You might be interested in investing in startups but are unsure about the intricacies of the startup landscape, including which startups to invest in and at which stage of their development.

You may be intrigued by the idea of investing in startups as a part of your investment portfolio, but if you’re not familiar with the startup ecosystem and unsure about which startups to invest in and at don’t have risk appetite to become angel investor, you’re not alone.

I shared the same questions and sought advice from my friend Apoorva Sharma, the CEO and founder of Excluto.com. While we’ve discussed startup investments in the past, we never delved into the specifics.

The world of venture capital (VC) is thriving, with VC firms constantly innovating their investment strategies, seeking out promising startups to invest in, raising next rounds of investments and creating wealth by exiting at the right moment. 

But wait, why am I suddenly talking about VCs? 

What does the expert say

Well, this was precisely the question I posed to Apoorv. It turns out that for retail investors who lack either a deep understanding of the startup ecosystem, the time and commitment to research potential high-growth startups, or sufficient capital but still want to diversify their investments across a broad range of startups, investing in a VC fund is a practical option. This approach allows investors to participate with smaller investment amounts and gain access to a more extensive portfolio of startups. 

In a world where the idea of using VC funds as an investment vehicle in startups is relatively new, a fundamental approach is to seek out individuals involved in the VC ecosystem and inquire about any active funds. A similar query within your social or professional network is also a preferred choice for investors. However, these options may limit you to exposure to only 1-2 funds at most. Additionally, the VC fund industry is a tight-knit community that fiercely guards its privacy. This means that partnering with a fund manager in the early stages of a fund requires a stroke of luck and networking.

Roadmap

So, what other options are available to investors? According to Apoorv, “A pragmatic way to find the desired investment vehicle is by exploring a Fund-of-Funds like product, which offers access to funds managed by the best players in the market. Think of it as a marketplace for VC funds managed by GP’s, where you can access multiple funds covering various themes, markets, and geographies. These funds may focus on emerging tech, contrarian bets, futuristic themes, sports and entertainment, media and OTT, fintech, cybersecurity, retail, and many other sectors. Investors can allocate their capital into a range of startups within the same business domain as their own or which they understand or in a completely different sectors to diversify their investments. You can choose to be an early backer like an angel investor or invest in Series A and beyond, depending on your risk appetite exit timelines and available capital.

Sounds great, but where do I find a VC?

As I mentioned earlier, finding a VC fund can be challenging for new investors. However, new challenges call for newer solutions. Social media can be your best friend. Connect with General Partners (GPs) and attend various events within the VC ecosystem to stay informed and get exposed to all that’s happening.

Use Platforms

Another simpler option is to leverage technology by signing up with platforms that connect Limited Partners (LPs) and GPs. These platforms provide access to multiple VC funds and their performance data at no additional cost. Having fund details in one place and the ability to compare funds allows investors to make informed decisions. You can reach out to the GP’s whose funds appear promising.

VC funds are like zebras, each different from each other.  A LP should always be aware of their own investment philosophy.

Interested in learning more?

Feel free to reach out to us @vikasraina or @Apoorv — we’d love to connect!

Excluto serves as a bridge between LPs and VCs operating in diverse industries and regions. We provide LPs with in-depth information, enabling them to make initial decisions without the need to directly contact fund managers. Our platform prioritizes absolute confidentiality, and it operates exclusively on an invitation basis, safeguarding the privacy of both VCs and LPs.

For additional details, please get in touch with us at admin@excluto.com or visit www.excluto.com to register.