The Indian franchise of Shark Tank—a global reality-television series in which aspiring entrepreneurs pitch their ideas to a diverse group of “shark” investors—has clearly struck a chord.
According to Parrot Analytics—a data-science company that analyses media content across platforms—the audience demand for the show was 13X 13X Parrot Analytics India TV audience demand for Shark Tank Read more that of an average television series in India. This puts it among the country’s top 2.7% of all shows.
The show resonates with the Indian audience because it tells the story of a transforming India, showcasing the growth of innovative businesses: germinating the idea that investing in them could lead to substantial returns.
This has generated a demand for startup investing, with more people looking to invest in promising startups. A new ecosystem has emerged that combines slick marketing, feel-good storytelling, and online platforms to aggregate and attract retail investors into fundraising campaigns.
Today, startup founders are increasingly using online fundraising platforms to raise capital, often using Shark Tank type of shows for publicity and credibility. Through online platforms, such as Tyke Invest and Infubiz, the startups offer “investment” opportunities to retail investors with a ticket size as small as Rs 5,000 (~US$60) or Rs 10,000 (US$120).
Tyke and Infubiz did not respond to a detailed set of questions sent to them.
These campaigns, resembling a public offer under company law, raise low-ticket funds from retail investors through a community subscription plan, but are actually innovative non-equity instruments with an underlying speculatory bet on the company’s future valuation. Under securities laws, these contracts resemble derivative products, which are prohibited unless traded on a recognised stock exchange.
Increased advertising and promotion of these funding campaigns and platforms is problematic, creating a Wild Wild West environment for unsuspecting small-time retail investors.
On the prowl
About a week ago, a startup founder posted on LinkedIn LinkedIn LinkedIn Apratim Ganguli’s Post Read more about their fundraising campaign on Tyke Invest. The pitch was intriguing: Investors could multiply their returns by subscribing to the fundraiser early. The post urged them to “stay ahead of the curve”. The startup was going to feature on an upcoming OTT angel-investing show similar to Shark Tank.
A little research revealed another another LinkedIn Zymrat’s Post Read more similar post, among others, directing viewers to a fundraising campaign.
Headquartered in India’s financial capital Mumbai, Tyke Invest markets itself as a platform for exclusive investment opportunities and claims over 150,000 registered subscribers.