FAQs

What is a startup?

A startup is traditionally defined as a newly established private company designed to scale quickly. Most startups start as small operations while they develop their initial idea, and then seek additional funding from venture capitalists and angel investors as they build their businesses.

Why is it called a startup ecosystem?
The startup ecosystem is just like the environmental ecosystem. The way resources of the environment play an important role, the people, corporates, founders, investors, advisors, and, mentors play an important role to develop and nourish a startup. Due to their individual and mutual importance, it’s called the startup ecosystem.
What is the minimum amount I can invest in a start-up?

Agility Ventures Partners offer investors to invest with a minimum amount of ₹2,00,000.

What are the exit options available to investors?
The exit options available to the investors are:
  1. Selling of shares to a new investor in the company.
  2. Mergers & Amalgamation of the company.
  3. A takeover of the company by big corporates.
What is the minimum time for which money remains blocked?
Being a startup investor is like sowing a seed, the fruits of which are reaped after a certain point in time. Therefore, a startup investor should expect an average time of 3-5 years to stay invested if they want to reap good returns out of the investments.
Do investors get dividend or share in profits in any manner?

No, a start-up does not offer any kind of dividend or share in profits to the investors. It is considered that startup investing is for net worth building not for monetary returns.

What are the pros and cons of investing in startups?
Pros
  • Small investment amount
  • High returns
  • Diversification of portfolio
  • Networking
Cons
  • High risk
  • Delay in returns
  • Less liquidity
What are the rights of an investor?
Investors have various rights:
  • Access to a periodical or annual financials of the company.
  • Prerogative in every big decision making of the company.
  • Legal remedies for any breach.
  • All the rights of a shareholder.
What are the obligations of an investor?
Investors have very few obligations:
  • Understanding the terms and conditions before investing.
  • Understanding the product and operational framework.
  • Transfer funds to the startup’s bank account on time.
  • Inform and educate yourself.
What are the legal remedies available to an investor?

In case of any breach, investors have the legal right to sue a company in a competent court of law. The agreements being entered by a startup and the investors are admissible in the court.

Is it risky to invest in startups?

Yes, It is risky to invest in startups. However, it can be mitigated.

How can the risk be mitigated?

The risk can be mitigated by diversifying the investment in more startups.

What are the industries in which start-up funding is common?
Innovations are happening in every industry. Therefore, startups are rising in every field and at Agility, we are exploring more than 20 industries including:
  • Edutech
  • Fintech
  • Agritech
  • Healthcare
  • Automobile
  • Technology
  • Consumer Goods
  • E-commerce
What is the basic point we must consider before investing in a startup?
An investor should consider the following points while investing in a startup:
  • Background of founders
  • The idea of the business
  • Level of innovation
  • Team strength
  • Future prospects
  • Technical aspect
  • Lead investor
  • Mentors or advisors associated
What are the stages of funding?
The following are the stages of funding:
  1. Idea Stage: Where there is just an idea and the execution hasn’t started for the same.
  2. Seed Stage: Where the idea is to be executed but with a small round of funding up to ₹50,00,000.
  3. Angel Round: Where there is a small background of the startup but it is withheld in growth due to lack of funds. Angel investors come and invest somewhere between  ₹1 crore to ₹5 crores.
  4. Pre-Series A: Where investment round falls between ₹3 crores to ₹12 crores.
  5. Series A: Where investment round falls between ₹15 crores to ₹100 crores.
  6. Future rounds: Startups may also go for Series B, C and D.
What are the modes of payment allowed to invest in an Indian startup?

Anyone can invest in an Indian startup through the usual banking channel using their bank account. In the case of an NRI, the person can also use their NRE/ FCNR (B) account maintained with an AD Category I bank.

What instruments can be issued by an Indian Company?

The following instruments can be issued by an Indian Company for receiving the investment:

  • Equity Shares
  • Compulsory Convertible Preference Shares
  • Optionally/ Partially Convertible Preference Shares
  • Optionally/ Partially Convertible Debentures
Which are the sectors where foreign investment is prohibited?
Foreign investment is prohibited in the following sectors:
  • Lottery Business includes government or private lotteries, and online lotteries.
  • Gambling and betting including casinos.
  • Chit funds.
  • Nidhi company.
  • Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or tobacco substitutes.
  • Trading in Transferable Development Rights (TDRs).
  • Real estate business or construction of farmhouses.
  • Activities or sectors not open to private sector investment e.g. (I) Atomic energy and (II) Railway operations (other than permitted activities mentioned in entry 18 of Annex B).
Note: Foreign technology collaboration in any form including licensing for franchise, trademark, brand name or management contract is also prohibited for Lottery Business and Gambling and Betting activities.
Are the investments made in Indian startups repatriable?

Yes, the amount invested in Indian startups is repatriable, subject to applicable taxes, except in cases where the investment is made on a non-repatriation basis.

What are the tax implications on exit?

The Capital Gains Tax as per the Income Tax Act is applicable on the exit to the investors.

What are the compliances to be made by a company if it receives investment from outside India?

The company has to comply with the FDI regulations and make all the necessary filings with the Reserve Bank of India through its Authorised Dealer Bank. The type of filing depends upon the type of instrument issued by the company.

Is an investor required to make any compliance with any Indian authority while investing in India?

No, the investor is not required to make any compliance before investing in India, subject to the investment limits under FDI.