its second phase of growth, the company roll out Sapience across significantly larger workforces, going up to over 10,000 people per customer.”We currently have pilots running with some of the country’s top ten information technology services firms,” says Deodhar.

Demand for the software, says Deodhar, has scaled up rapidly in the past few months. About six months ago, it was still working with customers whose workforces ranged between 100 and 200 people. Three months ago, companies with between 300 and 500 employees started to sign up for the product. “The product business is very different from services. Once customers start coming in you have to scale up quickly,” he says. To support the increased demand from the market, the company has recently inducted Avinash Sethi and Ranjit Nambiar into its management team. Sethi earlier spent several years at TCS and Intel, while Nambiar comes to InnovizeTech after a six-year stint at Dell India.

For the founder team, though 2012 promises to be a demanding year, scaling up will not be an altogether new challenge. Deodhar, Bhatia and Joshi earlier co-founded software services firm In-Reality Software, which was acquired by Symphony Software in 2004. Deodhar had also founded another software services firm, Frontier Software, in 1988, which was acquired by Veritas Software in 1999. Swati Deodhar, who came up with the idea for Sapience, has earlier held several leadership positions in companies such as Symphony Services, Ruksun Software, Mafatlal Consulting and PricewaterhouseCoopers.

InnovizeTech is currently not profitable though Deodhar says that the company expects to post $100 million in revenues in five years. Last July, the company raised seed funding of about $350,000 from Indian Angel Network (IAN) and over $850,000 in Series A funding from Seed Enterprises this November. Onward Group founder Harish Mehta represents IAN on the company’s board, while Seed Enterprises is represented by Mitesh Bohra. It currently employs 23 people, of which 17 are engaged in product development and support.

Image Courtesy: InnovizeTech Software

When Kallol Borah wrote in last week to introduce his latest venture, HeadStart Ventures, I was a bit confused. Borah also happens to be a co-founder of the HeadStart Network Foundation, a not-for-profit entity which hosts the popular startup showcase event HeadStart. The two, it turns out, are not related and there is some acrimony brewing on that front. But Borah’s new venture, whose primary activity will be to seed startups from a proposed Rs 25 crore angel fund, is inspired (quite literally) by his experiences with the other HeadStart (where he continues as director). Taking lessons from his past experiences, he aims to plug some of the “gaps in the startup and innovation ecosystem” with his angel fund.

Though it will compete with organized angel investor networks such as Mumbai Angels and Indian Angel Network, HeadStart Ventures’ functioning style will be a cross between an incubator and a venture capital firm. Individuals who want to invest in the fund will be required to make a minimum commitment of Rs 50 lakh. Each individual investor will become a limited partner in the fund. While Rs 25 crore is the target corpus for now, the founders have not set a hard cap yet on the final fund size. It will have an investment committee which will vet and close deals. This will be supported by an operations team which will be involved in activities such as workshops and managing mentors and industry partnerships. Borah and his co-founders will man the operations team and probably also be on the investment committee, though he says, “I think we will end up having a different set of people on the committee.” Read the full story

Canaan Partners hosted a breakfast roundtable with over 30 angel investors on December 22 in Mumbai. The objective was to brainstorm on constructive ways in which the potentially large angel community in India can engage better with young entrepreneurs. Alok Mittal, general partner, Canaan Partners, sums up the roundtable. Also check out his thoughts on a potential investment structure for angels at Venturewoods here. Mittal has been at the head of an initiative to create an informal forum to encourage more angel investing in the country.

Making Angel Investing Work

By Alok Mittal

Canaan Partners hosted a roundtable discussion with over 30 angel investors. This note summarizes the key discussion items.

Individuals & Groups

The participants included members from angel groups (Indian Angel Network and Mumbai Angels, each of which have made 18 investments till date) as well as individual angel investors. Many participants also reported that they invest both individually and through these groups. Read the full story