Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Padmaja Ruparel was recorded in December 2017.
Padmaja Ruparel is Co-founder, Indian Angel Network (IAN), and Founding Partner, IAN Fund. She has been a key player in shaping India’s still somewhat nascent startup eco-system. Those interested in Indian startups and the funding trends should read on.
Sramana Mitra: Tell us about Indian Angel Network and the journey you’ve had building it. What is going on there now? What is working? What is not working? What have you learned through this process?
Padmaja Ruparel: The entrepreneurial ecosystem in India is very different from what it is in the Valley. It’s a much more nascent ecosystem. Our first startup industry is the IT industry and that’s only 25 to 30 years old. You can imagine how young the startup ecosystem is.
Sramana Mitra: I would say it’s only about a decade old really.
Padmaja Ruparel: That’s true. It started with TiE coming here in 2000 or so. That’s when I operationalized the TiE Delhi chapter, which is now the best performing chapter in the TiE world. About 10 years ago, I co-founded Indian Angel Network, which brought the concept of angel investing to India. It started off with a very simple model. The ecosystem was very different here. The expectations were very different.
We grew over the years. We decided to build something which was a little distinct. We moved away from informal angel groups to something that is global and institutionalized. We decided that some of the foundation on which IAN would be built would be real-time information leveraging domain expertise and geographic clout. We provide real-time information to our investors. We provide money, mentoring, and market access. It’s a combination of these three that we thought would help startups to build global companies.
Sramana Mitra: Can you comment a little bit on the composition of the angels in India? The history of the IT ecosystem in India is very different from Silicon Valley. In Silicon Valley, there have been a lot of product success stories and that’s where the angels were born out of. People would make money and then come back into the ecosystem with the experience of building product companies.
India’s heritage is on the services business whereas the bulk of the investment that happens in the startup ecosystem is in product companies or Internet companies, which we don’t operate at all in the service company mode. I believe you’ve had to navigate that tension. How has that played out?
Padmaja Ruparel: You’re absolutely right. Here at IAN, we see people who build garage-to-IPO companies. The reason I mention that is whatever trajectory the company takes, it’s starts with services and then moves to the product side. That’s number one. Number two is the services companies are not angel investable because angels are not looking at headcount businesses. They’re looking at very scalable businesses.
That is where the services businesses are getting productized. That is where a lot of the process businesses are being productized. All of that is getting productized very rapidly. We are now entering the next phase. As angels, we look at the next ventures. Automation is coming next. We have a lot of companies and startups who are looking at AI and virtual reality. They are picking up gaps in the existing large company product suite and doing it faster, cheaper, and better.
The growth of innovation here has gone into two directions. One is going from services to products, SaaS, and AI. The other thing that has happened is, India is known for its software. Technology and software has become horizontal – not vertical anymore. We’ve invested in companies even in manufacturing, biotechnology, and stem cell. The power of this country is phenomenal. The spread and evolution that is happening in technology has grown.
The market here is phenomenal. It’s not only a large market. India represents a sixth of the world’s population. It’s a market that has grown domestically. Disposable incomes are rising. GDP is tracking at around 6%, which is huge. It has become a pilot market for many innovative products. Once they grow into stable ventures, they go global into other developing markets as well. I can give you tons of examples. There’s a company called Consure which is into low-cost medical device for incontinence. It was operationalized here.