Angel investing wasn’t on Anjan Chatterjee’s radar at all. The 56-year-old founder of Specialty Group of Restaurants was too wrapped up in running his 124 restaurants and confectionery outlets across the country. Then, two years ago, his UK-educated son Avik, 23, returned home, and began talking excitedly about new business ideas his friends were experimenting with. A year ago, egged on by his son, Chatterjee watched Shark Tank, a reality show on ABC channel where entrepreneurs make pitches to angel investors. “I liked it,” Chatterjee says. So much that he’s chosen to turn angel himself, albeit of a more gentle variety. Chatterjee and two of his friends (one of them a former Unilever executive) have informally put together a Rs 15 crore fund, which is on the verge of investing in three startups. “We will keep adding more money to it,” he says. “We are investing in youngsters — those who have the energy and can energise us.” The trio will pick up minority stakes with a five-year time horizon. While Chatterjee will focus on identifying the opportunities, his partners will chip in with finance and marketing support. The focus will be on food-related startups, although Chatterjee is open to other areas he is passionate about — music for instance. The ticket size will be in the Rs 1 crore to Rs 3 crore bracket. “Our biggest criterion is the entrepreneur’s honesty and integrity. We can be a really long-term, patient investor if need be. I know what startups are all about. I know the risks and the odds,” says Chatterjee, who started his first restaurant in Mumbai, Only Fish, in 1992, and went on to create brands like Oh! Calcutta and Mainland China two years later. Success today has a new name, glamour a new address and passion a new destination. Angel investing — playing God to entrepreneurs in their early stages — is the hot new occupation of India’s upper crust. This is the new gold rush and wealthy Indians of all hues are rushing in to turn angel investor. From the glamorous world of Bollywood, stars like Amitabh Bachchan and Hrithik Roshan have entered the fray. Not to be left behind are cricketers like Yuvraj Singh and Umesh Yadav. “I want to support young entrepreneurs with revolutionary ideas with both money and my experience of building brands,” says Singh. The New Rage Rich Indians from every walk of life — lawyers, doctors, diamond merchants, exporters, corporate executives, professional chief executives and entrepreneurs — are all getting hooked to the idea. “Angel investing is the new rage. There is a fear of missing out. It is drawing one and all — some smart and passionate, others greedy and impatient,” says Sasha Mirchandani, cofounder, Mumbai Angels. Mirchandani who, along with Prashant Choksey, founded Mumbai Angels way back in mid-2006, has been witness to the rapid growth of networks like his, particularly in the past couple of years. Since 2013, membership to another nineyear-old group, the Indian Angel Network, has risen from 200 to 350 now; and for the Mumbai Angels it more than doubled from 100 to 210. A newer one like the twoyear-young Kolkata Angel Network today has 50 members. But the bigger action is happening at the platform-based networks that have emerged, which are luring many smaller, often first-time investors. LetsVenture, ah! Ventures, growX ventures and Applifyi are a few such networks that are registering brisk growth in their membership. For example, Applyifi, launched four months back, already has 185 angel investors on board. Sheetal Bahl, cofounder of growX, who has been tracking the space for over five years now, says that the number of angel investors in India would have easily doubled in the last one year (current industry guesttimates peg it at anywhere between 1,500 and 2,000). Like many fads and fashions, angel investing became a rage in the West before India followed suit. From Paypal’s Peter Thiel to Tesla’s Elon Musk, it’s become virtually the favourite pastime of successful and wealthy entrepreneurs seeking intellectual stimulation. Back home, former Tata group chairman Ratan Tata appears bitten by the investin-early-stage bug, having angel invested in 12 startups in as many months. And seasoned honchos like media professional turned entrepreneur and philanthropist Ronnie Screwvala, Google’s Rajan Anandan and Infosys cofounder Nandan Nilekani have begun making headlines for their angel investments. “Interacting with these entrepreneurs gives me a quick update on what’s happening because I had lost touch with that space (while he was away in Delhi working on the Aadhar project),” points out the former chairman of the Unique Identification Authority of India. It’s the absorption and sheer delight in early-stage investing on the part of the likes of Nilekani that is persuading others with a stash of wealth — albeit not as accomplished and successful — to tread the same path; they may not figure in the corporate who’s who but for them angel investing offers the quickest route to enter the rarefied club of the high and mighty. Last month, Mumbai-based Anupam Mittal, founder of People Group, which runs matrimony site