She was like any other teenager : loved ballet dance and basketball, and often sneaked out of class by strategically sitting close to the classroom door. of course, she needed the support of her classmates for this, and soon found a way to get that. quite simply, she bribed them with dhokla.
The student of Kolkata’s Loreto House used to tell her mother tall stories about a “big party” in school. The indulgent mother, incidentally a great cook, would offer to supply the dhokla. “I think my main objective always was: How do I go to the next level and have fun,” recalls 55-year-old Padmaja Ruparel. It’s an objective that seems to have stayed with her even years later.
Today, Ruparel is president of the Indian Angel Network (IAN), one of the country’s largest angel investor groups. She has been investing in startups for more than two decades and, today, is one of the most influential names in the startup investment ecosystem. Hardly surprising then that she debuts at No. 31 on Fortune India’s Most Powerful Women list, in the same league as Vani Kola, managing director of Kalaari Capital and Meena Ganesh, founder of health-care startup Portea.
Ruparel co-founded IAN a little over 10 years ago. What started as a small, close-knit group of friends who wanted to back startups is now a network of more than 460 angel investors (typically high-net-worth individuals who invest their personal money in startups in return for equity). It has backed 135 startups across 17 sectors in 11 countries since 2006 with an average internal rate of return (IRR) of 32%, an impressive track record in an industry where the failure rate is high.
Ruparel’s first angel investment happened quite by chance. At that time, she didn’t even know that the investment she was making had a name. (While the phrase ‘angel investing’ has been around since the late 1970s when it was used to describe wealthy people who backed Broadway shows, it wasn’t much in vogue in India even in the 2000s.)
In 2005, Ruparel and Saurabh Srivastava, her mentor and founder of software firm IIS Infotech, along with four others, pooled in their personal capital and bought back information technology solutions firm Scicom from British technology company Xansa. Scicom was a part of IIS Infotech, which was acquired by British-based FI Group (later renamed Xansa) in 1998.
In 2007, San Diego-based Science Applications International Corporation acquired Scicom and Ruparel took home a whopping 11 times the capital invested in her debut ‘angel’ investment. “This was a high-risk, high-reward bet. It was a very difficult space but a great team was in place. It had all that we talk about today. It unconsciously whetted my appetite,” she says.
To understand how that first deal happened, let’s go back a few years. A young, newly-wed Ruparel moved to Delhi in 1989-90 with an English degree as well as an MBA and CA articleship under her belt. She landed a job as a career counsellor at a computer training institute, but left a few months later as it didn’t excite her. She then dabbled in media briefly before joining IIS Infotech in 1991 primarily because she figured software was the next big sunrise industry.
It was a huge leap of faith, but it was the beginning of a journey that changed the course of her life. She started by assisting Srivastava, creating his travel plans, and gradually got into other parts of the business, including proposal writing. Srivastava was also the co-founder of Nasscom which helped Ruparel gain early exposure to startups.
Founded in 1988, Nasscom at that time was still a fledgling association and Ruparel’s initial role was mostly handing out badges to guests. But she was quick to use the opportunity and soon started finding sponsors for events that she ran almost single-handedly. “I was not from a tech background, so I had to learn from scratch. I could not code but I had to learn which language was necessary for what,” she says.
Apart from her involvement with Nasscom, Ruparel also expanded her repertoire at IIS to tech recruitment and project optimisation. She was instrumental in forming joint ventures with a Singaporean firm and other strategic initiatives such as the Over the Counter Exchange of India (OTCEI) listing and delisting of IIS. In 1998, when IIS Infotech was acquired by FI Group, Ruparel was the only team member besides the family and management to be involved in the negotiations and documentation. “I really saw it first-hand, what goes into a headline which says this M&A happened. I realised share price doesn’t need as much negotiation as much as reps and warranties do. My learning is that in M&A you disclose as much as you can,” she says.
As Ruparel was deeply involved with industry associations such as Nasscom, TiE, and The Indian Private Equity and Venture Capital Association (IVCA), the wide world of startups opened up to her. She networked with many entrepreneurs and young businesses; founders frequently shared their business plans with her, often seeking capital, introduction to mentors, and guidance. One of the first things Ruparel realised was that there was a big gap between entrepreneurs and investors, and the two did not have platforms to connect. Also, entrepreneurs didn’t know where to go if they wanted to raise smaller amounts of Rs 50 lakh to Rs 4 crore, as early-stage investors at that time were not writing cheques of less than $1 million (Rs 4.8 crore in 2006).
