The Science Of Startup Investments: How Family Offices Can Tap Into The Startup Opportunity In India

Recently, Infosys cofounder Kris Gopalakrishnan urged India’s wealthy to look at startups as a serious investment opportunity and not just a trend. “We need to flow the money of high net worth individuals (HNIs) into startups,” he had said..

In India, there is still a need for larger involvement of family offices as there only a few players like Hero MotoCorp’s Pavan Munjal, Sharrp Ventures, Transworld Group of Companies, SAR Group Family Office, Ronnie Screwvala’s Unilazer, Dabur Group’s Burman Family Holdings, among others.

The opportunity is huge. As per DataLabs by Inc42, between 2014-2019, Indian startups have raised $58 Bn across 5,011 deals. The startup ecosystem has grown leaps and bounds with over 50k startups in the country. Hence, there is no dearth of finding the right fit.

Talking about returns expected from VCs, Transworld’s Mehta said that he would expect 16% to 18% of internal rate of return (IRR) in dollar terms, net fees and other charges. But for the VCs doing Series A or above, the return rate should be 15%; while for early-stage VCs, return should be 20%-25%. In the case of direct deals, it should be 25% return, according to Mehta.

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The Science Of VC Investments: How Family Offices Can Tap Into The Startup Opportunity In India

Recently, Infosys cofounder Kris Gopalakrishnan urged India's wealthy to look at startups as a serious investment opportunity and not just a trend. "We need to flow the money of high net worth individuals (HNIs) into startups," he had said. Notably, the new generation of wealthy and high net-worth individuals (HNIs) have been focussing on wealth management and investments through family offices.