FREQUENTLY ASKED QUESTIONS (FAQs @ VCats)
1. What is angel investing
• Angel investing is the practice of high-net worth individuals investing in equity of start-up
businesses with the goal of profiting from their long-term growth. Such investments
also associate the typical equity investing risk, and also that start-ups are in the early
stages and some will likely fail. But other than profiting, the motivations are personal
interest, desire to give back from one’s own experience, and the thrill of being
involved with an innovative company.
• Angel Investors are typically, passion driven individuals who are smart investors and believe
in investing in high growth businesses opportunities of tomorrow. Therefore, angel
Investing is much more beyond the money and hence an angel, apart from money,
does bring with him: Mentoring Support for the startup, Opening business growth
opportunities for the startup and Strategic Guidance at various stages of the life cycle
of the startup.
2. What isstart-up incubation
• Start-up incubation is a multi-faceted program designed to help start-ups succeed.
Incubators help entrepreneurs with running a start-up by providing workspace, seed
funding, mentoring, access to strategic business partnerships, training and access to
investors. The purpose of a start-up incubator is to help entrepreneurs shape and
grow their business at an accelerated rate.
• At the forefront of developing the start-up ecosystem, Venture Catalysts has mutli city
presence for angel investment and start-up incubation and provides platform to
group invest, learn and network.
3. Who are angel investors
• Angels are typically high net worth individuals with considerable entrepreneurial or
business executive experience who have a lot to offer to start-ups and the local
entrepreneurial ecosystems.
• Angel Investing is one of the most intelligent investment asset classes which is highly
passion driven.
• Angel Investors back businesses of tomorrow by funding, mentoring and guidance, opening
business expansion opportunities and everything else that accelerates the growth
trajectory of the startup.
• Angel Investors view early stage investing as a high risk but highest rewarding asset class.
4. What type of company angels invest in
• Novel business concepts and products
• High growth, fast scalable and less capital intensive businesses
• Companies not sufficiently developed so as to be self sustaining yet • Businesses that
need both external funding & mentoring to grow to the next level
5. Benefits of angel investing
• Investing in alternate asset class
• Active form of investing as opposed to traditional passive investments such as stock
markets, real estate etc.
• Opportunity to engage with and mentor the next generation of entrepreneurs that are
likely to create impact on society in terms of wealth and job creation • Probability of
multi bagger return on investments
6. How much to allocate towards start-upsinvestment
• Now most wealth advisors believe that alternative investments are a necessary part of a
healthy and diversified portfolio plan.
Alternative investment includes:
• Real Estate (passive, average returns and cyclical),
• Commodities (passive and market linked),
• Hedge Funds (not available in India and extremely complex) and
• Private Equity (private investments in companies) and broadly this includes Venture Capital
and Angel Investing. Only angel investment can be initiated with small capital, rest
require significant allocation and are passive.
By investing in start-ups at an early stage, a single investor can take positions in multiple
start-ups with a limited capital. The best way to begin angel investing is to allocate a certain
portion of the investable capital for startups, and then breaking it down into multiple
calculated investments so as to create a diversified portfolio, thereby spreading the risk.
7. Advantages of joining an angel group
While individual angels are incredibly important, there is only so much one person can do
alone. Being part of an angel network and investing in group overcomes limitations
associated with solo investing in the following ways:
• Robust deal screening processes that allow for multiple “checks and balances” before
presenting a startup to the investors
• Large number of curated deal flow throughout the year
• Start with small capital and still be part of a successful syndication and create a portfolio
• Hassle free pre investment and post investment processes; because all activities from
screening, due diligence, negotiation on terms, legal paperwork for investment to
post investment reporting and periodic sharing of updates and connecting to Venture
Capital firms for next round are managed by the angel platform
• As a group, individual investors participate in larger funding rounds, effectively investing in
start-ups that already have business traction thus reducing risks associated with very
early investing
• New angels can learn from experienced investors by being investing partners across
multiple investing groups
8. What to look for in a start- up?
• Stage of the company
• Size of the market opportunity
• Compelling strategy
• Competition mapping
• Proprietary technology (if any)
• Strong founding team
• Potential exit opportunities
9. Typical type and time frame of Exists after angel investing
Successful start-ups move to the next rounds of funding called Series A, series B and beyond.
