VG Angels shifts to sustainable investing model, targets 30% success rate

Signalling a change in its investing philosophy, the venture firm is looking for depth in companies and aiming for investor exits with returns of up to 10x

VG Angels, the early-stage arm of Venture Garage, is overhauling its investment strategy to focus more closely on each portfolio company as it looks to lift success rates from 10–15 per cent to around 30 per cent, said co-founder Vivek Kumar. Success, he added, means delivering investor exits with returns of up to 10x.  

 

"We have changed our philosophy a lot in the last three years because we found that we were randomly investing big amounts in a large number of companies. We then realised that we were unable to work with them, and the success rate actually dropped. So, in the last few years, we have seen better success rates," Kumar added.

 

Kumar cited the instance of 'The Health Factory', a startup on healthy bread, as a successful example under the firm’s new investment philosophy.

 

VG Angels invested in the company in 2022 and, as a result of its hands-on approach, the firm achieved a return of over 11 times when it made a partial exit in the second half of 2024. A few other recent exits include assisted mobility firm Arcatron, edtech firm EduGorilla, lithium battery manufacturing company Maxvolt Energy, and lifestyle company Rare Planet.

 

Due to its focus on the "depth" of the companies, VG Angels has also restricted the number of companies it invests in each year. Kumar said that compared to other Indian networks, which invest in a large number of companies annually, VG Angels targets approximately 15 companies each year and plans to work with each company for a three to four-year period.

 

So far this year, the firm has invested in about 7-8 companies and aims to reach around 15 by year-end. In total, VG Angels has invested in nearly 55 companies.

 

Some of the portfolio companies of VG Angels are home hygiene company Cleevo, fraud and risk management platform Consint.AI, drone startup Garuda Aerospace, and ed-tech firm eduTinker. The average ticket size for the early-stage companies that VG Angels invests in stands at Rs 2 crore.

 

Commenting on the growth of the firm's angel network, Kumar said it has significantly expanded from around 40-50 people in 2018-2019 to a network of around 3,000-4,000 people currently. The network includes senior corporate executives, current and former startup founders, and high-net-worth individuals.  

 

Going forward, the firm aims to focus on early-stage manufacturing-oriented companies. Kumar said it's an area that has been historically starved of equity investment and believes that such companies can also strive for unicorn status.