TANCET 2021 Solved Papers

Question Numbers: 11-20PASSAGE - IIWhen global business process outsourcing, (BPO), company WNS (holdings), acquired a Bangalore-based analytics and data management firm, marketics, for dollar 65 Million (INR. 266.5 crores), one of the biggest gainers from the deal was K Ganesh, the non-executive chairman of the acquired company and an angel investor. Ganesh, who was instrumental in arranging the WNS deal, had joined marketics just three months after its creation in 2003 and had personally met virtually all its funding needs. So, when WNS agreed to the price Ganesh sought, it was a culmination of an angel investment successfully realised.ENTREPRENEURS TO ANGELSGanesh is only one among a new and growing breed of angel capitalists who are ploughing the money, they made from previous investments from cash-hungry, promising start-ups.Leading this breed are people such as, Raman Roy, the founder and the former head of BPO firm. Spectramind (Now part of Wipro group), Jerry Rao, founder and former head of BPO Firm, Mphasis (sold later to EDS) Rajesh Jain, founder of a clutch of web portals under the India world umbrella , Suvir sujan and Avnish Bajaj, co-founders of Bazee.com, The Auction website acquired by ebay, and Alok Mittal who founded Jobsahead.com. Unlike the largely expartiate angels who came to India in the late 1990s and invested in companies with a global focus, these new angels are lending a helping hand to fledgling enterprises that have their Indian market as its primary focus (atleast for now ). In doing so, they are removing a lacunae that has long been the bane of many new entrepreneurs. Though the money sloshing around in India-focused venture capital (VC) funds is more than dollars 1-2 billion that means ( 4100 to 8200 crores). A very little of it is available to start ups with funding needs of 1 million dollar (rupees 4.1 crore) are less. This is because VC Firms with fund sizes of dollar 100 million - plan. Are hamstrung by limited management bandwidth and typically look for investments larger than 1 million dollar.That make the new angels, who give fledgling companies as little as 10 Lakhs, indispensable to entrepreneurs looking for bridge capital to tide over their limited needs in the early stage (Typically a couple of years). This has allowed, nascent companies such as Guruji (a local search engine) Novartium (a net work computing specialist) and Knowcross (an IT solutions firm) to raise money that would otherwise not have been forthcoming. In terms of volume of deals, it is these India-Based angels that now dominate angel investing, with the number of the more serious players estimated yet around 400. That is still peanuts compared to the US, which had 234,000 active registered angel investors in 2006, as per the University of New Hampshire centre for venture research. Even among the original group of NRI Angels such as Sameer Bhatia, Kanval Rekie and Ram Sriram (as well as non-Indians like anlog devises Chairman Ray Stata and European serial entrepreneur Christophe F Maire), there is a subtleship in emphasis towards tapping the opportunities the Indian Market presence. Maire, who built his last company Gate 5 to Nokia, has invested in the Bangalore based social business networking company New shop.While the new angels all fund companies at the early stage and have a common India focus, they operate on differing investment philosophies . There are the solo operators - Ganesh, Bajaj, Sujan and Jain whose stout, invest, mentor start-ups on a one-to-one basis. Then, there is a second group of Angels that has centered formal networks and works through platforms such as the band of angels (GOA) the indus entrepreneurs group, and Nadathur Holdings, a company belonging co-found NS Ragavan.Another group comprises of professionals who are using the proceeds of their lucrative jobs to dabble with the angel investing. According to Sahha Mirchandani a cofounder of the Mumbai edition of band of angels (BOA), this group includes High Networth Individuals as well those whose overall net worth may be just a few Lakh rupees. What all this amounts to, as Sujan points out, is that, "Angel investment have become an acceptable asset clause for professionals with even modest amounts of money to invest".There are differences among these groupings of angel investors as well. For instance, while Ganesh Focuses on all his energies on promoting start-ups at any stage in their life cycle, others, such a Jain, have a much wider field of play. Indeed, Jain himself lays headlines in November 1999, when he sold his 5 crore rupees. Twenty man operation, India Bulls to Sify for close to 5000 crore rupees. Now with investments in 13 companies spread across industries as diverse as mobile payments (mCHEK), Broadband content, (Rajasri Media) local language, internet portal (GREYNIUM), healthcare (YOS), Jain has comfortably recast himself in the role of venture capitalist. Jain himself insist that all his diverse holding fit-in quite well with his core philosophy of promoting world changing innovation like Pangea 3, pinstorm, orbit, indus biotech and cleartrip. His investments range from 10 lakh rupees to 20 lakh rupees. "As