RITU JHA-
TiE Angels, the angel initiative of the TiE Silicon Valley chapter, seems to have rolled the dice in the right direction more than a decade ago.
Established in 2010, when the valley was buzzing with yet another wave of startup culture, TiE SV had the mission of supporting top-tier emerging companies with early-stage investment. That is why they launched the TiE Angels program. The program has seen tremendous growth in Silicon Valley over the years. It has also been replicated at other TiE chapters, both in the US and outside.
TiE Angels is an active and successful program, ranked by CB Insights as one of the Top 20 Angel groups in the nation a few years back.
TiE (www.tie.org) derived its name from “The Indus Entrepreneur”, and is now a global organization, simply known as TiE. It is devoted to entrepreneurs of all diaspora, and have 61 chapters across 14 countries. The mission is to foster entrepreneurship globally through the five pillars of TiE: mentoring, networking and education, funding and incubation.
Kumar Sripadam, Chair – TiE Angels Silicon Valley, spoke to Indica at length. “TiE Angels SV, since inception, has invested into about 70 startups, from over 120 investors. A total of about 14 million invested and has had numerous exits,” he said.
He added that among other things, TiE Angels connects startups with serial entrepreneurs, high-tech executives, TiE charter members and other professional investors through its platform.
TiE Angel Groups not only syndicate deals with each other in the TiE ecosystem but also with other non-TiE entities. One such syndicate group, TiE Angels, is part of the Insync angel network whose members are many leading west coast angel groups. They also have had good deal flow from incubators and entities.
He further remarked that “TiE Angels works closely with the other programs at TiE like the TiE50 program at TiEcon (annual signature conference of TIESV). Many TiE Angels companies apply for this program to be selected and recognized as TiE50 winners. On the other hand, many TiE50 winners are being looked at for investment by TiE Angels.”
“We are all coming under one umbrella to work together,” Sripadam said.
Incidentally, TiE50 program is signed up with Tim Draper, an iconic venture capitalist in the US, who chairs the Meet the Drapers TV show. The Draper team takes part in a special segment of TiE50, where they get to listen to 10-12 pitches from the TiE50 award winners and select some for their TV show.
“Draper is a luminary in the Valley… not just because of his VC career. He’s got Draper Investments and Draper University, focused on entrepreneurship and helping companies, funding them, taking them to the next level. So, getting him aligned works very well with TiE and the startups get great publicity when they find their names linked to Draper’s. TiE and TiE Angels are all about entrepreneurship, mentoring and education. It’s a great pair,” Sripadam said.
He also said that while Draper doesn’t invest unless and until you compete in his show, it gives a sense of what his perspective is and how he looks at companies. “I think just the fact that he is there as a judge to listen to the top twelve, makes it a great event.”
To be picked one of the top four from the top twelve does help tremendously. These companies have the tag of Draper. They get noticed by investors as companies, get to know which way the technology trends are going, and what are the hot domains.
“Draper’s comments and advice, given to participants who want to know what is happening, are very helpful. He is also a critic, and positive criticism is good for startups. So, he’s actually helping the company find answers. They get to know when there’s a relevant question they are not prepared for, and that they need to take it back to the drawing board and work on it.”
Sripadam further said that TiE Angels is now more proactive. It invests in those TiE 50 Winners who meet the initial criteria, in effect putting their money where their award is.
With over three decades of experience in technology, Sripadam is an entrepreneur/CXO, business consultant, investor and has been the chair of TiE Angels since 2017. He says he has seen the group expand in both membership, investments, frequency and methodology. Besides the usual industry domains, TiE Angels has also broadened its scope of deals into many diverse sectors such as Cleantech, Agtech, Organic Food industry etc.
On the kind of companies that get investment, Sripadam said the investors seek those that solve “real” problems and have good traction in a demonstrable market.
“Historically at TiE, we are looking at your typical technology domains such as enterprise software solutions, infrastructure, solutions in healthcare or digital health, security, big data, cloud, blockchain, AI etc. To take it further, we’re looking at a lot of interesting deals with a convergence of many of the above,” he said.
However, Sripadam added that though they had started with the above-mentioned fields, they have diversified to invest in startups outside the norm in the last few years.
“We are becoming more diverse in our investments. So, for example, we funded a media company called Revry.tv out of Southern California,” Sripadam said. “They have good traction which attracted other VCs to invest as well.”
He was quick to add that not just domain diversity, the group has also been encouraging and funding gender-diverse companies. “Revry is one such case. We had another woman-founded company, Bitesize.co, which got funded not only by TiE but also got picked up by other groups and venture capitalists.
“Recently, we invested into Harvest Thermal, a clean tech company with a very qualified woman CEO. All these companies pitched at our periodic investor events, which happen once every quarter,” he said.
TiE Angels has regular pitch sessions, typically 3-5 times a year, and many a time takes pitch meetings in between regular pitch sessions. To accommodate the large deal flow, they have increased the number of pitching companies to 8-11 per event.
“With the amount of deal flow we have, we want to give a lot of companies a chance to pitch,” he explained.
Apart from the regular pitch events, they take on meetings with qualified companies in between, where a smaller set of interested angels participate. Since often the timeline may not fit a “happening” startup’s fund raise deadlines, it is necessary to take on meetings with them as soon as possible. One such company which was closing its round, pitched to TiE Angels SV, went through a rapid due diligence cycle and got funded was Earthsense.co. It is an Agtech “robotics” company out of Urbana-Champaign, Illinois.
“TiE Angels does not invest from a fund but leaves it to investors or form groups to invest,” Sripadam said.
He said earlier individual TiE Angels made direct investments into the company, but lately have been relying on Special Purpose Vehicles (SPV) — entities set up with investors that are pooled together to raise capital.
“Everybody comes in, you know, sometimes with as little as $7,000 and all of a sudden it adds up,” he said, adding that this model has helped fund many more early-stage companies. The funding typically has been between $120,000 and $350,000.
Asked what impact the pandemic has had on startups, Sripadam said the pandemic has led to disruption in many aspects. One prime example is the blossoming of a large number of start-ups in the field of healthcare. He added that startups have become far more resilient during and after the pandemic, in terms of adjusting to the new ecosystem by sometimes pivoting their product/solutions and tightening their budgets.
