Meet Padmaja Ruparel: Midwife to rising Indian startups

In this edition of CNBC-TV18's Young Turks, it's time now to turn attention to India's domestic angel investor community which is slowly coming of age. An angel investor or angel is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity.

With over 200 angels registered with India's dominant formal network, the Indian Angel Network, which kicked-off six years ago, indicates the scale of the growing interest in angel investing. Below is a transcript of the interview on CNBC-TV18. Also watch the accompanying video. Padmaja Ruparel is the president of the Indian Angel Network and she's been investing in startups for over two decades now. She describes to the angel investment ecosystem and also the Indian Angel Network's plans for the year ahead. The network looks at sectors like agriculture, banking and financial services, education and even healthcare for investment. Padmaja stepped out of her corporate life to operationalise the band of angels now known as the Indian Angel Network. What started with a nine-year-old laptop using investors' offices in 2006, today has operations across five cities in India with over 200 angel members, 35 investees and 25 incubator companies. The Indian Angel Network boasts of an average about 350 deals a month. Padmaja talks about investment plans for the year and why entrepreneurs still find it hard to startup. Ruparel: We don't have very high quality incubators which sort of gives a 360-degree surround strategy to the entrepreneur for instance. Starting a company takes a long time and the Indian legal frameworks are tough. The innumerable number of compliances needed for a start-up offers us the opportunity to provide a single window of guidance in which a startup can work with. Q: Which sectors are you bullish about and why? Ruparel: In our minds, the growth of the Internet itself is of course a big opportunity as it moves into the second-, third- and fourth-tier term, along with mobile telephony where there is a lot of activity. Education comes next followed by medical devices and healthcare. These are the three sectors which I am bullish in the short- or medium-term. I think is going to be a lot of innovations in the agriculture sector. Q: What is your average ticket size and the investment pipeline for the year? Ruparel: Typically, we invest between Rs 2-3 crore per company- that's our average sweet spot that we like investing. Last year, we have closed 11 deals and this year we closed six deals while the sixth month is still not over. So we are closing one deal in less than a month. We should be able to close 15 deals this year. Q: What are the kind of returns you expect on your investments and in what timeframe? Ruparel: The answer is simple: As much returns and as fast as possible. We do look at very high returns, but we simultaneously recognise that many start-ups will make losses before they break-even. Some of the good ones offer returns many times the original investment. Q: You have been in the business since 2006. Share with us some success stories. Ruparel: We have got several to be honest. Druvaa, a company that is well-known started off with angel investments. Our first round investors made 11.5 times the original investment over a period of 42 months.
The company has also lured venture capital investments and has now gone to the US to build its company. It's a perfect story, I think that’s the classic success that you would want.
There is another company Vienova which was angel-invested again and the angels received  4-5 times the original investment. There was another company called Hungry Bangalore, but it was strategically acquired by an UK entity, and again angel investors made money.
One of our latest ventures, authorGEN, a Chandigarh-based online education venture, has made investors rich. Another example is Educomp which came in with a strategic investment. So there are plenty of examples and I think our investors feel the effort is rewarding. Q: Give us instances of some failures and explain why you think they have failed? Ruparel: We haven't seen too many as yet and that does not discount the fact that we won't see them. An entrepreneur needs to be focused on the company and build a team around it imbued with the same work culture, have the ability to accept mentally certain realities and be able to maintain capital efficiency. Padmaja, we will be tracking those investments closely. Thanks very much for speaking to us on Young Turks.