Native Angels Network, a recently-launched initiative of a group of Madurai entrepreneurs to support start-ups in small cities and towns, has made its first investment into a firm that designs and creates rainwater harvesting systems.
The network is putting in Rs 10 lakh of seed capital into a fledgling firm called Rainstock, started by first-generation entrepreneur K Sakthivel, 23, and his college professor VS Arvind. Seed capital is the money required to get a business running.
Sakthivel, an engineer who specialised in electronics and communications, says he started this venture while at college. “I chose this because water is a very essential component and will also be big concern in the years to come,” says the founder-CEO. In recent years, Madurai and its surrounding districts had been affected by severe drought. So much so that Sakthivel’s estimate of the market potential for rainwater harvesting structures is Madurai is about Rs 150 crore.
“Funding is a concern for people like me. I come from a small village and I got my initial capital through some like minded friends. But now will this seed funding I will scale up my business,” he says. After the professor-student duo started Rainstock, they were joined by Sakthivel’s friend R Nandhini, who resigned her private bank job to be part of the start-up.
Sakthivel says he has been able to understand the various water management technologies through the Rural Technology and Business Incubator of IIT-Madras.
The amount of Rs 10 lakh might seem small but the investing network points to a bigger message. “In the last 15 years,” says Sivarajah Ramanathan, founder Nativelead Foundation, the parent of Native Angels, “Madurai has not seen any big initial public offering (IPO or share offering) except a jeweller who went for an IPO. Youngsters here were moving to Chennai and some even to Bangalore, as we did not have an ecosystem here. That is what we are trying to create.”
The network, started in November last year, has well-known industrialists and business people in its fold. Its chief mentor is R. Dinesh, managing director of TVS Logistics while one of its trustees is K Pandia Rajan, founder of Ma Foi. Thirty-five investors in all contribute a minimum of Rs 5 lakh over a period of three years. This is what gives the network the investible funds. In terms of investing, they pick up a maximum 25-30% stake in the firms and plan an exit within seven years.
“After we started around 60 start-ups have approached us so far for funding and advice,” says Ramanathan. The network wants to focus more on the unorganised sector, for “they are the ones who need more funding and guidance,” he says.
The Native Angels Network is already talking to industrialists in Coimbatore and Tiruchi to start chapters in those cities. And, it is already getting ready to infuse Rs 10 lakh into an e-commerce venture that sells meat products.
