As 2017 draws to a close, I thought it is a good time to step back and review how the early stage ecosystem continues to evolve in India. 4 years back, I was questioned, challenged and almost opposed by the nay-sayers who believed online investing would never work in India. At LetsVenture we did make it work – this year we continue to be the largest marketplace for early stage in India, despite the ecosystem seeing a drop of 50% in the number of early stage deals from 2016. However what continues to confuse people around is the definition of “online angel investing”, and what an online marketplace like LetsVenture stands for. What has consistently emerged is the misplaced understanding of online investing, its mechanics and if it is safe to invest online.
So here is my post on what a marketplace means to early stage investing, debunking some of the theories and assumptions.
LetsVenture for Founders:
1. We allow startup founders looking to raise angel funding to create their startup profile for free.
2. We “curate” startups (online and offline) to ensure that only startups that are ‘funding ready’ get listed under Investor Connect on the platform.
3. Our team meets about 100-150 founders every month before this listing happens.
4. If a founder wants to be in stealth mode for fund raising, the platform allows you to keep your profile private. (block / allow access)
5. As a founder, YOU are in control of your fund raise – you can manage which investors view your profile, what your minimum cheque size should be, and how much you want to raise.
6. If you don’t have a “Lead Investor”, we help you find a lead. 30% of our startups have found lead investors on LetsVenture.
7. After your syndication has reached 100% commits, you can accept / reject investors in your round.
8. A typical early stage round of USD 250K-300K sees 15-20 participating investors, with a Power-of-Attorney given to the lead investor. The minimum commit per investor is INR 5L per startup.
9. For Indian registered startups, we follow the companies act for private placement in India and the regulation of the country where your startup is registered.
LetsVenture for Investors:
10. We ‘curate” investors on the platform. It is not an open platform where any individual can sign up to be an investor. As an investor on LetsVenture, you know your co-investors are curated and understand the risks of angel investing.
11. A featured deal on the platform typically has a lead investor, has been vetted by other investors, has terms of conditions decided before being featured. It is ‘commitment’ ready.
12. We manage all the paper work in the back-end. Your commitment to a startup is conditional to due diligence being approved by the lead investor.
13. We provide quarterly startup reporting on your investment.
The online model does not change the genesis of angel investing.
a. It is NOT an ‘open’ platform where information is shared with anyone who has access to the platform.
b. It is NOT higher ‘volume’ and more number of investors in every round.
c. It does NOT mean there is no diligence and no lead.
What it does mean is the marketplace makes discovery of startups easy for investors and founders.
a. We leverage tech to help us create personalized match made recommendations to investors who have very well defined investment thesis.
b. The marketplace provides analytics on valuation guidance to founders and investors
c. It provides easy tracking of the investment process.
d. We are using technology to eliminate information asymmetry – not to break and trivialize early stage investing.
If you are ever confused about what we stand for, think of us as your friendly guide to investing. We don’t judge, bias or recommend startups, but rather allow the intelligence of the angel community to guide you in your investment. Early stage investing continues to be the highest risk asset class and creating process efficiency and transparency will help in demystifying some of the harder to understand aspects of investing.