In the ever growing business ecosystem where sustainability of new startups is already endangered by less profit and operational glitches. Indian startups lose most of their time and effort in poaching investors, in fact the entire process might take up to three-six months. This leak in Indian ecosystem has led to the rise of many online fundraising platforms that helps startups in creating online profiles that are in accordance with the needs of investors listed on the platform. These mindful postings bring a drastic drop in the time spent by entrepreneurs in fundraising activities.
Considering the availability of Tracxn’s massive “Competitive Intelligence” engine, the company has launched a fundraising platform, Tracxn Syndicate, to help budding entrepreneurs accelerate and build great companies. It will inherit the parent company’s curated and researched database of more than 10,000 technology startups, rendering a standout edge to the company.
The idea is to ease the way Indian startups raise money, while also creating opportunities for individuals to invest in promising Indian startups whilst mitigating risk through shared investing. The platform will allow selected startups to pitch their ideas to early stage investors who can then interact with founders, both digitally and offline for a period of three-days.
According to the company, they will be handpicking 1-2 startups from the upcoming sectors after thorough analysis of the latest trends in the hottest sectors. Every week 2 startups will showcase on the Syndicate platform to the registered angels.
For joining the investors’ pool, the process begins with the filling of a simple sign-up form. Once the investor sign-up, the company reach out to them to verify the accreditation of the investor and theron, join its investor group.
The startup fundraising process is given a 3-day window, under which startups and investors interact on various levels. Investors can apply to this process but access is granted only to the selected investors. The Process includes:
- Idea Pitch by Founders
- Video Presentation by founders
- Query and Responses by Investors
- Following this, Investors may setup one-on-one call with the founders
- Interested investors showcase their interest with an amount and highlight the value they will add to the startup.
Thereafter, the founders get to choose which investors they want on-board and the deal is finalised with formal agreement and documentation being managed by Tracxn.
Bangalore-based Tracxn! was founded by Abhishek Goyal and Neha Singh, it works with venture funds and corp devs to help them research markets and scout interesting companies. Today, the company has tracked startups in 100+ sectors across Enterprise Infrastructure, Enterprise Applications, Tech, Consumer Internet, FinTech and more. Company recently raised $3.5 Mn in Series-A funding from SAIF Partners in April, 2015.
We caught up with Abhishek Goyal to understand the complete process, here are the excerpts:
Inc42: The site says that you’ll have an exclusive group of investors. What is the criteria for that and why do you want to keep the investor side limited? Will there be any limitations to the total members?
Abhishek: There won’t be a limit on total number of members. Startup are a high risk asset and we want to ensure all members understand that. We will give access to angels who are more regular investors, or people who can add value to the company and also each deal will be visible to limited angels (more like Inc42 parties). We expect to build most syndicates through seasoned angels and founders – many who can add value beyond capital and are founders friendly.
Inc42: Are you catering to the global investor set or just Indian investors as of now? In the context of Indian investors, how does the accredited investor verification work? Also in terms of agreements and documentation, who sets the term sheet? Is it standardised or on a deal to deal basis? What does the documentation exactly include? Does it go upto the complete termsheet, SSHA and all?
Abhishek: We are starting with India and will scale to more geographies very quickly. Tracxn Syndicate will do all the documentation – termsheet, SHA, SSA. But our documentation might be simpler and shouldn’t take as much time.
Inc42: What’s the monetisation model? Just the monthly investor subscription or do you charge a commission as well? Also do you invest personally into these startups as well?
Abhishek: It’s early days to think about monetization model. We want to set an expectation that we will charge something so that we can do a good job at it. We are starting with subscription fee, but I am sure it will evolve. (Fixed amount of INR 25k per month)
Inc42: The website mentions that the whole process will last just 3 days and investors on the platform have to further get approved for each deal. How does this process work? Why are all investors on the platform not allowed in on all the deals?
Abhishek: We want founders to drive the entire process – right from who gets to see about their company (or for that matter if they are raising capital) and all the way to who gets to invest how much and why should someone be on their cap table. Capital is getting more and more democratized and cheaper, whereas skill required to be a great founder isn’t. So in our head, this is the right thing to do and in future we expect founders to get more and more picky about things as markets evolve. So we want to build our platform accordingly.
Inc42: Finally after the 3 day process, do the deals close on the platform or go offline? How big is the offline component?
Abhishek: Technology is going to be a large enabler. Most of the process will be digital, but it will be closed instead of open. So one can’t see who all are raising capital, their current status. We don’t plan to conduct any physical event.
Inc42: Did you pilot a few deals earlier before launching? If yes, how did they work out? How much was the offline component? Can you disclose the deals, if possible?
Abhishek: We haven’t announced them so will talk about them as time progresses. We haven’t done any physical event for it and don’t plan to. Most communication is through digital medium.
Recently, entrepreneurial evangelist Prajakt Raut has also launched a fundraising platform Applyifi, a private platform for startups to create a comprehensive pitchbook and thereafter apply to multiple investors or accelerators/incubators. It also provides startups with a 36-point scorecard and assessment report, which help startups understand their strengths and weakness, and provides them actionable inputs to sharpen their business plans. Further, investors can filter deals using the Applyifi 36-point scorecard. It focusses on deals between $77K – $155K.
Applyifi.com has recently completed its maiden deal for OGES, an online Q&A and best practices platform for the Oil & Gas industry. This is one of the early investment commitments Applyifi has secured from its first batch of 4-curated startups. Two other startups from the first batch – one raising around $39K (INR 25 lakh) and the other raising around $79K (INR 50 lakh), are in active talks with accelerators and investors from the Applyifi network.
LetsVenture is yet another fundraising platform that enables startups to raise capital. Once a startup has verbal commitments from investors, company helps them in the funding closure process through the Commitment-to-Closure package. The package takes care of closure of term sheet & shareholders agreement, and complete legal & financial due diligence. It charges 2-3% of the entire funding as a commission from startups per deal closure.
LetsVenture recently conducted LetsIgnite, an angel summit, aiming to connect startups to the angel ecosystem. Uptil now the company has closed more than 22 investment deals including TestBook, Bluegape, flipClass and iTraveller etc.