Having eight years of experience in financial modelling, fund management and business advisory services, chartered accountant Himanshu Kumar realised that there is a huge gap between the demand and supply of funds in the market.
According to a estimation by The World Bank, approximately 70 percent of all MSMEs in emerging markets lack access to credit. The current credit gap for formal SMEs is estimated to be $1.2 trillion and the credit gap for both formal and informal SMEs is $2.6 trillion.
Soon, Himanshu stumbled upon the idea of reaching out to a large number of investors to bridge the gap and back startup ideas. Founded in last September, Angle Paisa acts as a bridge between startups and investors by providing early-stage funding to startups. It helps startups raise equity investment from friends, family, community, independent investors and public at large.
With the help of Angle Paisa, startups can explain one’s business idea, narrate the startup story, describe the target market and strategy and the quantum of investment to be raised in exchange for the equity on offer. They can also engage investors using videos and photos.
Angle Paisa’s experts then evaluate this plan in detail to ensure that the campaign is fair, clear and not misleading for investors. Once the campaign goes live, the investors study the proposal, evaluate it in order to invest in the startup.
We create opportunities using Internet as a medium, to raise investment for businesses online, outlining the associated benefits and risks in a clear and easy-to-understand manner,” says Himanshu (33).
An expert in Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards, Himanshu provided support to many transnational companies. In 2013, he returned to India and started working on Angle Paisa. It took almost one year to channelise the process and kick-start Angle Paisa, where a person is considered as angel investor when he/she invests Rs 5,000.
Angle Paisa was bootstrapped with an initial corpus of Rs 50 lakhs, which was primarily utilised in setting up its website and social media campaigns and online presence.
Angle Paisa has around 34 investors and five startup ideas. While evaluating startup ideas, it considers business model, environment, feasibility, funding required and founding team. So far, it has invested Rs 3.75 crore in the startup community.
Revenue model and traction
Angle Paisa charges a fee between three and six percent, depending upon a few criteria such as nature of the project, quantum of investment required, dilution of stake. The company has a team of four people across finance, management, social media and IT. By next year, Angle Paisa expects to have more than 200 startups and 2,000 investors.
Further from the perspective of increasing our current set of skills and knowledge, our venture has been supported by some well-renowned CXOs from various sectors working with us as mentors,” says Himanshu.
Crowd Funding market in India
Crowdfunding is generally defined as an online platform for small businesses and startups to increase their opportunities, investment base and funding prospects. The concept is believed to have started primarily in the US and UK and entails the use of the Internet and social networking sites such as Facebook, LinkedIn or Twitter.
It India witnessed a couple of crowdsourcing success stories, before the term even became popular. Dhirubhai Ambani's Reliance Industries, a small but successful textile business, was crowdfunded by communities across Gujarat.
According to SEBI, crowdfunding is defined as solicitation of funds (small amounts) from multiple investors, through a web-based platform or social networking site for a specific project, business venture or social cause.
SEBI is currently in the process of establishing regulations on crowdfunding, which will be a boon to the SME or early-stage startups to raise funds from small-time investors.
According to a study by World Bank, the global crowdfunding market could will reach $90-96 billion by 2025, which is 1.8 times the size of the global venture capital industry today. The last couple of years have witnessed the srpouting of a few platforms in the space, such as Mumbai-based Wishberry, Bengaluru-based FuelADream, crowdfunding fintech platform Impact Guru, actor Kunal Kapoor’s Ketto and Mumbai-based Catapooolt.