More than 25 high-net-worth individuals (HNIs) from Gujarat have come together to invest Rs 100 crore into startups. Every year, these entrepreneurs will support a minimum of 50 startups with an average ticket of Rs 50 lakh.
This initiative was taken under the banner of the IndUS Entrepreneurs (TiE)'s new Vadodara outfit - TiE Vadodara.
Originally the idea was first conceived with the aim to strengthen the startup ecosystem in Gujarat, and stakeholders within the TiE ecosystem realised that it was necessary to catalyse a number of individuals who were yet to invest in startups.
"Investing into this asset class is very different compared to other asset classes, such as gold, listed companies, mutual funds etc. This requires a different level of risk-taking ability and and it's completely illiquid in its nature," said Bharat Bafna, co-chair of TiE Vadodara, and one of the investors.
Bafna said that out of the 25, only around 12 had experience in investing in startups. So he and others started warming up potential investors to the idea of putting money into startups, and getting exposed to this asset class.
Bafna noted that the idea received a lot of positive feedback from Minister of State for Electronics and Information Technology Rajeev Chandrasekhar when it was discussed in the lead-up to a TiE Vadodara event.
"He was quite impressed with the idea. And although he said that the idea was good, it needed proper shape and commitments, so that the idea does not wither away," Bafna said.
A few days after that, TiE Vadodara's president Nilesh Shukla and chairman Samir Parakh informed Chandrasekhar that they have roped in more than 25 HNIs who aim to invest more than Rs 100 crore in 50 startups.
"Hence in the next three years, we should have around 200 start-ups duly screened available to TiE members and with an average ticket of minimum Rs 50 lakh -- this reaches a minimum of Rs 100 crore," the letter by Shukla and Parikh to Chandrasekhar read.
"The startups which will apply, first of all, we will methodically analyse their business model and other aspects with the help of industry. After that, we will have monthly meetings, and presentations, and this will be a continuous process," Shukla said, adding that this system should be replicated in other states.
This comes at a time when the Indian government has been trying to establish new avenues for funding startups.
Recently, a report submitted by seven working groups on how the government can leverage AI, said MeitY Startup Hub has envisaged a Future Design IndiaAI scheme with a budget of Rs 945 crore and matching funding of Rs 3,000 crore from the industry for 5 years to foster AI startups.
“The programme envisages impacting and consolidating 725 tech startups over the course of 5 years to pave the road for an inclusive AI startup ecosystem…” the working group said.
As part of the IndiaAI, the working group has proposed an AI Ignition Grant Program to support 500 AI/deep tech startups at the product development stage with a grant of Rs 30 lakh each.
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