At a time when funding is drying up for start-ups, Keiretsu Forum, the world’s largest private angel investment community is planning to expand and open more chapters in the country. In an interview, Judith Iglehart, president, international division, Keiretsu said it is in tough market conditions that the angel network is able to find the best companies.
She said what sets Keiretsu apart from mainstream venture capital firms is that it provides money to the companies and nurtures them during tough times. California-based Keiretsu, which makes investments based on the insights from its community of over 2,500 investors or members, is eyeing Indian companies ranging from healthcare, aerospace to big data and robotics. Edited excerpts.
How is Keiretsu Forum shaping up in India?
From our perspective, it is shaping up fine. Members bring other members. As long as people are coming to us and bringing deal flow to us, we are doing our job. Because the twin pillars of Keiretsu Forum are ‘great association and quality deal flow.’ We want to see the best companies with the best members. We see a great variety of sectors, everything from cool stuff to hardcore life sciences. But not everything is interesting to every member. So we have the ability to look at lots of companies and in their home territory so that the original chapter can keep an eye on the growth and development of the company as they move forward.
What are you doing differently compared with the others?
I don't know nothing how the (mainstream) funding works, but they usually just throw $100,000 into a company and say go into Y-Combinator (start-up accelerator) or some place and make it. We have learnt over the years that it is not quite that easy. A lot of good ideas and entrepreneurs need nurturing. A lot of our members like to provide work, money and nurturing to small companies. I think we are in it for the long-term. We don't have that scattershot approach of ‘shoot the shotgun and have the buckshot go everywhere.’ We are more focused on the niche.
What advantages does India have over other start-up ecosystems?
All of your scientists are involved in big science. The world of big science is changing. Cellular Biology is being used for computers, clothing that moderates wear and your exercise potential. Things that were unheard of five years are now huge in the market. Who knows what it would be next year, but Indians have the intellectual capability to do whatever they want. They (Indians) started most of the major companies, ran them in the Silicon Valley, now that they are home and they will do the same thing here.
Do you see exits for investors as a significant issue here at a time when funds are drying up?
We know that the people that are in place in our chapters have the capability of bringing these companies to liquidity events.
The lesson I learnt is that it takes a long time for a company to get liquidity. We thought originally it would be three years, but it is five years.
It is not 10 or 11 years, but five or six years is typical. We have only been around for 16 years. It took us a while to see those trends. Every time the market takes a dive, we start (back to) square one again. .
Any such ideas where Keiretsu placed its bets?
A company was brought to us that made coffee and removed most of the caffeine from it. It was called Puroast (low acid coffee). It seemed to be a good idea, everybody gets an upset stomach after drinking nine cups of coffee. Nobody may have done it.
There is a company I saw in Seattle. It was an apple orchard that was being ripped out for it to be replanted as an organic orchard. They raised a lot of money in Washington State, which is where they grow a lot of apples.
It came to Northern California and nobody invested, so it just depends.
