ANGLEPaisa acts as a bridge between start-ups and investors by providing the much needed early-stage funding to help businesses see the light of the day and begin their journey of the path of success. It is a fundraising platform that allows you to raise equity investment from friends, family, community, independent investors and the public at large through its website. One can explain one’s business idea, narrate the startup story, describe the target market and strategy and the quantum of investment to be raised in exchange for the equity on offer. For all this, one can engage investors using videos, photos etc. ANGLEPaisa experts then evaluate this plan – in detail – to ensure that the campaign is fair, clear and not misleading for business investors. Once all is clear and as per the procedure, the campaign goes live and the investors can study the proposal, evaluate it and finally, make the decision to invest.
Why ANGLEPaisa for Startups?
At ANGLEPaisa, we create opportunities, using the internet as a medium, to raise investment for businesses online outlining the associated benefits and risks in a clear and easy-to-understand manner. Over and above these, the following reasons make ANGLEPaisa a destination for investors and fund seekers:
- Regular funding: The relationship between the fund seekers and fund providers is not a one-time activity on ANGLEPaisa. It is about fostering a relationship that lasts for a long time and the one that can be relied upon for funds requirement in future. Raising funds through other means for existing businesses could be a complex and a long drawn procedure due to the various consents, waivers and other unanimous shareholder actions needed for a company to raise additional money. ANGLEPaisa lets you avoid all of this and ensures availability of funds on a continuous basis for your business ideas. For more details on funding for the existing businesses, please refer to our “Funds for Established Businesses” section.
- A Strong base of investors: ANGLEPaisa has a strong base of investors from different walks of life and with varied business interests with a proven track record of putting business ideas into action and running successful enterprises. Such benchmarks on successful investment proposals speak volumes of the credibility of investments and crowd-funding that flows through us. We also provide a regulated platform for investing money with the advantage of sharing risks and rewards.
- Crowdfunding platform approach for start-ups and SME sector for raising funds and increases the flow of credit in the economy enabling growth.
- Banks, in India, face several challenges and are severely constrained in their ability to lend to the upcoming and growing businesses owing to the applicability of Basel III capital adequacy norms on to them. In such a scenario, crowd-funding comes as an alternative source of raising capital.
- Crowd-funding allows raising funds with significantly lower cost of capital and without having to go through the rigmarole of complex procedures.
- It also provides investment opportunities and new products for portfolio diversification of investors.
- It also increases healthy competition in a market dominated by traditional methods of lending.
To maintain sustainable business projects and to live-up to the expectations of the market, the operators of the crowd-funding platform perform diligently and supervise of the projects chosen.
Substitution of Institutional Risk by Retail Risk: At present, the risk in financing Startups and SMEs is borne by the Venture Capital Funds (VCFs) and Private Equity (PE) Investors. In crowd-funding, these entities solicit investments in smaller sums from a large number of investors. Hence, the risk taking by VCF/PE (informed investors) is substituted with retail investors whose risk tolerance level may be very low. The situation may become even more precarious considering the fact that investments in SMEs and Start-up may involve low liquidity and are generally treated as aggressive long-term investments. Moreover, the negotiation abilities of retail investors are severely diminished as they contribute to individuals or small groups without a deep knowledge of the subject.
- The risk of Default: There is negligible or no recourse available to the investors as the funds are solicited through a platform that might or might not conduct appropriate due diligence of the issuer. Moreover, the funds are solicited by the issuer through a platform and not through a written and formal offer document.
- Further, in peer to peer lending, there is no investor protection by way of a compensation scheme to cover defaults like deposit guarantee schemes for bank deposits. The funds are sought on the basis of future possibilities/ probable gains as against an existing and proven business model/ guarantee of return.
- The risk of Fraud: In this world of internet, there is a possibility of websites being used by fraudsters claiming to be owners or promoters of projects or of false websites being established, simply to defraud the investors or to entice individuals to provide credit card details etc. Thus, there is a risk of misuse as well as cyber-security and/or identity theft.
- Systemic Risks: Due to the nature of crowd-funding, there is a possibility that investors may not practice good diversification principles. There might not be good secondary markets in which investors can sell their investments. There are possibilities of money laundering as well.
- Overlooking Existing Framework: The Disclosure and due supervision involved in Crowdfunding platform cannot be compared with the existing framework of the public offering through the filing of Prospectus and subsequent scrutiny by regulators. Further, for a crowd-funding platform, requirements/checks such as track record for the issues, minimum promoters’ contribution, lock-in, trustees for debt securities, rating by credit rating agencies etc. may not be available.