Invest into VC Funds – A Success Story

Did you also want to be a part of Nykaa or Zomato’s public listing success stories? What if you would have had some investments into those companies before they went for IPO? Well, you are not alone. 

Utpal is a successful tech entrepreneur from Ahmedabad and has been investing in various assets to diversify his wealth. He had been exploring how to go about investing in some successful VC funds that invest in promising startups. However, he found that investing into VC funds was generally accessible to institutional funds such as pension funds, established family offices, and a few ultra HNIs. This remained exclusive because of the required minimum investment ticket size and invite-only access of the same. 

IndiaBiz made it possible for Utpal to invest into a highly successful VC fund called Unicorn India. Unicorn India has highly coveted startups in their portfolio like OPEN Bank, ChitMonks, Inntot, Moteefe, and many more. Along With Utpal, 13 other investors joined hands to become an LP in a Unicorn India Fund. 

What and how did this transaction proceed?

The transaction saw the coming together of 14 individual retail investors to invest in a reliable venture fund, managed by Unicorn India. These individuals pooled in their respective funds to be able to make such investments. Unicorn India is one of the most promising early-stage investment firms to exist in India.

Formerly, all transactions at Indiabiz involved two parties, a buyer and a seller. It was the first time when multiple parties came together on one side to engage with one entity on the other. This one-of-a-kind deal gave these folks the status of a Limited Partner collectively, in addition to the opportunity of being a part of the “high risk, high potential return” club. The coming together of these individuals allowed them to explore venture funds as a potential investment alternative with their respective limited contributions to the pool.

This asset class which was earlier limited to ultra-high net worth individuals is now available and more importantly, accessible to individual business investors like you and me. But at the same time, the investors must bear in mind that the potential returns come at the cost of high risk. It simply operates on the principle of higher risk, higher return. Individuals with an appropriate risk appetite are advised to make contributions to venture funds.

What benefits can you expect?

This agreement was carried out in Ahmedabad, which belongs to one of the major Tier 2 cities in India. The majority of India’s venture fund domestic contributions come from Tier 1 cities, especially Delhi, Mumbai, and Bangalore. This renders venture funds widely inaccessible in Tier 2 and Tier 3 cities. 

We expect there would be innumerable such transactions in the immediate foreseeable future. This would lead to a major influx of investable funds, thus, perfectly complementing the exponentially growing start-up sector in India. The two-fold benefit arising from this includes the promotion of entrepreneurship in India on one hand while giving more investors a chance to be a part of a success story and leveraging greater ROIs.

Venture funds’ growing popularity coupled with easier access would lead to it being recognized as a potentially rewarding investment alternative, especially in Tier 2 and Tier 3 cities. This would allow more and more people to tap into the benefits of investing in venture funds.

While there is not a lot of information out there about how to invest in venture funds, or when venture funds are accepting contributions, there is no reason for you to worry. Indiabiz provides you with the information as well as makes it seamless for you to start investing in venture funds. 

The association of individual investors allows the probable risk to be diversified over the same, lessening the burden on any one of them. It also allows more risk-averse investors to broaden their investment portfolios and be able to explore venture funds as a viable investment opportunity.  But that’s not it. With an increasing number of contributions to such venture funds, some individuals might gain the confidence they need to go solo and become full-fledged venture capitalists.

The course ahead:

In common parlance, most people think of venture funds as a potential opportunity for only those who can afford to splurge in crores. This has left enormous untapped potential in this segment.

Millions of retail investors constantly hunt for a new asset class to invest in. There are various avenues available such as stock market, real estate, etc but venture capital offers the highest return presently. Retail investors form an important part of our economy. And it’s high time they step into the venture capital market and harness its untapped potential. Thus, there is immense scope in this field. 

Venture Capital funds are undoubtedly one of the riskiest asset classes to exist today. But the potential returns these funds entail, attract a large number of investors. The liquidity of the fund is also limited in the short term. The average life of a fund is around 8 years, making it suitable for long-term investment.

Here’s what the parties to the agreement have to say:

Utpal Vaishnav“To give an analogy, becoming an LP with a fund is like getting married. There might be ups and downs; there might be great returns in one fund, and there might be setbacks in others, but as long as mutual trust levels are high, the relationship will be fruitful” said Utpal, the lead investor in the investors’ group who provided solid confidence to others.

On being asked about his experience with Indiabizforsale, he added, “In one word – Flawless! I have known Bhavin, founder of IndiaBizForSale, for years. However, this time, Hardik from Bhavin’s team led the initiative, and I’d say I cannot be happier to state how smoothly the transaction moved ahead. Indiabizforsale’s position, connection, and proactiveness are among the best in the industry!”

Anil Joshi“This is a new asset class and retail investors become a very important part of any fund and fund manager. Earlier India didn’t offer this opportunity to retail investors for VC investment, now it is possible” said Anil Joshi, manager of Unicorn India. On his experience with Indiabizforsale, Anil said, “Working with Indiabizforsale was wonderful, it took just one meeting to share the vision as a fund manager and they managed to bring the group of investors on-board. Very professional organization and team to work with”.

“Retail investors are always in search of new asset classes to invest in. There are many mechanisms for Real Estate, Stock Market, MFs, etc but the formal mechanism for VC funding is yet to mature” said Hardik from IndiaBizForSale, hinting at the immense scope in this field.

A final word!

Indiabizforsale as India’s Leading Investment Banking Opportunities Platform for Small Medium Businesses & Startups has made a significant impact with this transaction which opened a new door for business investors. Apart from that, investment opportunities of various asset classes are available to more than 100,000 IndiaBiz members from India and abroad.

Want to explore Venture Funds as an Asset Class? You know where to go now! 

Glossary

Venture Capital: Finance provided to startups by high-risk assuming investors

Risk appetite: The amount of risk an enterprise can afford to take in pursuit of its basic objectives.

Risk-averse: The tendency to go for an option with less uncertainty over high uncertainty

Retail investors: Individual, non-professional investors buying and selling securities

Venture capitalists: Investors who provide venture funds

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