A typical exit comes when a larger investor from these rounds buys your shares. An exit time
frame may vary from 1 year to 7-8 years, but a typical exit would take around 24-30 months.
Also, sometimes the start-ups business catches the attention of a large strategic investor;
traditional corporate or other well-funded start-ups for its strategic value and an acquisition
takes place, providing exit to early stage investors.
New avenues such as MSME listing on stock exchanges have come up which over a period of
time are likely to become platform tor liquidity.
10. Angel investing best practices
• Avoid going out to find a company of interest and make individual investment •
Avoid deploying all capital in too few companies
• Diversify investments in multiple deals
• Accept the risks associated, and the fact that some investments will be written off •
Invest with a mindset that investment is both for returns and engagement,
mentoring and networking
11. Can an investor member refer startups for fundraising?
• Yes, VCats investors are encouraged to refer and bring interesting investment opportunities
to the network. This currently, is a great source of deal sourcing pipeline for VCats.
An investor may simply introduce the deal to VCats' Team Members and can be
shared at sourcing@[Link].
12. Can a VCats Member refer a potential investor?
• Yes, just like in case of deals, VCats members are encouraged to refer potential investors to
VCats team to continue strengthening the power of VCats' Network.
13. How does one get to know about the investment opportunity through Venture
Catalysts?
• For investors who have subscribed to venture catalysts’ membership, the
opportunity to invest is first open to them over the email.
• The open opportunities are also communicated via whatsapp groups. • The startups are
also sent to various geographies for in person pitches to investors in those geographies.
14. Does every startup that VCats invests in, pitches in every city?
• No, a startup can not pitch to every city where VCats hosts a pitch session as logistically it
becomes a challenge for an entrepreneur to travel so extensively. • The deals are
allocated to various geographies considering the relevance of the particular geography
for the startup and the investors’ appetite in the particular geography.
• Subscribing to Venture Catalysts Membership, therefore, is the best way to stay updated
about every investment opportunity at Venture Catalysts.
15. What is the Agenda of Pitch Sessions organized by Venture Catalysts?
• The Agenda of VCats Pitch Days is to showcase the investment opportunities to potential
investors.
• The Pitch Days acts as an event where investors may hear the in-person pitch by the
founders who have already signed term sheets with VCats and accordingly make their
investment decisions.
• VCats does facilitate any follow-on meetings/details required to help investors make their
investment decisions.
16. How to invest through VCats in Startups?
The investment process in Venture Catalysts is fairly simple. There are multiple modes of
engaging with the team
• Step 1: Committing during pitch session - The Deals that pitch at various geographies are
the open investment opportunities for investors to review. Investor(s) may express
their commitment to any representative from Venture Catalysts preferably over an
email.
• Step 2: If a potential investor wants to engage with the founder more to arrive at a decision
then, the same is facilitated by VCats Team (both partners and central team).
• Step 3: As the deal generates interest from the investors and ~50% Commitments are
received, the third party due diligence is initiated to safeguard the best interest of
investors.
• Step 4: Once the commitments for the current round in a startup are complete, VCats
ensures receiving a positive due diligence report and parallel to this SHA Signing is
completed.
• Step 5: On successful signing of SHA and receipt of DD report, the call for monies is issued
to the committed investors.
• Step 6: Committed investors are given 15 days time to transfer their investment
amount.
• Step 7: Subsequent to the round being closed, Unit statements are issued to investors
who had remitted their investment amount.
17. Do all startups that pitch get funded?
• No. Only those companies that are able to gather commitments equal or near to their total
fund raise amount, get funded.
• If after all the pitch sessions, the commitments received for a particular startup is fairly low
compared to their requirements, they do not get funded.
18. What happens if a deal remains undersubscribed?
• If a deal remains marginally under subscribed, we go ahead and complete the
investment.
• If a deal remains significantly under subscribed, the deal is dropped and no further efforts
are made.
19. What happens if a deal gets over-subscribed?
• If a deal gets more commitment than their requirement, pari passu comes into effect.
