In the previous article, we read about Angel Investing Opportunities in India where we closely read about how India offers a range of investment opportunities across various asset classes, sectors, and geographies. We also explained through popular global & Indian examples what successful angel investments can lead to. We took the example of Facebook, Google, and popular Indian startups like Flipkart & Ola to help explain the significance of Angel Investment.

Lastly, we listed out popular angel investment opportunities in India:
Healthtech
Fintech
Edtech
Agritech
Clean Energy

In this article, we take a look at what we mean by accredited investors & how these accredited investors are playing a crucial role in supporting the startup ecosystem in India & fostering innovation.

Like always, we’ll try to explain the definition in the form of a story to help readers get a comprehensive understanding of the subject.

Once upon a time, in the bustling city of Bengaluru, a selected group of individuals held a key to a mysterious realm known as "Accredited Investors." These individuals were not your ordinary denizens of the financial kingdom; they were the chosen few, whispered about in hushed tones by those seeking entry into exclusive opportunities.

The gates to the world of Accredited Investors were guarded by the Securities and Exchange Board of India (SEBI), standing tall and vigilant. To enter, one needed the magic key—a specific financial status that set them apart from the common folk.

Accredited Investors, adorned with financial insignia, possessed a net worth that soared high above the clouds or an income stream that rivaled the mightiest rivers. These fortunate souls had crossed the thresholds set by the SEBI, unlocking access to a realm where private offerings and exclusive investment opportunities awaited.

According to SEBI guidelines, an Accredited Investor is a business entity or institution that wishes to start its AIF Fund to invest in startups. While individual investors are required to have a net worth of ₹2 Crores to be considered as an Angel Fund, a Corporate investor is required to have a net worth of ₹ 10 Cr.

The SEBI has also prescribed certain rules & regulations regarding the amount of funds that can be raised from investors via AIF. For AIF Category 1, Category 2 & Category 3 respectively, the minimum investment is ₹ 1 Cr. The minimum commitment required for investment in VentureX Fund is ₹ 1 Cr.

Tales of Accredited Investors' prowess spread far and wide. They were the patrons of private equity, venture capital, and hedge funds—investments shrouded in secrecy and privilege. The kingdom recognized them as the risk-takers, the visionaries. They were considered as the chosen ones who dared to dance where others feared to tread.

We take a look at some examples of successful startups that have benefited from the support of accredited investors:

1. Uber: Uber is a ride-hailing platform that has revolutionized the transportation industry. In its early days, Uber received funding from a group of accredited investors, including Benchmark, TPG, and Google Ventures. This early funding helped Uber to expand its operations and develop new products and services.

2. Airbnb: Airbnb is an online marketplace that connects travelers with hosts who have spare rooms or homes to rent. In its early days, Airbnb received funding from a group of accredited investors, including Sequoia Capital and Greylock Partners. This early funding helped Airbnb to scale its operations and expand into new markets.

There have been many successful Indian startups that have benefited from the support of accredited investors. Here are some examples:

1. Byju's: Byju's is an ed-tech company that offers online learning and educational products. In its early days, Byju received funding from a group of accredited investors, including Sequoia Capital and the Chan Zuckerberg Initiative. This early funding helped Byju's to expand its operations and develop new products.

2. Oyo: Oyo is a hotel booking platform that has become one of India's most successful startups. Oyo received funding from a group of accredited investors, including SoftBank, Sequoia Capital, and Lightspeed Venture Partners. This early funding helped Oyo to expand its operations and develop new products and services.

3. OLA: Ola, an initiative by ANI Technologies, emerged as a beacon of convenience, redefining how people traverse the ever-expanding cities. With just a tap on a smartphone, Ola empowered millions to summon a ride, making daily commutes more efficient and enjoyable. What began as a local solution for urban transport soon expanded its wings globally. Ola ventured into international markets, bringing its user-friendly platform and innovative solutions to new corners of the world, contributing to the evolution of the global ride-hailing ecosystem.

Now that OLA is foraying into the emerging Electric Vehicle and Lithium Ion Batteries space, this is an opportune time to talk about the investors who understood & trusted its potential at a very young age & gave it funds to fuel growth. These accredited investors included Softbank Group, Sequoia Capital, and famous Shark Tank judge Anupam Mittal among others.

These examples demonstrate the crucial role that accredited investors play in supporting Indian startups. Accredited investors bring not only financial resources but also expertise, mentorship, and networking opportunities to help startups grow and thrive. Without the early-stage funding and resources provided by these investors, many startups would struggle to get off the ground and achieve success in India's competitive startup ecosystem.

Planify is proud to state that it has a set of 10,000 accredited investors who have been actively investing in over 300 vetted startups on our platform & Planify has helped facilitate over ₹250 cr. worth secondary investments, earning them a minimum annual return of 50%. Planify has also facilitated over 31 successful exits where a cumulative investment of Rs. 3.1 Cr. (Rs. 10 Lakh per company) is presently valued at Rs. 17 Cr., providing absolute returns of ~450% and CAGR returns of a whopping 117% every year.