Investing, like the movie business, or investment banking, is a club. Everyone knows each other, their deals, their exits and in general, who the losers and the heavy hitters are. But like all elite clubs, they are closed and tough to get into. This is on both sides of the fence -- as an investor or as a startup. In a country like India where the venture community is growing but still in its infancy, relatively speaking, this is even more exaggerated as a reality.
Let's say you're a brilliant engineer who doesn't speak English, from a small, remote town in India, but with a breakthrough technology borne of years of research spent in a local college lab. The chances of you engaging with a VC to explore commercial possibilities of your patented invention are going to be very tough. Getting access to the Sequoias of the world most often happens through personal contacts and recommendations and not through cold calling.
As an investor, the problem of access is equally problematic as you have to really mine the startup and innovation terrain in all kinds of different ways to unearth the gems. This is especially so if you're an individual "angel" or have a pile of cash to plonk somewhere worthy but don't have the infrastructure to launch the appropriate searches and vetting processes.
LetsVenture solves all of those problems efficiently and easily by providing a marketplace for investors and startups to meet and marry, much like US-based AngelList, which produced Uber, founded by US-based entrepreneurs Naval Ravikant and Babak Nivi.
"Hardly 200-300 startups get funded each year whereas the potential is many folds higher. This money will help us scale up and build our outreach in more cities ," said Manish Singhal, cofounder and CEO of LetsVenture, in an Economic Times article, who along with his two other co-founders Shanti Mohan and Sanjay Jha invested 30 lakh rupees ($50,000) to start the firm last September.
If you're an entrepreneur -- especially someone without the contacts or institutional fameworks like an IIT or an IIM -- these are the people whose eyes could be potentially appraising your company as LetsVenture investors: Infosys co-founder Nandan Nilekani, Snapdeal co-founder Kunal Bahl, Wipro scion Rishad Premji, Manipal Global Education's Mohandas Pai, cloud star Freshdesk's Girish Mathrubootham, and many, many more.
It's a pretty surreal, out-of-this-world list. All of them put an undisclosed amount of money together in a latest Series A round. "Although we had a lot of angel funding groups, we never had a systematic market where angel investors can invest," Nilekani said.
Even companies that have had no problem in attracting VC money have flocked to the platform and it's easy to see why considering the collection of industry legends that are associated with it. "Even though we already had two lead investors, we decided to use LetsVenture as it helped to build a syndicate of over a dozen investors," said Amarpreet Kalkat, co-founder of Frrole, a big data startup, in the Economic Times article.
So far, LetsVenture is on fire. Around 750 startups and 1,200 investors across 20 countries, 375 of them Indian, are registered on its platform. The business model seems to be working well: LetsVenture has managed to raise $17 million (10 crore rupees) for 53 startups that are under its aegis and is apparently on track to close 35 funding deals this year.
LetsVenture is an important milestone for Indian entrepreneurship. For the first time, here's a fund that attracts global investors, not just famous Indian ones. Like AngelList, it will now offer important resources such as legal advice and a jobs bank, dubbing it the "Linked In" for startups. It allows people like second-generation family businesses of wealthy global Indians to enter a new domain when they wouldn't have had the opportunity to earlier. Most importantly, it offers them a curation of interesting companies to choose from.
This curation is important for a few reasons. Not only is there due diligence done by the lead investor -- the "crowd" of investors is a collective hawk, scanning the credentials of the company, the investment terms, as well as the lead investor. This is as good a filter as any you can hope for. Finally, LetsVenture will most probably, like AngelList, help with the closing of the deal in a final round of due diligence, allowing both the startup and the investor to sleep a little easier.
LetsVenture levies a 2 to 3 percentage charge of the entire funding round as commission on the startups, as well as around 20,000 rupees ($320) as annual registration fees from investors, which makes it one of the better bargains both parties are likely to find in the startup universe.