The Lankan Angel Network (LAN), the country’s largest network of angel investors, recently held an Investors Night, where members and other potential investors were updated on what’s happening locally, and globally, in the startup ecosystem.
Held in association with LAN’s ecosystem partner Ford Foundation, the LAN Investors Night was also the setting for the announcement that the Rs. 100 Mln Angel Fund, launched by LAN in 2021, has been fully deployed. The Fund made investments in eight startups, namely MintPay, Chakra Suthra, Spectrify, Billable, QuickHelp, Ruwini Jayarathne Jewelry, True by Tina and Magicbit. Following the full deployment of the Angel Fund, and in line with global trends, LAN is planning to soon launch its follow-on fund, which will be most helpful in accelerating the growth of its startups.
Additionally, this event featured Keynote Speakers Dr. Clarence Tan, a renowned futurist and former Head of AsiaPac at Singularity, and Ms. Padmaja Ruparel, Co-Founder/President of the Indian Angel Network (IAN) and Founding Partner of the US$ 55 Mln IAN Fund; who spoke on the importance of angel investing and having different types of investments available, as well as the need for follow-on funding.
Speaking on his experience as an Angel Investor, Dr. Tan noted that the first question he asked when evaluating potential investments was why the founders were doing it. For example, is it solely to make money? If so, they could move on if a bigger project came along. So, his investments were focused on talented people with the right purpose. He also signalled venture investing would gravitate towards exponential organizations, since concepts like AI could not be adequately serviced by more traditional, linear thinking processes.
The next speaker, Ms. Ruparel, spoke on the beginnings of IAN, and how it initially had an 18 to 20 per cent failure rate, which was an acceptable figure on par with global trends. But more troubling was that, during the early days, an additional 30 per cent of investments had to wind down due to a lack of follow-on funding, which the IAN Fund was set up to address. This Fund, backed by a high profile team of industry stalwarts, was also a valuable resource during COVID. It had the ability to help several clients in its portfolio, who were on the verge of failing, to pivot while also going to the lengths of helping some secure new customers to ensure they made it through COVID.
Further, Ms. Ruparel shared her early experiences with the local startup ecosystem. Currently, Sri Lanka is the third largest in South Asia, with over 800 startups and 100 Angel Investors participating. She added that the current challenge for Sri Lanka is addressing a shortfall in follow-on funding, since capital is primarily raised from Angel Investors at present. She also advised that delays in delivering suitable follow-on funding could result in investors opting out, as they needed to see value creation on capital, and successful exits, to stay interested. As such, unlocking a wider and more diverse funding pool was imperative.
During the unprecedented economic hardships experienced by Sri Lankans in 2022 and 2023, LAN was a driving force in further building the local startup ecosystem, which was ably achieved by LAN’s Immediate Past Chairperson Ms. Chandi Dharmaratne.
According to LAN’s current Chairperson, Mr. Prajeeth Balasubramaniam; “Ecosystem building was always a part of LAN since its inception. But, due to a lack of funding in the country, LAN will over the next two years place a greater emphasis on building the investor ecosystem in a sustainable way for this asset class. This will now allow LAN to better serve its members by giving them more investor related information, including access to visibility of deal flow, regional trends, etc. In line with this, LAN is actively planning to launch a follow-on fund that aligns with our commitment to Environmental, Social, and Governance (ESG) principles.”
Mr. Balasubramaniam added that this fund aims to accelerate the expansion of the startup asset class in Sri Lanka, contributing to the country’s economic resurgence. “By supporting the growth of the startup entrepreneurship asset class, we anticipate a positive impact on various aspects such as job creation, increased tax revenue, enhanced research and development (R&D), and more. We firmly believe that this growth will not only drive economic progress but also align with our ESG values, fostering sustainable and responsible business practices. Through our strategic investment and support, we aim to create a thriving ecosystem that promotes innovation, social well-being, and environmental stewardship. We are excited about the potential of this initiative to contribute to Sri Lanka’s economic development.”
Caption
Pictured is a panel discussion held at the LAN Investors Night. Participating (from left to right) were the moderator, Hatch Works Venture Partner Lakshan De Silva, as well as Serial Investor/Futurist Dr. Clarence Tan, IAN President Padmaja Ruparel, and ACUITY Group Chief Strategy Officer Yaveen Jayasekera.
