Institutions like BITS Pilani, IIMs and IITs have always had strong alumni networks. Many of these have founded the top startups in the country including Ola, Meesho, Swiggy, etc. While many of these institutions have their entrepreneurial cells, a few have thought of starting an alumni fund.
All this is set to change with IIM Kozhikode’s new IIMK Alumni Fund. Avijeet Alagathi, fund manager and spokesperson, IIMK Alumni Fund, says,
“The alumni community wanted to contribute meaningfully to the startup ecosystem and hence thought a ‘skin in the game’ approach works best to help entrepreneurs scale their ideas into meaningful businesses”.
Early this year, a group of IIMK alumni got together to look at investing jointly in startups to participate in the ecosystem. The idea was to help the next generation entrepreneurs scale their ideas into large enterprises.
What does the fund do?
IIMK alumni believe they bring valuable skills and networks in a range of industries that could make a difference to a startup’s success rate. Added to this, the combined experience could help in evaluating new startups, and bring more industry-specific insights to the table.
Revant Bhate, treasurer, IIMKAA (alumni association) says, “We are very happy to see the intent of IIMK Alumni to contribute to the startup ecosystem and its manifestation into a fund which can invest and create impact at scale with skin in the game”.
One of the key objectives for the IIMKAA in setting up IIMKAF was to drive alumni and student engagement around the entrepreneurship theme. Over the past few years, the IIMKAA has seen a great deal of activity in the entrepreneurship space - either with alumni founders building and exiting successful startups or assuming senior roles at leading startups as well as being active angel investors and venture capitalists.
“The 8,000+ strong IIMK Alumni network is now able to assist entrepreneurs of today through their own experience, reach and networks. Given enough interest around the asset class which is usually not accessible easily, there was significant appetite to formalise a fund. The overall time to setup the fund from conceptualisation to commitment to paperwork took us about 90 days. The AL platform makes it very seamless to launch funds in short periods,” says Avijeet.
The workings of the fund
The fund currently is sector agnostic. It invests in venture opportunities ranging from pre-seed through early-stage companies. To date the fund has made multiple investments across sectors in startups like Turmswear (functional apparel), Credenc (education lending), Vernacular.ai (AI-based Voice Automation Software), and Postcard (healthy flavourful snacks), to name a few. These investments have been made along with some marquee investors.
“A fund advisory team is setup as a portion of investors in the fund who have had experience in either building early stage startups or investing in them. The investment committee comprises of five fund managers who are also the anchor investors in the fund. The process followed is typical to a venture firm for making investments,” adds Avijeet.
Since the IIMK Alumni Fund is structured as an AngelList Angel Fund, it allows a group of angels to raise meaningful capital and use AngelList India’s infrastructure to run their investment back office. It also allows the fund to write larger cheques into companies with short timelines.
There are no management fees for the fund. The IIMKAF has raised capital upfront to make multiple investments. The fund legally and operationally, is like any venture fund. The investment committee makes all investment decisions.
How does AngelList help?
AngelList India handles everything through the lifetime of the fund including its setting up, legal review for investments, taxes, financial reporting, wire transfers, and distribution.
Angel investors focus on helping startups grow rather than concentrating on profits the company makes. They are also essential in helping the ecosystem as angel funds focus on early stage startups, which in turn move ahead and forward towards the next rung.
AngelList will manage the legal and regulatory aspects of raising capital and investing it, and charge a platform fee of 5 percent on the fund while the fund managers can make 15 percent of the profits out of these angel and venture funds.
Speaking about the IIMK Fund, Utsav Somani, partner, AngelList India, says: “IIMK alumni have been at the forefront by creating the first-ever Alumni Angel Fund in India, which is one of the best use cases of the versatile AngelList India platform. We now have requests from alumni associations of other institutes and corporates as well, and are happy to see the deepening of capital pools in India to support the ecosystem”.
(Edited by Suruchi Kapur Gomes)