Sunday, June 23, 2024
Outlook India
Outlook Business

Lights, Camera, Investment: Is Indian Angels Wading Into Risky Waters By Letting Audience Invest In Start-Ups?  

While Indian Angels claims to provide the audience a chance to become investors, it’s pretty clear that there is a lot that still needs to be taken care of  

Lights, Camera, Investment: Is Indian Angels Wading Into Risky Waters By Letting Audience Invest In Start-Ups?   
POSTED ON November 24, 2023 1:45 PM

At first glance, you would be forgiven if you mistake Indian Angels, which airs on Jio Cinema, for being the latest avatar of the business reality show Shark Tank India. The premise is the same—start-up founders pitch their businesses to a panel of entrepreneurs and hope to secure funding.  

The panel of angel investors in this case features Ajinkya Firodia, managing director of Kinetic Group, Ankit Agrawal, founder and CEO of InsuranceDekho, Aparna Thyagarajan, co-founder and chief product officer of Shobitam, Kunal Kishore, founder of Value360; Rikant Pittie, co-founder of EaseMyTrip and Shreedha Singh, CEO and co-founder of T.A.C – The Ayurveda Co. 

Except that Indian Angels claims to be the world’s first angel investment show on OTT where viewers can also invest in the participating start-ups. And that is when things start getting intriguing.  

Abhishek More, founder and CEO of Digikore Studios, who is the producer of Indian Angels, stated that the show offers angel investors the opportunity to support emerging businesses as well as extends an invitation to viewers to become investors in the company of their choice. “People in India dream of having their own venture and now, with new times, people are willing to put money into businesses of their interest too. Indian Angels is the world’s first show on an OTT platform to provide this chance. So, anyone and everyone watching the show is open to becoming an investor.”  

A Reality Show Trumps People’s Real Money  

The ‘Audience Turned Investors’ section on the show’s website states that each participating business has a dedicated profile block on the platform. Viewers can browse through the company profiles, following which an expression of interest (EOI) form shows up. This collects details from the potential investor, including contact information and the amount they are interested in investing.   
Upon clicking on the company’s name, a viewer sees the brand and founder’s name and the company’s valuation, along with a small brief of the organisation. They can fill the EOI to become an investor by answering a few basic questions, like why they want to invest in the business. The show makers claim that any viewer in India can invest a minimum amount of Rs 2,00,000 in a company.  

Satish Khubani, founder and CEO of Jaipur's Havit Cycles at the Indian Angels show
Satish Khubani, founder and CEO of Jaipur's Havit Cycles at the Indian Angels show

But are things straightforward? Surely, a layperson might not be able to judge which start-up has the best chances of scaling up, especially in the VUCA world? 

“The viewer will surely invest after having an interest in the business, and if they see a potential for growth, they can fill out the form and will be contacted further,” explained Kunal Kishore, founder and director of Value 360 Communications and also an angel investor in the show. “There are a series of discussions between the angels and the founders who pitch their businesses before the show is live, as it is not possible for anyone to invest money into a business with a mere presentation of 10 minutes,” said Kunal.   

At the same time, he added that a viewer can watch the 10-minute pitch on the show before filling the EOI, following which some internal processes begin and the interested investor can directly communicate with the founder.  

Kunal Kishore, founder and director of Value 360 Communications
Kunal Kishore, founder and director of Value 360 Communications

“We can’t educate the common people around investments as we’re already providing a platform for people who keep interest in it. The people who are watching the show and investing in start-ups are most likely expected to be investing into multiple asset classes, so they can de-risk themselves by investing small quantum in larger numbers,” he claimed.

Kunal also added that, eventually, the deal-making will be between the viewer and the company. “We as angels or show makers won’t be involved directly or indirectly. We are just facilitating two people to meet for business,” he added while reiterating about viewers owning full responsibility for their investments.   

Another angel investor at the show, Aparna Thyagarajan, added that neither the angels nor the producer can take responsibility of the success of any start-up, as it is not practically possible. “It is expected for the viewers to make decisions based on their understanding of the business and its performance. The investment should be made with the investor’s own decision without the promise of success or failure,” she emphatically stated.   

Caveat Emptor? 

The key question that remains is whether it is prudent to keep the platform open for the masses, especially viewers who might not be well-versed with investment vocabulary, rather than limit it to established serial investors. And who takes the responsibility for indemnification should the start-up crash and burn?  

Talish Ray, partner at TRS Law Offices, opined that when a company is spending money to bring out a show at such a large scale and open for investments to a large mass in India, it is their responsibility to educate those who watch.  