Shaadi.com, bumped into an astute 20-something at a party. Brandishing business cards that read ‘Angel Investor’, he was quick to brag that he had invested in three startups in the previous month. “These are exciting times. Media hype around startups, high valuations, some good exits and (lots of ) glamour are luring many to turn angel investor,” says Mittal, who has invested $3 million in 70-odd startups since 2007. Utsav Somani, 27, comes from a Marwari business family with interests in hospitals and exports to Africa. “Last year angel investing was creating a lot of buzz and it got me excited about startups,” he says. But he realised that not being part of any angel network meant that he did not get access to the best angel deals in the country. Since then he has been working hard to build networks and connect with other angels. The efforts paid off. He is now part of the Indian Angel Network, amongst others. Somani, who considers himself an active investor, has invested in 10 startups and is close to finalising two deals in Mumbai soon. Being a part of the angel network, he is able keep a close eye on all deals. He vets 5 to 10 startups a day; some proposals land in his inbox directly and others come via angel networks. On an average he invests Rs 5 lakh to Rs 20 lakh in a startup and has a horizon of three-five years. And he is allocating 60% of his annual investment portfolio into startups. “Failure doesn’t scare me as an investor. I know there could be breakout losses but there could also be big wins. I am well aware of the risks,” he says. Passion Play Then there are those who have earned fame and not fortune — and as the former wears off, they’re keen to deploy the latter in rewarding avenues. In April this year, cricketer Yuvraj Singh turned angel investor by setting up a $10-million fund called YouWeCan Ventures. It has invested in seven startups, including Vyomo, Cartisan, Healthians and EduKart, which operate in diverse sectors from beauty services to healthcare. “We are looking at startups that are attractive as an investment and also have a social angle,” says Nishant Singhal, cofounder, YouWeCan Ventures. A cricketer turning angel isn’t as outlandish as it appears. “A lot of people used to approach him for help, for funds. So we said why not create a fund to do this,” explains Singhal. Typically, he invests Rs 1 crore to Rs 2 crore in each startup, taking a 12-15% equity stake with a five-year time horizon. “We are not thinking of returns. This is a long-term investment. We are not worried about how much and how fast,” Singhal says. Anand Chandrasekaran, 36, chief product officer at Snapdeal and a Silicon Valley veteran, is looking at angel investing from the other end of the spectrum. “I am passionate about technology, product and design where a lot of innovation is happening today in the startup world,” the Harvard-Stanford alumnus says. Curious to see how these new models are evolving, he feels angel investing is a good way to expose himself to new ideas, understand how these problems are being solved at early stages and maybe help the startups take some key early decisions. “They learn as much as I do by being an angel investor,” says Chandrasekaran. Thanks to his networks and his expertise, some of the best deals land directly in his mail box. He is focused on deep technology-driven startups. And as an angel investor, he chips in by helping the entrepreneur on issues around product design, technology strategy and hiring “I am not a very financial minded angel investor. It is a passion not a job for me,” he says. “It keeps me young and connected to the ecosystem. It also keeps me hungry.” Asset Allocation Game Between the two ends of the spectrum — Yuvraj and Chandrasekaran — are investors who are well and truly into it. Like K Ganesh who is an angel investor in over 25 startups. The newer lot of angels, though, are often wealthy and are looking at angel investing more for asset allocation and portfolio diversification. “This is the new real estate and many are getting seduced,” says Saurabh Srivastava, cofounder of Indian Angel Network. Consider Arjun Seth, 36, managing director of Luxe Travel, a travel firm, who allocates his investible wealth between equity, real estate and art. Three years ago he began to look at startups closely. Now, 5% of his annual investments are as an angel into startups; he vets 5-6 proposals a week, attends startup pitch sessions every fortnight and finds time to meet entrepreneurs on Saturdays. “Startups are very risky. There is no track record and you are betting on someone else’s ideas,” says Seth. But what excites him are the prospects of fat returns. He has invested in 12 startups and managed to exit seven already. “I have been very lucky so far,” he says. Typically, he says, in the stock market, over the last 10-15 years, he has averaged a 15-20% return year on year. Real estate too was good till three years back giving him a 25% annual return. “With angel investing, on a portfolio basis, it is not difficult to get 20-25% returns. That’s why as an asset class, it has to be a part of my portfolio,” he