Pranay Mathur, Partner and CEO, RealTime Angel Fund

5 Oct 2023 , 10:47 AM

As an SEBI-registered angel fund, what factors do you consider when selecting potential startups to support?

At Real Time Angel Fund, our primary goal is to identify and support startups that possess innovative ideas and are led by teams with strong growth potential and profitability prospects.Our investment strategy is centered around seeking out startups that boast inventive business models and offer scalable products or services capable of disrupting their respective industries. While we do not limit ourselves to specific sectors, we are currently heavily focused towards health, fintech, green energy, artificial intelligence, and consumer technology. We understand that capital alone is not enough to ensure a startup’s success. Therefore, in addition to financial support, Realtime Angel Fund is committed to providing mentorship and operational guidance to our portfolio companies. Our aim is to not only help them grow but also to assist them in creating significant value in their respective markets.

Could you share some success stories or examples of startups your angel fund has supported?

We have a strong track record of successful investments in high-growth startups. Since our launch in September 2022, we have supported and invested in twenty startups with an average investment of INR 1.5 Crores and INR 35 Crores dispersed to startups.  Recently we invested in Myway.ai and Redesyn. With our support both the startups have been able to accelerate its growth trajectory, expand its user base, and further enhance its product offerings. Some other names that we are proud to be associated with are MyMandi, TransportSimple, Punt Partners, FreshoKartz, MeraTractor, MentorKart, LarkAI, CapitalSetu, We360, Woovly, MyWays.AI; all who have revolutionized the space they operate in with the help of the impetus they have received through our funding.

How do you plan to navigate the unique challenges and risks associated with early-stage investments as an angel fund?

Early-stage investments do come with certain challenges and thus we have to be extremely strategic in our approach. For each hurdle we face, we curate a tailored problem-solving roadmap, because it is usually never a ‘one size fits all’ sort of a problem. However, for the sake of an example, these investments are high risk, so we first perform thorough due diligence and try to back the decision to invest with as many data points as possible. Then we develop a robust risk assessment framework which allows us to identify startups with higher potential for success. To navigate this challenge overall, we also try to diversify the portfolio of companies we invest in, to reduce the impact of failure from one investment.

Do you offer any other value-added services to startups you invest in?

At the Real Time Angel Fund, we offer a comprehensive suite of value-added services to the startups we invest in, transforming them into success stories. Our commitment extends well beyond providing capital; we become true partners in their growth journey. Our flagship Seedleap Accelerator Fund Program, powered by the Real Time Angel Fund, is a testament to our dedication to early-stage startups. Through this program, we provide up to INR 2 Crores (USD 250K) in seed funding, giving startups the financial boost they need to take flight. But it doesn’t stop there. We understand the challenges and complexities that startups face, which is why we offer hands-on mentorship and operational support, helping them navigate obstacles and scale effectively. Startups participating in our program gain access to an unparalleled network of industry experts and a global community of CXOs, creating opportunities for partnerships and collaborations. The program culminates in a Demo Day, where startups can showcase their progress to a network of over 300 investors, opening doors to additional funding and strategic alliances. Furthermore, our commitment to visibility includes the opportunity for startups to get featured in prominent online and offline media, boosting their brand and market presence. Our mission is crystal clear: to empower startups to achieve their goals and realize their dreams, providing them with the resources, support, and connections needed to succeed in the competitive startup landscape. We’re not just investors; we are their dedicated partners in success.

How do you stay ahead of the curve and identify promising investment opportunities in the rapidly evolving startup ecosystem?

We employ a multifaceted approach that leverages our experience, network, and industry insights. First and foremost, our commitment to continuous learning is unwavering. We maintain a team of experts who are deeply immersed in various sectors and industries, regularly monitoring market trends and emerging technologies. Additionally, we engage in extensive market research to understand market dynamics, identify gaps, and pinpoint areas of growth potential. Networking is another cornerstone of our strategy. We’ve cultivated a vast and diverse network of industry professionals, entrepreneurs, and thought leaders. This network provides us with valuable insights, access to deal flow, and the ability to connect with startups that align with our investment thesis. Furthermore, we actively seek out startups with unique value propositions and disruptive potential. We focus on founders who demonstrate a deep understanding of their markets and exhibit the drive and vision to bring their ideas to fruition. Our rigorous due diligence process helps us evaluate not only the business model and market fit but also the startup’s team dynamics and scalability.

Could you elaborate on your approach to risk management and how you mitigate potential risks?

The startup ecosystem can be unpredictable, and mitigating potential risks is essential to protect our investments and generate positive returns. Before making any investment, we conduct rigorous scenario analysis to assess the startup’s vulnerability to various market conditions and external factors. By modeling different scenarios, we can better understand how the startup may perform under various conditions and adapt our strategy accordingly. We also develop clear exit strategies for each investment. Understanding how and when we can potentially exit allows us to manage liquidity risks effectively. Moreover, maintaining a robust system for monitoring the performance of our portfolio companies, regular reporting enables us to detect early warning signs and take corrective actions swiftly. We also structure our portfolio to be resilient to market fluctuations. This involves diversifying across industries, geographies, and startup stages. A diversified portfolio can absorb shocks in one sector or market and maintain overall stability.

What are the significant challenges you face as an angel fund in supporting startups, and how do you overcome them?

While there are new challenges sprouting up always, startups, especially at the early stages, have a high likelihood of failure. Many new businesses do not survive past the first few years, which means that as angel investors we can lose our entire investment. In such cases, diversification can reduce the impact of any single failure on the portfolio. Similarly developing a robust risk assessment framework can also help overcome this hiccup. 

Furthermore, early-stage investments are typically illiquid, meaning that your money is tied up for an extended period. It can take several years for a startup to reach a point where it can exit through an acquisition or an initial public offering (IPO), providing investors with a return on their investment.    Portfolio management and exploring secondary markets is a route that helps us mitigate this challenge. 

Also, as an angel fund we typically have limited control over the management and decision-making of the startups they invest in. This essentially means that we are unable to control where the funds are allocated, making it a tough proposition for us. Therefore, we negotiate investment terms that provide certain rights and protections for us. We also remain actively involved in the operations of the start-up and provide assistance wherever we can.