How Mumbai-based ah! Ventures built a global network of 750 investors

You may have often heard of a startup idea or two emerging from a sleepless night doused in alcohol. But what is rare is an idea to set up an investor network venture fund born over a pint of beer.

Set up in 2010 in Mumbai, ah! Ventures was the brainchild of Harshad Lahoti, an engineering student from Pune, who began his career with Larsen & Toubro in 2002. Wishing to do something more, his interest in finance and investment further propelled him to start Intercontinental Investments, an investment management and consultancy firm in 2005.

In 2006 -2007, the private equity and investment space was very different from the current scenario. “There were few angel investors and there weren’t many in terms of a third-party investor. There were VC funds and the friends-and-family rounds, but funding in between had seen a dearth,” says 36-year-old Harshad.

Around the same time, Harshad had built a startup around the poker card game. While looking for investment and funding for this startup, Harshad realised how difficult the process actually was.

Building a pro-entreprenuer fund

"It got me thinking how the startup ecosystem could actually foster without 'real' angel investors, who could truly give a helping hand to startups," says Harshad. It was during this time Harshad and his friend Abhijeet Kumar, who met each other at a radio club in 2003 and have been friends since, thought of ways to create a pro-entrepreneur fund.

The duo then decided to start a fund that truly guided and helped entrepreneurs raise money. Having a few friends from the investment consultancy firm they roped in some people to put in some money to build a fund and help startups.

ah! Ventures was started to make the startup lifecycle a lot easier. The idea was to create a pro-entrepreneur network that put the entrepreneurs in the focus. “Instead of the investor or investor network driving the deal, we let the entrepreneurs drive the deal. The entrepreneur is always front and centre,” says Harshad.

He adds that they are an angel network by the entrepreneurs, of the entrepreneurs and for the entrepreneurs. Harshad says they believe this philosophy, in long term, is in the best interest of the investors. "Being pro-entrepreneur today is in fact being pro-investor tomorrow," says Harshad.

Pivoting from a fund to a network

However, when they approached Securities and Exchange Board of India (SEBI), they found that the guidelines were much stricter and they needed a larger pool of funds. So, after going back to the drawing board, they decided to pivot.

The duo saw that the angel investment network had started picking up and they decided to build one themselves. The network was built by roping in different angels and letting them take a call on when and how much they wanted to invest. And that is how CLUB ah! was born.

From five investors in 2012, CLUB ah! is now a 750-investor-strong group across the globe, working as a network of networks. ah! has multiple investor networks, mentor network and partners or enablers network.

In the investor network there is:

1. The seed network that invests in early stage, ideation or proof-of-concept-stage startups. The amount of investment is usually $50,000-150,000.
2. Angel network, which invests $150,000-500,000. This Harshad says is one of the most extensive funding stages. The startup is mature enough to have some proof of market, and have tested the product and need money to scale.
3. VC network, which invests $750,000 to $1million. Here, numbers and traction are given emphasis. Some of the startups that have been funded under ah! VC network are itraveller, EywaMedia and Origa Leasing

In his experience with Intercontinental Investments and ah! Ventures, Harshad adds that India is a unique case in point when it comes to angel investments. Foreigners are a little sceptical to invest at an angel level as they don’t understand the nuances and conditions of the country and consumers.

However, Harshad adds that Indians residing abroad don’t mind sending in the money, as they know how India operates.

Working on a different 80:20 rule

Today, there are several networks in the startup space. Apart from individual angel investors like Aprameya Radhakrisha, Raghunandan G and Phanindra Sama, there are several networks like Cross-border Angels, Mumbai Angels, Chennai Angels and Indian Angel networks that are active in India.

Over 80 percent of ah! Ventures investors are in India and 20 percent are abroad (across 22 countries, China, UK, Canada, Switzerland and Southeast Asia). Of this 20 percent, over 80 percent are NRIs and the rest are foreigners.

“Scepticism to invest in India as an angel still exists, but that will change with ease of doing business. ah! Ventures is sector-agnostic. Investors are from varied fields,” says Harshad.

The focus is on anything that can scale. Harshad adds that the idea cannot be a brick-and-mortar business with a linear model, but must have an exponential growth curve.

Shiju Radhakrishnan, Founder and CEO, iTraveller says that in their experience with ah! for two years, the network has acted as mentors, investors, sounding boards, facilitators and much more. Adding to what Shiju says, Amit Grover, Co-founder AHA Taxis says that ah! Ventures follow a meticulous approach in closing deals, which not only help the startups but the investors as well.

Shiju adds that

“Abhijeet and Harshad have always surprised us by the sheer amount of time they spent with us dedicating themselves like one of us in solving some of the key issues we have faced. When we speak about our experience with investors and we believe that if ah! Ventures hadn't invested, iTraveller wouldn't have been able to sail through most of the challenges that we faced as a startup in the past couple of years.”

It is all about the team

In September, ah! Ventures will be conducting a startup summit 'STARup' at IIT Bombay in September this year. Harshad adds that the long-term agenda is starting a fund of their own, which will be larger than what they had thought of initially and they also intend to get into the incubation and acceleration space.

Speaking of the key parameters, Harshad adds:

“When it comes to investing in a startup the key things I look at is the team, idea and the market conditions. The market has to be ready and mature. But the idea and the market are variables - over the lifecycle of the startup, the market conditions change and their idea keeps pivoting. What is the only constant is the team, they drive the idea through the market conditions and hence backing the right team is of utmost importance, because they will have to manoeuvre and make things happen.”

Harshad also believes that the team needs to be grounded and humble in their approach and at the same time need to display the hunger to make things happen. It is a tricky combination but finding a team with both the combinations is important.

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