HNI’s (high networth individuals) and UHNI’s are upbeat about Indian Startups Growth Story. Presently, Indian startups are gaining the attention of high net worth individuals and ultra-high net worth individuals (UHNIs) who are looking for early access to promising ventures. These individuals are also providing a fresh lease of life to startups during a funding winter.
According to a report by funding platform LetsVenture, there are over 9,000 tech High Networth Individuals and UHNIs who prefer to invest in pre-seed and Series A rounds, while nearly 2,500 of them are high risk-takers participating in seed and pre-series rounds. India has 10,000 to 12,000 tech High Networth Individuals and UHNIs.
The portfolios of HNIs and UHNIs with lower risk appetite are distributed across multiple assets under management (AUMs) such as corporate fixed deposits, venture debts, investments for asset leasing, and alternate investment funds (AIFs), driven by short-term gains. However, high-risk takers evaluate their investment thesis deal by deal, making smaller bets across multiple startups. About 50-55% of HNI’s and UHNIs invest in startups through angel networks.
UHNI’s have the passion to mentor startups besides seeking profits
The LetsVenture report showed that 70% of CXO High Networth Individuals /UHNIs are driven by returns followed by their passion to mentor startups. Besides maximizing returns, 75% of businessmen/founder-CEO High Networth Individuals and UHNIs are interested in mentoring startups and contributing towards developing the startup ecosystem. About 55% of businessmen/founders prefer to stay invested for 5 years and exit a startup at a growth stage. About 60% of CXO HNI’s and UHNIs prefer to stay invested for 3 to 5 years, while 70% of professionals have an investment horizon of 3-5 years.
LetsVenture conducted primary interviews with over 125 HNIs and UHNIs to arrive at this data.
Family offices are investing in the startup ecosystem by participating in bridge rounds in pre-Series A to pre-Series B stages. Family offices saw significant participation in the absence of venture capitalists (VCs) deploying the dry powder that they are sitting on. The report said they are patient capitalists compared to VCs, but the decision-making continues to be slower.
While health tech and fintech are evergreen sectors, investors are scouting for deals in cleantech, deeptech startups, and space tech. From a limited partner (LP) sentiment, India’s startup space is expected to remain strong over the next 15 years. “From an LP perspective, the good news is a strong belief in the India story,” said Shanti Mohan, founder, and CEO of LetsVenture and trica.
HNI’s and UHNIs are highly sought-after clients for wealth managers. They generally qualify for personalized managed investment accounts instead of regular mutual funds. They also qualify for estate planning and tax planning as well as portfolio management services. In sheer numbers of high-net-worth individuals, North America leads the pack with 7.4 million, followed by the Asia-Pacific region with 7.1 million, and Europe with 5.6 million.
HNI’s and UHNIs are setting up family offices offshore due to strong regulatory frameworks, ease of doing business, and attractive tax. Wealthy Indians are setting up family offices offshore. It is pertinent to note that the transfer of wealth from one jurisdiction to another is an integral. One needs to bear in mind that every jurisdiction has its own capital controls, compliance, and regulatory frameworks that are unique, constantly evolving, and designed to protect itself. Thus, it is critical that all these factors are assessed in detail by High Networth Individuals /founders/entrepreneurs who and in doing so, they must engage capable and credible advisors such as regulated investment managers.
Family offices and UHNIs can play a crucial role in supporting startups through investments. According to a LinkedIn post by trica, family offices and UHNIs can help startups by providing capital, mentorship, and access to networks. They can also help startups with their expertise in various fields such as finance, marketing, and technology.
Indian startups are gaining the attention of HNI’s and UHNIs who are looking for early access to promising ventures. These individuals are also providing a lifeline to startups during a funding winter. Family offices are investing in the startup ecosystem by participating in bridge rounds in pre-Series A to pre-Series B stages. While health tech and fintech are evergreen sectors, investors are scouting for deals in cleantech, deeptech startups, and space tech. High Networth Individuals and UHNIs are highly sought-after clients for wealth managers.
They generally qualify for personalized managed investment accounts instead of regular mutual funds. They also qualify for estate planning and tax planning as well as portfolio management services. Family offices and UHNIs can play a crucial role in supporting startups through investments, mentorship, and access to networks.