a rule, I will not touch anything where I do not get between 0.5 percent to 1.5 percent of the stake", says Bajaj. He and his peers also say they realise the main reason their expatriates predecessors failed was that they were hamstrung by the fact that they were largely absentee-investors, who nearly introduced Indian Start-ups to clients in the US.Hence, Bajaj and the new angels say that they are taking on a more strategic role in their companies, and helping them tap the potential of the domestic market so they can achieve critical mass before thinking of going global. This fits in well a shift in focus of global IT, BPO and Biotech companies, who are all looking at India as the next big growth market.THE INWARD TURNThis radical shift in focus, has lent the second wave of angel investors a new halo, especially since most have themselves built up and operated successful businesses. For young companies, having angels who can mentor and mould them through the growth pangs can make the difference between survival and falling by the way side. "Angel investors with an entrepreurial background can help start ups avoid repeating their own mistakes, thereby helping the company grow faster than it would have otherwise", points out Ganesh.For example, the Marketics team had initially wanted to go after low-end data processing and analytics work, which would have got them revenues faster, but at lower margins. But Ganesh suggested that the company go after high end KPO Work from the US, even though sales for this segment were longer, promising help with operating expenses in the interim. The intervention proved to be crucial for the companies' later success. Ganesh also assisted Marketics in getting a couple of major clients in the US.The homegrown angel investors operate on a different plane that the earlier NRI Investors, "points out Bajaj, who has invested in companies like Pangea 3, (Legal Process Outsourcing), Pinstorm (Search Marketing) Orbit (real estate) Indus biotech (Biotech) and Cleartrip (Online travel). They bring first hand experience to the table , which makes all the difference. And, of course, the first choice of most Indian entrepreneurs is someone who has already built businesses locally. "That is borne out in the case of Guruji.com, a local search engine company in Bangalore. The company had a choice of funders but chose to go with baazee's co-founder Sujan, because of his expertise in building an India focused auction business. "Having Suvir as a mentor akin to obtaining invaluable theoretical knowledge to a crash MBA Course that would otherwise still be elusive even if someone spent ten years working on the ground, "says gurji's Chief Executive Officer Anurag Dod. His choice was spot on: Sujan anchored new business product development and marketing strategies as well as helped it forge new alliances . Even more importantly, he helped Guruji sew up it first round of funding with the Silicon Valley based venture capital firm Sequoia Capital. Nearly being on board improved the ventures funding prospects and valuations.Since most angels still hale from the technology sector, their first impulse is to invest start-ups in the internet, BPO, pure research, biotech, mobile and semi-conductor domains. But even this is changing. "The opportunity is broader: in health care, travel, entertainment, hospitality," agrees Bajaj. "Take the case of YO! China. It was funded by angels outside India, as Indian investors were not interested." Mital had invested in a high-end chain of restaurants through Delhi's BOA.Alternate, or renewable energy, has become another hot favorite with angel investors in the US and this trend is catching on in India too. For example, Rajesh Jain has left the comfort of his first love, web portals, to venture into alternative energy by investing in the firm Intellizon. But this expansion of horizons also requires that entrepreneurs and professionals from different backgrounds, cultures and industries begin to join the angel world. This, is not happening in a significant way as it should.The main reason the average person is somewhat skeptical of angel investing is that , in India it is still not a proven model, not well understood, not too maturing and without deep networks. Unlike the VC industry, which has been tried and tested, there have very few know angel exists. "Exists will attract more entrepreneurs and professionals,' adds Ganesh.While Ganesh is not keen on talking about on how much he invested in Marketics and the return he pocketed, the industry rule of the thumb-in Silicon valley an angel investor gets a stake that is anywhere between 10% and 30% for investments that range between $1 Lakh and$2 Million - would indicate that he could have come out richer by $6.5 Million to$19.5 Million on the day. That's a cool return by any yardstick but because Ganesh will not talk about it. He and angel investing win none of the public accolades that fall upon venture capital firms.Still, the angel ecosystem is evolving and word of successful exists are likely to attract other high net worth individuals. This will only deepen the pool of India focuses angel capital, and help more aspiring businesses bloom.