20. What is the difference between Investment Commitment and Investment Amount?
• Investment Commitment is the ballpark quantum of money that an investor is willing to
invest in a particular startup. The Actual Investment amount that an investor may
actually subscribe to can deviate from the commitment amount and is
communicated by VCats in the Call for Money Mail. The deviation is due to the
commitment amount being mapped against the share price.
21. What is the Minimum Investment Commitment that an Investor can invest through
VCats?
• The Minimum Investment Commitment Amount is INR 2,00,000, however, it does vary from
deal to deal and is mentioned in every investment interest mail that is shared for the
respective investment opportunity.
22. What is received by an investor against the investment being made through VCats?
• Unit statements are issued by the startups against the amount received by them and
the same are couriered to the investor by VCats.
23. Can an investor sell / transfer his share in a particular startup, if and when
needed?
• No, the investor has to stay invested until an exit opportunity arrives.
24. What Support is given by VCats beyond investment closure with respect to
investments?
• Venture Catalysts is committed to handhold its investors till the point where an
investor investing through venture catalysts is holding a single share in the
company.
• Post investment closure, the Portfolio team of VCats organizes review calls for its
portfolio startups for the investors once in every 4 months.
• Regular updates regarding the progress of the startups is shared with the investors. •
VCats ensures that legal and financial compliances are not neglected by the startups to
safeguard the best interest of the investors.
• Investors are welcome to explore synergies and business opportunities within the
VCats Portfolios and the VCats Network.
25. What is the deal evaluation process at Venture Catalysts?
• Once a deal is received, irrespective of the deal source, the in-house deal evaluation team
screens the applications by getting on calls with the founder to get deeper
understanding of the venture, followed by an in-person meeting/video call with
VCats founders. The team short-lists the deals taking into consideration a lot of
factors; however, it is not restricted to fixed parameters.
26. What is offered by VCats in its integrated incubation program?
The integrated incubation comes with the promise of undertaking fund raising for which
the support is beyond the financial aspect to include:
• Focus on mentoring and guiding the entrepreneur at every stage after the first point of
contact.
• Business networking and opportunities are available to the founders with other
dedicated resources through the entire fund-raising journey.
• VCats offers the start-up the opportunity to pitch and connect with investors in Tier I, II &
III cities and opportunity to expand globally through VCats network abroad. • VCats
team also helps the startups with their next round of fund-raising.
27. What is the Membership Model at Venture Catalysts?
Membership On-boarding Process
1. New members can be referred only through existing members, partners or VCats
co-founding team.
2. Profiles of new members will be circulated to the existing members for reference. 3.
Engagement/Introductory Call is scheduled with one of the VCats’ Founders. 4.
Membership fees for an individual **
o For 1 year: INR 45,000 + 18% GST.
o For 2 years: INR 80,000 + 18% GST.
o For 3 years: INR 1,10,000 + 18% GST.
** Subject to change
28. Are there any other charges charged by Venture Catalysts?
• Yes, apart from the membership fees, another fee that investors pay is the transaction fees
charged by VCats on the amount invested by a potential investor, during the time of
investment.
• The price for Transaction Fees is: 2.3% of investment amount by an individual.
29. Does an investor have to complete any other formalities to be a part of the
network? • Yes, the investor needs to sign two other documents at the time of
becoming a member:
o Power of Attorney (PoA)
o Membership Framework
30. Why does an investor have to give a PoA?
• POA is taken from investors to execute the transaction in a timely manner in case of
direct captable(Non AIF) Investments. Today, we are investing in 10-15 deals per
month with at-least 20-30 investors in each deal. Getting signatures from 60-70
investors for multiple documents becomes time consuming. PoA is for the regular
transactions such as appointment / resignation of board directors, rights issue
documents etc. All exit transactions will be taken only after approval from the
investor.
31. Can an investor invest through multiple accounts?
• An Individual Investor can max have 3 Investing Entities for investing the
committed amount
.
• The 3 investing entities can be immediate family members or privately owned
companies and in case of multiple entities being used by an investor, the PoA
against each entity will have to be shared with Venture Catalysts.
• The shares are issued against the investing entity of the individual investor.