Syndicates are private investment vehicles led by experienced technology investors and financed by institutional investors and sophisticated angels. Indian investors can participate by applying to back a lead or lead a syndicate themselves.
Access to top deals
Deals are sourced by high-quality angels and venture capital firms.
Carry for lead investors
Only pay a portion of profits to sourcer if the company exits.
Indian residents who qualify as an Eligible Angel Investor.
How do Indians qualify as an Eligible Angel Investor?
You need to meet one of the following requirements:
an individual investor who has net tangible assets of at least INR 2 crore excluding value of his / her principal residence, and who
has early stage investment experience, or
has experience as a serial entrepreneur, or
is a senior management professional with at least 10 years of experience.
a body corporate with a net worth of at least INR 10 crore
an AIF (Alternative Investment Fund) registered under SEBI AIF Regulations, 2012 or a Venture Capital Fund (VCF) registered under the SEBI (Venture Capital Funds) Regulations, 1996
What are the tax implications of investing through AngelList India’s AIF-regulated "Angel Fund"?
At the time of making an investment, the angel investor becomes part of an Angel Fund, which is registered with SEBI under the AIF Regulations. Under the (Indian) Income-tax Act, 1961. Angel Funds have been accorded pass through status in respect of all incomes (except business income), i.e. investors are subject to tax as if they had directly invested in the portfolio companies. There is a 10% withholding at the time of making payments to investors, which the investors can claim credit for while filing their returns.
AngelList India is not qualified to provide tax advice and the above should not read as tax advice. There are many exceptions to the generalisation stated above, so please be sure to consult with your tax advisor and accountant before making an investment.
Will Indian investors be able to invest into US syndicates?
Yes, but the bar for accreditation for US syndicates is slightly higher. Individuals are required to have a net worth of at least $1,000,000, excluding the value of one’s primary residence, or have an income of at least $200,000 each year for the last two years.
How are Syndicates different to investing directly into the company?
Leads get carry for their syndicated investments. This allows them to leverage their deal flow by earning upto 15% carry on the allocation being shared with backing investors.
Investors can participate in syndicates with lower minimums. They get access to lead’s deals and benefit from their experience in picking and managing investments. These deals will be typically hard to access for someone who hasn’t spent considerable time in building deal flow.
Startups get more capital with a single cap-table entry.
What are the limits to keep in mind while investing through AngelList India?
Leads and Investors will be required to meet the minimum threshold of investing INR 25 Lakhs over a period of 5 years from the time of making their first investment with AngelList India. This can be in a single investment or over multiple investments.
Generally, it is recommended to make multiple investments to have a portfolio of startups that will help in diversifying risk associated with startup investing.
As a company, is there any restriction to raising from an AngelList India syndicate?
Unless otherwise permitted by SEBI under the AIF regulations, AngelList India syndicates can only invest in companies which:
has been incorporated during the preceding 5 years.
has a turnover of less than INR 25 crores
is not promoted by an industrial group whose turnover exceeds INR 300 crores
does not have connections with the Eligible Lead Angel Investor
How often can investors expect an update on investments?
Companies and leads may or may not choose to provide any information about performance.
Investors will be getting a statement of report on their unit holdings annually. This will be provided by a third party.
How private are the deals on AngelList India?
AngelList values privacy and by design, everything is private.
Backers have to apply to back syndicates and see deals that the lead wishes to share with them.
Privacy is the only way for top leads to attract value-add backers in a syndicate.
Is there any added benefit of raising through AngelList India's fund structure?
Raising through AngelList India's Angel Fund benefits the company since the company is exempt from the Indian "Angel Tax"
which could otherwise apply in certain situations if the Angel Investor
had invested directly into the company.
The Indian "Angel Tax" is
levied on the portfolio company on the capital invested, if it receives funding at a valuation,
which is more than the fair market valuation derived as per the Indian Income tax rules
and will be forcefully treated as income.
What are the qualifications to lead a syndicate on AngelList India?
The Eligible Angel Investor should have considerable experience in matters related to startup investing (e.g. negotiating term sheets, closing investment rounds) and should have made at least a few notable startup investments.
As a lead, what deal / company should I syndicate?
Generally, the opportunity should meet most, if not all, of these conditions:
Notable co-investors: There should be a reputable angel or VC participating or leading the round. They should be making a significant, new investment in the company.
Experienced founder: The startup is founded by an experienced founder.
Domain expertise: The company is in the lead’s area of expertise.
Technology companies: Generally avoid companies that do not use technology as a lever to demonstrate high growth potential.
Conflicts: Disclose conflicts, such as owning advisory shares or having relatives at the company. Investors may have a higher bar in such cases.
Bridge/extension rounds: The company should be gaining at least 12 months of runway from the round.
What is the maximum number of backers I can invite to my syndicate?
No syndicate will have more than 199 Eligible Angel Investors from India.
When do I realise the carry?
The return from the carry will be realised only upon a successful liquidation event (e.g. secondary, sale, public offering) and will be shared as per the distribution guidelines mentioned in the investment documents.
Typically, 15% carry will be paid out to the Lead Investor and 5% carry will be paid out to AngelList India.
Can I invest in Indian companies if I am not an Indian resident?
Yes, select opportunities would be made available to foreign investors that will be structured as a US based special-purpose vehicle similar to other AngelList syndicates.
What are the Indian tax implications for non-Indian investors?
Non-Indian investors will be investing into a US based special-purpose vehicle. At the time of exit, the purchaser may withhold taxes on the amount of gains and the SPV will file taxes on its returns of income in India.
AngelList India is not qualified to provide tax advice and the above should not be read as tax advice. There are many important exceptions to the generalisation stated above, so please be sure to consult your tax advisor
and relevant international tax treaties before making an investment.
Neither VentureHacks Inc (“VentureHacks”) nor AngelList India LLP is a stock exchange recognised by the Securities and Exchange Board of India (“SEBI”) under the Securities Contract (Regulations) Act, 1956. The Platform (ie, www.angel.co/india) is not a fund raising platform. The Platform only registers the Eligible Angel Investors (refer FAQ section) and target companies and allows them to interact with each other in a restricted environment. No securities are offered by any target company on the Platform. The Platform merely markets the operations of its India centric fund (hereinafter referred to as “India Fund”), duly registered with SEBI as an Angel Fund having registration number IN/AIF1/17-18/0504. The India Fund solicits commitments from Eligible Angel Investors by offering its units which are not traded on any stock exchange recognised by SEBI.