Portfolio management service provider Piper Serica Advisors on Wednesday announced the launch of a Rs 100-crore angel fund to invest in early-stage companies that are using technology to either disrupt or significantly improve industries and processes.
The category-1 angel fund will make 30-40 investments over the next three-year period and the current fund size is capped at Rs 100 crore with a small green shoe option, according to a statement.
The fund will mainly focus on startups with exponential growth models. It aims to be a seed-to-IPO (initial public offering) fund and will stay with its winners for a period of up to 10 years.
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“It is a very exciting time to invest in start-ups in India just as the start-up ecosystem is ramping up. We are seeing some exceptional talent aspire to become entrepreneurs.
“India’s economic growth over the next decade will create hundreds of unicorns. HNI investors should definitely allocate a portion of their equity portfolio to start-ups with the objective of making high returns over a long holding period,” said Abhay Aggarwal, founder and fund manager, Piper Serica.
A longer holding period improves the success rate and the internal return rate (IRR). Early-stage funds with an average holding period of 3 years have 78 per cent failure rate and 11 per cent IRR, while those with 9 years of holding have 64 per cent failure rate and 30 per cent IRR, Piper Serica said, citing a study conducted by Industry Ventures.
Also, the company said it plans to launch a series of alternative investment funds (AIFs).
Founded in 2003, Piper Serica is a Sebi-registered portfolio management service company that provides access to Indian and international investors to the high-growth Indian equity markets. The firm has assets under management (AUM) of Rs 400 crore and aims to build an AUM of Rs 2,000 crore in the coming 2-3 years.