German angels scout for Indian startups

At a time when European investors mostly remain apprehensive about the Indian startup ecosystem, a group of German angel investors is building a portfolio of early-stage ventures in India.

The Asian E-Commerce Alliance (AECAL), a seed fund co-founded in 2014 by Germany-based digital entrepreneurs and investors Peter Kabel and Dominik Gyllensvard, has put in $10,000 to $700,000 in seven Indian startups and is close to making follow-on investment of $1 million in a portfolio company.

Besides investing on their own, Kabel and Gyllensvard have brought along a dozen other angel investors from Germany to invest in Indian companies. They declined to share the names of these individual investors for privacy reasons but said all of them are experienced entrepreneurs. One investor, for instance, has sold his e-commerce business in Germany for around $300 million and the other is running a big retail chain, they added.

Kabel is a media entrepreneur and academic who has invested in 30 digital startups, mostly in Europe. He said his association with Indian businesses began 15 years ago when he set up a software outsourcing firm in the country. His first investment in an Indian startup was in Ixigo in 2009 and he says he got a good exit when SAIF Partners and MakeMyTrip together acquired 76.6 per cent in Ixigo in 2011.

The seven startups that AECAL and its German co-investors include lingerie e-tailer Clovia, subscription-based online game-based learning solutions provider for children Flintobox and mobile game app Gamezop. They have also backed online internship finder for college students Greymeter, video livestreaming platform for low bandwidth areas InstaLively, online security provider ShieldSquare, and online women fashion commerce platform StalkBuyLove.

Three of the seven -- Clovia, StalkBuyLove and Flintobox -- are e-commerce companies. “As organised brick-and-mortar model of retail doesn’t have great presence beyond urban pockets we see a strong long-term potential for the e-commerce industry in India and want to take early bets,” Kabel said.

Among its portfolio companies, Clovia later raised Series A funding from IvyCap Ventures. StalkBuyLove mobilised pre-Series A funding from former Rocket Internet CEO Mato Peric. InstaLively also secured follow-on funding while Flintobox is in the process of raising a Series A round.

“We can invest up to $1 million and can help find co-investors if our portfolio companies require up to $10 million,” says Dominik Gyllensvard

“We are not a VC firm. We are private individuals investing our own money. In some cases, we co-invest with others who invest from their family offices or cash reserves,” said Gyllensvard. “We can invest up to $1 million and can help find co-investors if our portfolio companies require up to $10 million.”

They didn’t give any guidelines on the future investments. “We will continue to invest. Our investment will be opportunistic as our focus is on helping this first set of companies to grow and establish in the market,” Gyllensvard said.

Kabel said they also want to help Indian startups which want to establish a presence in the European market. “Indian startups should realise there is a large market as big as the US market which is waiting to receive the services they offer,” he said.

Kabel and Gyllensvard see themselves as precursors to the entry of large institutional venture investors from Europe into India. While European investors have shied away, investors based in the US, China, Singapore and Japan have poured in massive sums into Indian startups over the past couple of years.

Kabel said they have been in talks with a number of European venture capital firms to help establish their India offices and design their strategies for the country. “The risk-averse large institutionalised western European investors are still cautious about investing in India,” he said. “However, we are excited about the market and want to show others the prospects we see.”