says. Part of the current rush into angel investing can also be attributed to a sluggish real estate market, particularly the residential segment. Ashutosh Limaye, head (research) JLL India, a real estate consultancy, says between 2004 and 2008, appreciation in real estate prices (residential) in NCR and Mumbai hovered around 20%. However, the same dipped to 6-8.5% between 2010 and 2015. That may also explain why more and more high net-worth individuals (HNIs) are taking on an angel avatar. “There is increased interest among our clients to look at startups as an investment option,” says Anirudha Taparia, director, IIFL Wealth Management Ltd, which for the first time is launching a Rs 1,000-crore fund called Seed Venture Fund 1 for its HNI clients to invest in startups at various stages. It has also formed a 10-member board of seasoned entrepreneurs and investors like Raghav Bahl of Network18 fame, Sandeep Tandon of Freecharge, Aprameya Radhakrishna of TaxiForSure to oversee the deals and investments. IIFL, which has Rs 75,000 crore under management and 7,000 client families, says typically HNIs allocate 40-45% of their investment in real estate, 20-25% in equity, 20-25% in fixed income and another 5-10% in gold and art. Increasingly they want to have startups (3-5%) as part of their portfolio which is not very easy. “We are creating a fund of funds along with a coinvestment approach to investing in startups,” says Taparia. Success stories around exits and buyouts, where early investors have made big bucks, have also helped spread the word. Prashant Mehra, partner, Grant Thornton, says in 2013 some 265 startup M&A deals worth $126 million were cut. In 2015 (January-August) the numbers of both volume and value have surged — 575 deals worth $1.4 billion. Angel Investing 2.0 Besides individuals turning angel, what’s giving the early-stage investing story a leg up are the platforms that have emerged as one-stop shops for both entrepreneur and angel. On the lines of the five-year-old AngelList in the US (which also caters to job-seekers in startups), a range of such platforms has emerged back home. The two-year-old growX has 75-odd investors, has vetted over 1,100 deals so far and made 15 angel investments, seven in 2015. “We do not invest as individuals but a single entity,” explains cofounder Bahl. For each investment, they create a fund-like structure where all the members chip in. growX does all the work around vetting and structuring the deal. “The platform model allows us to do much larger round sizes. Earlier we could invest upto Rs 50 lakh in a startup. Now, we can put in upto Rs 5 crore,” says Bahl. Earlier free, growX has evolved to a small subscription and carry fee (a percentage of the gains made on investments). Applyifi, set up early this year, has a slightly different model. “Most platforms like growX are for experienced angels. In India where we need thousands of angels, we are trying to bring in a new class of investors into the fold,” says cofounder Prajakt Raut. Applyifi vets all the applications, screens promising ones, provides its members with detailed assessment reports and creates simple scorecards on each startup they screen and clear to help the uninitiated understand the process. Raut is targeting people who can invest Rs 4 lakh to Rs 4.5 lakh a year. He has already got 185 investors on board. “We have kept it free till year end after which we will charge.” Then there is Globevestor, which caters to NRIs interested in angel investing in India. Cofounded by Ankur Shrivastava in 2013, it has 350 members so far and has made nine investments worth $1.25 million. Los Angeles-based Manish Dabas, 37, who works with consultancy firm Ernst & Young, is one of them. Dabas joined Globevestor because he wanted to diversify his portfolio. “I do invest in mutual funds but I am not getting the multiple effect that startups could bring in,” he says. Of his annual savings target of $40,000, he has allocated $10,000 to angel investing. Globevestor sends him regular updates on his investments and also vets and screens new deals. Clearly, from an investor point of view startup mania today is not too different from the equity cult that took off in India two decades ago, with everybody in and around Dalal Street fancying their chances with ten-bagger and multi-bagger stocks. Many lost their shirts in the busts that inevitably followed the booms, and many angels come lately will ride a similar cycle. “Many new investors are blindly entering the fray, without fully understanding the risks of very early-stage investing,” says Bahl. Rajesh Sawhney, founder of GSF, a startup accelerator, whilst pointing out that a country of the size of India needs many more angel investors, admits that “the hangover will come.” But it won’t be as long-lasting and as disastrous as bubbles are for small investors in equity. “They (angels) can afford to lose money as they are not small investors,” says Mittal of Shaadi.com. And, as Sawhney of GSF points out, it isn’t as if it’s a lose-lose equation. “At the end of the day, it’s the startup ecosystem in the country that benefits.”