In a push to the entrepreneurial ecosystem, Grow VC is looking to create a virtual Silicon Valley community in India using the crowd funding approach.
In many ways, crowd funding is like crowd sourcing which actually means pooling of resources, capital, people, trust and cooperation and thrives on the collective power.
Drawing a parallel to India’s best known brand Amul, which operates much on those lines, Satish Kataria, managing director, Springboard Ventures, the Indian partner of Grow VC, says, “Crowd funding or sourcing has been used in variety of ways from pooling resources to produce milk, from disaster relief to film-making. With so much of internet and connectivity, the crowd funding approach has now been customised for startups.”
Grow VC, available at growvc.com, facilitates startups looking to raise money to expand their businesses to reach out to a wide network of investors through internet. It works on a subscription model and charges a nominal fee for every sign up. The model which only kicked off in February this year has gathered considerable interest with hundreds of new sign-ups each month and active participation of investors, startup service providers, advisors and entrepreneurs within the online community, it claims.
The model now reaches India in the form of india.growvc.com, a local platform launched by GrowVC in participation with Springboard Ventures. The latter will build the India infrastructure for Grow VC by providing an ensemble of local experts and investors to create the Indian extension of growvc.com.
“We will increase the funnel or bandwidth of the investors who can support startups and also provide them with mentoring, investment management services," says Kataria of Springboard Ventures. To begin with, Springboard is looking to partner with all the prominent angel networks such as Indian Angel Networks, Mumbai Angels and market the brand aggressively to provide GrowVC with a robust local infrastructure. Kataria has industry experience across branding, marketing and was most recently with Indiareit Advisors- a private equity real estate fund.
Grow VC has also announced the Virtual VC Co-investment fund to enable VCs to participate in Grow VC’s seed investments. IndiaCo, an Indian investment management firm, has come aboard the fund and has committed to invest $5 million to the virtual fund, with the local network being spearheaded by Springboard Ventures.
“We see that India is a very important market for Grow VC, because it has a strong entrepreneurial culture and also nowadays, more investors that are interested in investing in local but also international companies," Jouko Ahvenainen Founder & Chairman at Grow VC said in a statement.
It essentially follows a subscription based model where startups can sign up for as low as $20 (Rs 1000) and become a member of the network – where about 75% of the subscription fee would accrue to the “community investment pool” and 25% of the money goes to Grow VC to meet administrative costs. The crowd funding bit comes in where the monies collected as the “community investment pool” are used for funding startups.
“Instead of knocking the door of every investor, here is a platform which will allow startups to reach out to a whole range of investors easily. This also serves as a great platform for all the angel networks to evaluate start ups and leave their comments," said Kataria.
The need for this kind of network is also heightened with most of the existing early stage funds in India not really looking at a pre-revenue company but growing more towards a micro PE structure looking at late stage investments or mature companies where exit horizons are much clearer and nearer. Also, the existing angel networks have their bandwidth issues in terms of how many startups can they fund in year.
“Angel funds have management and investment bandwidth and often a good idea can remain unfunded. With this kind of network, it will create a wave, a community which no one would have imagined," Kataria adds. While the Indian network has just been launched, the global network launched this February has about 3,500 members with 400 members joining every month. There are about 1,000 startups that are currently using the platform, which has raised the community pool of $13 million till now. A few startups have also received direct investments from investors. Springboard Ventures will also seek to outsource a few startup ideas or provide investment management services for a fee towards those funds looking to invest in start ups, he adds.