What is an AIF and how you can join the LetsVenture AIF

One of the most structured ways to invest in private companies is through Alternative Investment Fund (AIF), which refers to privately pooled investment corpus where private investors can contribute to collectively invest in businesses according to a mutually agreed plan. 

LetsVenture also has an angel fund to route all your commits when you decide to invest in a startup. Named LV AIF, it was incorporated in October 2018 as a Category 1 Fund under Securities and Exchange Board of India (SEBI). As an Angel AIF, the LV AIF has a tenure of 10 years, with two years extendable. 

Although individuals can invest directly in a company, it is advisable to invest through angel funds, as startups usually prefer a cleaner cap table by facing VCs or funds bringing in a huge corpus. 

Advantages of investing through LetsVenture AIF

1. Highly curated startups

Backing startups in their early stages can be risky, as the success of the business is yet to be determined. Investors need to learn more about the business, the team and get an idea of what the startup’s unit economics would look like in the future. 

LetsVenture features highly curated startup deals that are primed for less risk of failure. 

2. Invest smaller ticket size 

The AIF helps pool funds from different investors for startup investments and also enables one to write smaller ticket sizes  It also provides one structured channel for founders to close fundraising. You may decide to invest as low as Rs 1 lakh per startup when investing deal by deal. 

3. Easy and transparent process

LetsVenture’s technology-first platform makes investing on the public platform a transparent process for everyone involved. The user-friendly website and mobile application with easy navigation helps  track your deals and portfolio. Investors can also check the portfolio updates and milestones easily.

The eligibility

An individual considering investing through the LV AIF must have net tangible assets of at least Rs 2 Cr excluding the value of his principal residence, as mandated by SEBI. 

Additionally, they must also meet one of the following criteria:

1. Prior experience in investing in a startup or emerging or early-stage ventures
2. Experience as a serial entrepreneur, having promoted or co-promoted more than one startup venture
3. Senior management professional with at least ten years of experience

Joining LetsVenture AIF

If you fulfill these basic requirements, join an active network of new and experienced investors on LetsVenture here: Join to Invest 

Once you have logged in on the platform and completed KYC, you can access a steady stream of startup deals on the platform. 

‍Here are a few things to keep in mind when you decide to commit to invest and begin your angel investing journey:

1. Unlike the public markets, where investment and returns are instant, the private market demands more patience. As angel investors back startups in their early stages, they count on the potential value that founders and startups can generate in the long run. 

Hence, SEBI guidelines mandate that investors commit to investing at least Rs 25 lakh over the next five years. Investors can choose to space out the investment amount and deals based on their discretion. 

2. LetsVenture allows investment on the public platform as well as through private syndicates. Note that all commitments – made through private or public mode – will be accounted for as part of the Rs 25 lakh commit via the AIF.

3. Investors need to pay a one time sign-up fee of Rs 25,000 so LetsVenture can complete all the regulatory requirements for the investments. 

4. The LetsVenture AIF operates on a transaction-based fee model and not a management fee model. This means individual investors pay 1.5-3% commitment amount. For instance, if you commit an amount of Rs 2 lakh, you would be charged Rs 3,000. This is a one-time fee at the time of commit, not an annual fee charged by LV.

5. If you have a pre-emptive right to maintain your pro rata shareholding, you can only invest up to a certain amount to keep your shareholding from being diluted. Preemptive right is the contractual right you have to reinvest in a future round.

These are the basic frameworks for angel investors to kickstart their investments on the LetsVenture platform. 

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(To learn more about angel investing, explore Learn by LetsVenture, a destination portal for lessons across stages of angel investing and free resources)

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