Piggybank – With Rs 2,600 cr, AngelList Wants to Ride Chinese Bull

Blame it on red tape, Indian startups may miss out on this moolah
Earlier this week, online dealmaking platform AngelList received $400 million (`2,606 crore) from Chinese VC firm CSC Upshot to invest in early-stage startups.However, Indian startups are not likely to receive any part of this fund, said Naval Ravikant, the India-born chief executive of AngelList, citing regulations around investing online through platforms and syndicates in India.

“We are still exploring regulatory clearance to do syndicates in India.Unfortunately , nothing is imminent,“ said Ravikant in an email response to queries from ET.

“If we do get regulatory permission to operate in India, then this money can go into Indian startups as well. It’s not geographically limited.“

A syndicate allows investors to participate in a lead investor’s deals. In AngelList, syndicate investors don’t invest directly in a company but in a special purpose fund that is created specifically for each investment. This fund then invests in the company . The corporate form of the fund is a limited liability company in United States.

Syndicates also facilitate online closing and tracking of deals. “Closing deals online is not legal in India, and the amount of money it takes to invest through a special purpose vehicle is not economical“, said Sanjay Mehta, a full time angel investor.

“In India, syndicates only mean aggregating investors together for a deal,“ he said, adding that the shareholder’s agreement is the only document that can be upheld in a court of law. In India, online deal-making platform like LetsVenture and ah!Ventures facilitate deal discovery online, but still rely on offline methods to close deals.

Only Globevestor, which is a USincorporated entity closes deals online. Typically syndicates are like smaller funds, led by re puted angel investors, whose judge ment on startups is valued by peers. Ravikant said the fund will back only syndicates, deal by deal, and put up to 25% of the round. The fund would invest in technologyfirmsintheearlyandseedstageover he next five to eight years, said Ravikant. Over 650 startups including Shyp, Sprig and Luxe have raised $205 million from syndicates.

Source: The Economic Times
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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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