Mumbai-based portfolio management service, Piper Serica Advisors Pvt. Ltd has launched a Rs 100 crore category-I angel fund to invest in early-stage tech companies.
With an aim to minimize the risk of high mortality in its portfolio, The PMS provider aims to back 30-40 investments over the next 3 years with this fund.
Piper Serica’s angel fund will focus on startups with exponential growth models. The fund aims to be a seed-to-IPO fund and will stay with its winners for a period of up to 10 years to reduce the risk of failure. 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 a 78% failure rate and 11% IRR while those with 9 years of holding have a 64% failure rate and 30% IRR, the firm noted.
The VC firm also said it is looking to launch a series of alternative investment funds in the coming years.
“We are seeing some exceptional talent aspiring to become entrepreneurs. India’s economic growth over the next decade will create hundreds of unicorns. High networth (HNI) investors should allocate a portion of their equity portfolio to startups with the objective of making high returns over a long holding period. At the same time, investing in startups is fraught with risks, therefore, it is better to invest through a well-managed fund,” said Abhay Agarwal, founder, fund manager, Piper Serica.
Piper Serica was established in 2003 as a SEBI (Securities Exchange Bureau of India) registered portfolio management service provider that provides access to both Indian and international investors in the Indian equity markets.
The firm said it will use its proprietary tool named Yoda.ai to screen investment opportunities. The tool uses 17 parameters to predict the probability of success and then selects the company with a score of 70% or above for further diligence, the company said in a statement.
Piper Serica’s currently has assets under management (AUM) worth Rs 400 crore. The firm aims to build an AUM of Rs 2,000 crore in the next 2-3 years. Its portfolio consists of companies like Info Edge, Dixon, Apollo Hospitals, Affle, Jubilant Foodworks among others.