“If you’re making a show like Shark Tank or Indian Angels, why not take out thirty minutes to educate the viewers? Of course, the buyer should beware, but it should be the moral responsibility of the show makers to ensure there is transparency,” she said, emphasising on the need for awareness and education on investment being open to the common public.  

Talish Ray, partner at TRS Law Offices
Talish Ray, partner at TRS Law Offices

Drawing a parallel with Shark Tank, Talish opined that the business show is full of drama and entertainment where the common man could get influenced by the emotional hooks from the entrepreneur's side. “Reality shows often showcase clips designed to evoke emotional responses. In this case, while discussing their business models, considered intellectual property, there is a lack of transparency regarding its ownership. The intricacies of private contracts between entrepreneurs and the show participants further contribute to this ambiguity,” she pointed out.  

Akshay Shah, founder of iWeb Techno, who appeared on Shark Tank India Season 1 accused the investors or sharks of not honoring their funding promises.  

Later, another X (formerly called Twitter) user, Anmol Sharma, shared a thread titled ‘Dark Side of Shark Tank’ calling out various irregularities of the show, including the sharks backing out from agreement, delayed funding and scripted narratives where the TRPs decide the founder they should back.  

Certain founders also claim that their portrayals in the media were misleading or misrepresented. The absence of public disclosure about these contractual details adds to the challenge of understanding the true dynamics at play. “All this fails to give a clear picture to the person who is about to invest his money in the show,” Talish said talking about how reality shows work.   

Reality or Risk, Really? 

Many are concerned about potential content manipulation on OTT platforms to boost viewership ratings, citing a lack of transparency. The current regulatory framework for these platforms is deemed inadequate and there is a rising demand for more robust mechanisms that ensure transparency in content creation and prevent the spread of misleading information.  

According to Kunal, the first round of episode investments will commence in November. Post that, the status of all the start-ups will go through due diligence by a third party who will prepare a report on the same, depending on which, the potential investors can move ahead in talks with the founders.  

Talish states that the major concern here is the potential privacy breach of the founders and retail investors. A third-party provider could have the start-up and the viewer details that they fill in the EOI and this data could then be used for various purposes beyond the show’s remit.   

Besides the audience data being potentially exploited, there is a likelihood that business models could be revealed without the explicit permission of the IP holder. Talish noted that the problem here is that the show partner might use the IP, and this affects not only the current business model but has the potential for long-term damage.  

Indian Angels
Indian Angels claims to be the world’s first angel investment show on OTT where viewers can also invest in the participating start-ups

However, Kunal stated that due diligence happens for start-ups by an audit form. “Due diligence happens for the start-ups by an audit form. The audit checks how the start-up has been performing and what numbers they've committed to, and a report is prepared, which is available to the customers through us. The interested investor's details are not disclosed; hence data breach is not expected,” he said.  

Elaborating on this, he said that the due diligence for start-ups involves a meticulous audit process that goes beyond assessing the performance and committed numbers. It encompasses a thorough examination of various aspects such as legal compliance, operational efficiency, market analysis, and team evaluation.  

“The audit culminates in a comprehensive report that not only highlights performance metrics but also delves into legal intricacies, operational strengths, market positioning, and team capabilities. This detailed report serves as a valuable resource for potential investors, providing them with insights and recommendations to make informed decisions about funding or collaboration. The audit firm will not have any information and data of interested investors so there will be no question of audience data leak of people interested in investing,” Kunal reiterated. 

While the concept of audience investment is innovative and has the potential to engage a broader audience in the start-up ecosystem, it demands careful consideration of ethical standards, transparency, and investor protection.  

Striking a balance between entertainment and responsible financial engagement is crucial to ensure the success and credibility of such initiatives in the long run. Regulatory frameworks and industry best practices should evolve to address these concerns and protect the interests of both investors and entrepreneurs. Hope someone at Jio Cinema is listening.  

  • Related Articles

    Honasa Consumer Ltd. announced its results for the quarter ending September 30, 2023. It delivered Rs 961 crore revenue from operations with 33 per cent YOY growth

    Honasa Consumer Achieves 33% Revenue Growth and 14X YoY Surge In Net Profit

    Sam Altman was fired as CEO Friday — and days later, he was back on the job with a new board of directors

    Sam Altman's Surprising Exit And Swift Return: Unraveling Impact on the Future of AI

    The SuperAngels Summit is being organized in partnership with the Department of Culture and Tourism Abu Dhabi, Abu Dhabi Convention and Exhibition Bureau, the Private Office of Sheikh Saeed bin Ahmed...

    Funding Winter To End By March, Says Ravi K Ranjan, Announces Super Angels Summit In Abu Dhabi