Micro venture capitalists in India are investing more than before – and this time, they are targeting your startup. Here’s how you can attract micro VCs in India and raise capital.
According to an extensive report by the Indian Venture Capital Association, micro VCs invested over $370+ million in the past 3 years; a 65% jump from the previous years.
Who are micro venture capitalists?
Before we explore how you can attract micro venture capital, here’s what you need to know about them.
Micro venture capital is the money invested in startups and small businesses that have JUST set up or are in the process of setting up (before the series A funding commences)
Normally, micro venture capital funds are lesser than the traditional VC. Also, in contrast to traditional venture capital i.e. money used to invest in growth-focused companies, micro venture capital consists of smaller seed investments, typically between ₹10L to ₹30L, in companies that have yet to gain traction.
In a statement by Financial Express, Micro VCs typically invest in rapidly booming sectors. Around 60% of such investments in 2023 were into the following sectors
- SaaS/AI companies
- BFSI
- Healthcare and life sciences
- Consumer apps and platforms, eCommerce and listing platforms
How to get your business noticed by micro VCs?
Keeping a solid business plan
Even Micro VCs need to see a solid business plan that explains your business model, vision, mission, and branding. You can download different business plan templates and work on a pitch that provides all the details of your company transparently. Explain your product, your purpose as a brand, and provide information on what you plan to do with the investment amount.
Document everything
Besides a business plan, you need to have receipts records and documents of everything your business has gathered or accumulates so far.
This means –
- Keep invoices ready for every transaction with the vendors
- Make sure your business keeps proof of contract with different third party vendors and suppliers
- If you are lending from any institution, ensure it is an NBFC or Government approved lending platform to avail better benefits.
Networking
The ideal way for VCs to notice your business? Network with the community!
Get recommended by someone who knows a VC professionally. Indian organizations like TiE, Indian Angel Network, and Indian Venture Capital Association provide networking opportunities that entrepreneurs should make the most out of.
Switch to a digital platform
Micro VCs in India look to invest in sectors that promise quick growth. This helps them grow into traditional VCs along with the company they invest in. Post the pandemic, several businesses took to creating eCommerce platforms.
In an interview with Yourstory, micro VCs Varun Mayya and Shashank Udupa said this about small businesses ” With technology becoming easier and cheaper to build, the road to success is centered around the concept of adaptability. Companies that could adapt to changing customer needs, thanks to the consumerization of IT, are those that will survive the technology game. Unfortunately, smaller companies continue to fail and cannot catch up.”
The best way to set up an online platform is to create an online store that offers inbuilt tools to accelerate growth. How to set up an eCommerce platform quick enough for a micro VC to notice? Opt for our affordable, easy to set up an online store. You can sign up here and take the guided tour to set up a premium online store for just ₹8/- day!
Register your company
Even though your company is in the setup phase, register it on an online portal and adhere to compliance. Micro VCs want to believe you are serious about taking your firm forward.
- Register your business online with the Udyog Aadhar Portal
- Ensure your business is compliant with Legalwiz.in
Benefits of Micro VCs in India
Beyond funding
Micro VCs offer more than just risk capital for micro/small startups and businesses. Most of the times, micro venture capitalists also offer mentorship to their portfolio companies and help them achieve their ideal product-market fit.
Setting up for growth
VCs ignore most small businesses for one main reason – lack of growth. Micro VCs help start the growth process; for startups and small businesses just setting up!
Micro VCs give you a leg up before you decide to obtain series A funding for your startup. This way, once your business is on the firm ground it becomes much easier to obtain different forms of investment.
Business partners
Micro venture capitalists also double up as business partners, sharing both the risks and rewards of the money they invest in you. Micro VCs too, are rewarded by business growth and scaling. They also offer practical business advice and assistance when needed.
VCs also involve in making corporate decisions and setting up the team. Often, they are actively involved in hiring key personnel and setting up contacts for further investments.
Finding funds with VCs
One more way to get VCs to notice you? Show them you are funding ready! Take our free online course on mojoVersity to discover if your business is funding ready, what are documents you need to compile a funding report, and what funding schemes you can take advantage of as a small business.
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