Canaan Partners recently organized a networking Angel Investor roundtable at the sidelines of the TiE Entrepreneurial Summit 2009 in Mumbai. The roundtable provided a platform for peer exchange and thought-provoking discussions on best practices in the field of angel investing.
Being an angel investor myself, it is interesting to see how the ecosystem for angel investments has evolved in the past one year. Much like the majority of the economy, angel investments too felt the crunch of 2008 - 2009. While angels did not exactly take a backseat in terms of investing this year; they did tread with much caution. A general sense of pessimism had prevailed and slackened the pace of angel investments with angels holding on to the cash more dearly.
Typically angel investors have invested as single entities and therefore undoubtedly face the highest levels of risk taking; coming in at the initial stages of the investment cycle. However, increasingly more and more angel Investors find it advantageous to organize themselves into groups like IAN, as it ensures:-
Adequate capital availability through syndication
Sharing the effort involved in making investments as well as managing them
Availability of wider domain knowledge within the investing group
While the earlier stages of angel investing witnessed a bias towards IT oriented investments, angel investors are now looking at a wide range of sectors. However, this range seems to be limited by the fact that angel investee companies need to raise their next round of financing from VCs, and sectors where follow-on investments are expected to be available are limited.
A common sentiment echoed by majority of angel investors includes a growing preference for entrepreneurs with strong domain expertise and operating background. Some of the reasons that contribute to this opinion include lack of compelling differentiation in ideas, as well as the difficulty in building strong operating team under inexperienced entrepreneurs.
Although angel investing is yet to reach critical mass in India, the Indian angel is increasingly becoming more risk-taking. To further the development of Angel capital in the country, some of the key initiatives that can be undertaken in collaboration with organizations like TiE:-
Having tax breaks for accredited investors, similar to those prevalent in other countries
Devising investment structures that allow for returns even when the investment turns into a lifestyle business, with no acquisition or IPO in sight, and with lower dependence on future rounds of financing
Expanding the themes and geographic spread of angel investment, perhaps by attracting local capital. Case studies of successful angel investments, as well as training on investing and portfolio management could be useful
Devising management structures to allow distinct roles for passive investors and active members, to allow maximum leverage on engaged investors
Alok Mittal, Managing Director
MotorExchange, India’s largest used vehicle exchange, recently announced the closing of Series A round of Venture Capital funding from Canaan Partners. The investment will accelerate the company’s growth and help build India’s largest used vehicle exchange aimed at providing the most efficient price in defined timelines to sellers, and the largest choice of vehicles to trade buyers. The company boasts to build India’s first recognized vehicle certification business aimed at authenticating the condition of the car to facilitate transactions for buyers and sellers.
BharatMatrimony, announced that it would be tying the knot with Twitter in the near future enabling its 20 million members to add their Twitter updates to their matrimony profile. This step is a way forward in the world of online matchmaking. Matrimony profiles will now become more interesting, closer to reality and would enable millions of singles to stay connected.
Zoosk, World’s largest social dating community, recently raised $30 million in a Series D funding round. Canaan Partners, an existing investor, also participated in the round. The latest investment will support the company’s rapidly growing user base, continued global expansion, marketing activities in key geographies, and investments in new features and applications. The company recently hit a $30 million run rate based on revenue booked for the sale of Premium Memberships, millions of transactions in Zoosk’s virtual economy, and advertising.
Canaan Partners, announced the appointment of >Tim Shannon, M.D. as venture partner. Based in Canaan’s Westport, Connecticut office, Dr. Shannon will support the firm’s current healthcare portfolio companies and identify new investment opportunities. Dr. Shannon brings more than 15 years of biopharmaceutical operational experience leading product and business development to Canaan’s investments.
TiE Entrepreneurial Summit 2009, : held on December 21st -23rd 2009 at MMRDA Grounds, Bandra-Kurla, Mumbai, focused on bringing together entrepreneurs, venture capitalists, policy makers, academia, industry, thought leaders and other stake holders. The theme for this year was “Enterprising India: Changing the Nation, Leading the World”. The forum showcased and celebrated the most Diverse, Dynamic, Distinct examples of Enterprising Indians. Alok Mittal, Canaan Partners, participated and addressed the session on ‘Financing outlook’.
Angel Investor Roundtable 2009: Canaan Partners recently organized a networking Angel Investor roundtable at the sidelines of the TiE Entrepreneurial Summit 2009 on December 22, 2009 at Hotel Trident, Bandra Kurla in Mumbai. The roundtable provided a platform for peer exchange and thought-provoking discussions on best practices in the field of angel investing with over 30 angel investors. The event kick-started with breakfast and covered topics such as what works, how involved do Angels need to be, what are typical deal terms and structures, how do Angels make stay or exit decisions, what are the biggest challenges including promoter/transparency issues, extending till the next VC round, getting exits etc.
Canaan Partners invests in entrepreneurs and works alongside them to turn visionary ideas into valuable companies. Since 1987, the firm has catalyzed the growth of disruptive technology startups and healthcare companies revolutionizing the practice of medicine. With $3.4 billion under management and more than 94 acquisitions and 54 IPOs to date, Canaan has funded companies such as Acme Packet, Associated Content (acquired by Yahoo), CommerceOne, DoubleClick (acquired by Google), ID Analytics (acquired by LifeLock), Match.com (acquired by IAC), SandForce (acquired by LSI), SuccessFactors (acquired by SAP) and Virsto Software (acquired by VMware), as well as notable healthcare companies such as Advanced BioHealing (acquired by Shire), BiPar Sciences (acquired by Sanofi), Chimerix (NASDAQ: CMRX) and Elevation Pharmaceuticals (acquired by Sunovion). Current technology investments include Blurb, Kabam, Lending Club, Performance Marketing Brands, SOASTA, Tremor Video and Zoosk in the U.S.; BharatMatrimony and UnitedLex in India; and PrimeSense and LiveU in Israel. The Canaan healthcare portfolio includes emerging leaders such as Liquidia Technologies, Civitas Therapeutics and DICOM Grid. Canaan maintains a presence in the global innovation hubs of Silicon Valley, New York City, India and Israel. For more information visit www.canaan.com or www.facebook.com/canaanpartners.
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