As Ruparel got a lot of business proposals for funding, an idea began growing in her mind—why not back a few proposals herself. She reached out to Srivastava and friends Raman Roy, Pradeep Gupta, Mohit Goyal, and Alok Mittal to find a way to back these firms. The six of them created an informal investors’ group and began investing. They soon realised that even if each one pooled in Rs 2 crore, it was still a substantial risk. Hence, they decided to pick one or two strong business ideas and pool in capital as a group to spread the risk and still have enough in case a firm needed more capital after a few months. “It started informally and we would meet entrepreneurs over tea. I soon realised that this idea has legs to it. Globally, there were angel groups and I spoke to several of them to understand the ecosystem. We decided to create an institution,” says Ruparel.
In 2006, the Indian Angel Network (IAN) came into being. Quite simply, the network invests in young firms, typically looking for investments between Rs 30 lakh and Rs 9 crore. The investments are syndicated among the angels who are the members of IAN and who often lead a deal based on their sectoral expertise. Some of the most prominent industry experts include Google India managing director Rajan Anandan, Avendus Capital co-founder Kaushal Aggarwal, and Anand Ladsariya, managing director of Everest Flavours, among others.
Ruparel’s biggest strength is her openness to new sectors because entrepreneurs often find it hard to convince investors about business models in the absence of industry peers. Consure Medical, a medical devices startup, is one such example. In 2008, when Nish Chasmawala, a medical devices industry veteran, began thinking of a device to help manage diarrhoea in bedridden patients, the sector was relatively new and India had barely two or three medical device firms that had succeeded in raising external funding. With Ruparel’s keen interest in the sector, IAN became the first investor group to recognise medical devices as a sector with potential. It eventually invested an undisclosed amount in Consure Medical in 2012. “She has been helpful not only at the company level but also at the idea level. She has been a sounding board and that has been her biggest contribution,” says Chasmawala, co-founder, managing director, and CEO of Consure Medical.
IAN invests in sectors such as agriculture, education, information technology, mobile, hospitality, and gaming. Its investment criteria are simple: a high entry barrier is a must, so that the business and its offering remains niche; a strong management team, and a scalable business model. Its portfolio includes firms such as cloud data protection and management firm Druva, analytics firm Sapience, platform as a service (PaaS) provider OrangeScape and online food tech firm Box8. So far, IAN has hit home runs with several of its investments. Some of its investors made a whopping 50% IRR in their 18-month investment in Wow! Momo Foods, after the startup raised its next round of funding. This year, IAN made profitable exits from Sapience and cybersecurity provider InstaSafe, among others.
Angel funding is now an asset class in itself, like its peers venture capital and private equity. In 2016, $4 billion (Rs 25,268 crore) was invested across 1,040 angel and VC/PE deals, according to YourStory Research, registering a 55% fall from 2015, due to bearish investment sentiment and lack of exits. Angel investing is fraught with failure the world over and IAN is no exception; it has written off 15% of its investments so far, including a robotics firm, in which the management floundered. Other reasons for writing off an investment include a firm’s inability to raise another round of funding due to slow growth or lack of investor interest in the space.
Ruparel’s passion for backing startup ideas and entrepreneurs, however, continues unabated. IAN is now launching a fund called IAN Fund to help more entrepreneurs. Ruparel, along with former Cisco director Pratik Bose and others, will lead the fund with a corpus of Rs 450 crore. Some 60% of the capital has already been raised through domestic investors. It will make a massive leap and focus on investments in the range of Rs 50 lakh to Rs 30 crore. The new fund has already invested in five firms.
From writing proposals and creating travel plans to leading IAN and its new fund, Ruparel has come a long way. But if there is one person who has allowed her to try out new responsibilities without letting the fear of failure come in her way it is her mentor Srivastava. “She has consistently over-performed on anything I asked her to do. People have two mindsets: an employee’s mindset and an owner’s mindset. Padmaja was an owner from day one. There is a complete dependability; I never have to ask her anything again. My role was to give her space and responsibility. She can do almost everything,” says Srivastava.
But Ruparel underplays it all. “It’s a blessed life. I have never said ‘give me this, give me that’. For me, it’s something I want to do and it’s a cause for me; startups and entrepreneurship is a life cause for me,” she says. For all the changes in her life, some things remain the same. She still loves the dhokla made by her mom and ensures she spends as much time with her mother as she can. When not reading business plans or interacting with entrepreneurs, Ruparel likes to paint, play the piano or hit the road with her husband for a short break out of the town.
( The article was originally published in the December 2017 issue of the magazine. )