Rehan Yar Khan is upbeat. He has just closed his first fund of ₹300 crore, raised only from domestic investors. “It was not difficult at all. The market and the people were supportive of the product,” he says.
His venture capital firm Orios Venture Partners last week closed a ₹300-crore fund. “We got it done in about eight months, whereas the average fund raising time is 18 months, especially if it is the first fund,” he says. This is an indication of how smooth it was for him to convince investors in India – mainly promoters of companies and wealthy individuals – to put their money in his fund.
He says his track record as an angel investor helped him when he made the pitch with prospective investors. In India, when you approach investors, most of whom are promoters of companies, you better have a track record to show. Else, getting the money will be difficult, is what he has to say for those wanting to follow his route of raising domestic funds. “I would say spend some time building your track record before you talk to them,” is Rehan’s suggestion. Abroad, most of the investors are fund managers.
In what way is a domestic fund different from one raised abroad? “At least, I won’t have to worry about rupee depreciation,” says Rehan. A depreciating rupee has been the Achilles heel of even some of the best fund managers, for it can wipe out your IRRs (internal rate of returns).
Rehan, who has been an angel investor since 2008, decided to go in for a venture capital fund because he wanted to participate in subsequent rounds of funding of exciting enterprises and not confine himself to just writing out the first cheque. As an angel investor, you are not able to cut larger cheques and venture capital firms also do not allow you to co-invest if you are not going to contribute large sums of money, at least ₹5 crore and more, according to Rehan.
A home-grown Mumbai boy as he describes himself, 42-year-old Rehan, who studied Political Science and Economics at St Xavier’s College, says to be an entrepreneur was always in his blood and his parents encouraged him. He recalls he set up his first venture when he was in the last year in college. His first business between 1992 and 1998, was one that imported seeds. Then he had a venture that was in the telecom space, from 1998 to 2004. From then, he had an online flower service, his first exposure to the Internet space. With the surplus from Flora2000.com, he started investing in start-ups, the most notable ones being Druva. He has invested in 19 start-ups in seven-eight years, before launching Orios.
Orios, according to Rehan, will announce its first investment in the next two-three weeks. It will be in a software products company from Mumbai-Pune that sells in the US. He has known the entrepreneur for a long time. “This is a good time to raise money in India. There are lots of opportunities,” he adds.