How It Works
- Indian Angel Network is not a secretive body; in fact, it will proactively seek positive publicity with a view to being seen as the investor group of choice by Indian startups. Members will agree on the publicity strategy. The deal flow arising from such activities as well as the publicity will be coordinated and handled by the Secretariat.
- The primary deal flow for the network comes through its members. Network members individually assess funding proposals that they might come across. In addition, they might create some startup opportunities with entrepreneurs. All such recommended opportunities will then be presented at the Network’s monthly forum as “sponsored” deals, ie, there is a member who feels the deal is worthwhile taking forward and will proactively do so.
- However, there will be deals that come directly to the Secretariat that are not sponsored by any member. These will be handled via an Elevator Pitch (EP) session that will vet and shortlist such deals for presentation to the Network as a whole.
Following broad objectives have been taken into account while coming up with the model for investment decisions:
- We want to have members who are involved in the Network strategy, operations, and actually invest through it. However, some members may spend disproportionate time on not only deal progression and closure but also in adding value to the business going forward. Members are encouraged to suitably incentives and reward such initiatives and efforts.
- People with differential ability to invest must be accommodated, especially as we will induct diverse people into the group. Also, adding members will be a continuous activity and not one time (such as fund closure). Both these require a flexible model in terms of where and how much each member invests. This will also ensure that new members feel invited to the Network with minimal constraints.
- nvestee companies will be explained the Network’s framework for investing and mentoring, as explained in this document, and a concurrence sought early in the discussions.
Given these objectives, it is proposed that the Network investment decisions be made in following fashion:
- Network meetings will be convened every 4 or 8 weeks, depending on the dealflow, to discuss deals that have been either directly sponsored by members or recommended by the “elevator pitch” (“EP”) committee members.
- All members present will then discuss and debate each investment and any concerns they might have, any additional information required, etc.
- Each subgroup will nominate a member (the “lead member”), who will lead all discussions on deal valuation, structure and closure with the entrepreneur. For the entrepreneur, the lead member will be the single point of contact for such discussions.
- Each Network member will be free to make his or her individual decision on investing in any given opportunity.
- As a broad outline, it is expected that members will invest in the region of Rs 25 lakhs per annum. It is also expected that members who do not invest at all for two years would be deemed not to have received value and must therefore review whether they should at all continue their membership.
Network members are collectively committed to contributing money as well as their time and expertise in businesses that they consider worth investing:
- Network members, when investing in an opportunity, will identify who, from within their group would be most appropriate to represent them on the Board of the company (there could be more than one board member) based on the ability to mentor and guide the company at strategic / operational levels as also availability of time to do so. The sub group of Network members investing in an opportunity are encouraged to find ways to appropriately incentivize / reward those amongst the group spending disproportionately more time and effort on mentoring the company (from within the equity negotiated by them) but this is purely at the discretion of the sub group.
- Such Advisors / board members may be given stock options in the company by the entrepreneurs, provided these are over and above the deal negotiated by the investing group of the Network. However, such arrangements would need to be agreed by the investor and promoter groups and the secretariat kept informed.