AngelList, a US-based online platform which supports early-stage funding and start-up recruitment, is looking to launch its syndicate operations in India. However, it would need to get regulatory approval, says Utsav Somani, an angel investor who will lead AngelList's India syndicate operations.
Syndicate is a concept, which AngelList has established successfully in the US. Under this, a venture capital (VC) fund is created purely to make a single investment. The syndicate pools money from several investors to invest in a specific start-up. For instance, if a VC fund wants to invest $250,000 in a start-up, it can personally invest $50,000 and ask 10 other investors to put in $20,000 each to form a syndicate. The syndicate collects the money and invests in the start-up as a single entity. The individual investors do not come on the capitalisation table of the start-up directly as is the practice currently in India.
The back-end operations during the lifetime of the syndicate - taxes, documentation, accounting, etc - would be handled by AngelList, which makes operations easy for the investors. In the US, AngelList charges five per cent on deals done through its platform.
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AngelList was founded by serial entrepreneur Naval Ravikant, who has invested in Twitter, Uber, Udemy and others. He started the company along with Babak Nivi. Somani will be responsible for bringing syndicates to India, which will be the third country for AngelList's syndicates operations after the US and the UK. Somany's role will include opening a dialogue with government officials and regulators with suggestions that would benefit start-ups and investors in the country.
"At the moment, there is a regulatory grey area for syndicates. We are working with the regulators. We'll soon reach out to the Securities and Exchange Board of India," said Somani.
Currently, LLP or limited liability partnership cannot be used as an investment vehicle in India. Besides, under syndicates the deals are to be executed online, which would also require regulatory clarity. Somani expects to get regulatory nod and start syndicate operations in the country in a year's time.
"I'm excited to be coached by Silicon Valley's sharpest minds in venture investing and leverage their decades of know-how to advance the start-up ecosystem in India. Also, this marks a chance for global investors to participate in India's most promising opportunities," Somani wrote in Medium, an online publishing platform.
According to Somani, this is a good time to invest in Indian start-ups because their valuations are getting corrected now.
According to sources, AngelList Talent, the recruitment product of the company, is already strong in India. The global platform has around 4,000 start-ups recruiting from India. Around 350,000 matches have been made between start-ups and candidates, of which 174,000 matches were made in 2016.
The company has 800 start-ups joining per month on the platform from India. Around 7,000 candidates from India are coming to the platform every month. It also has around 3,800-plus angel investors which are either Indian or are looking at Indian investments, said a source close to the development.
