Unlocking Investment Opportunities with Tyke Invest

The world of investments has often been restricted to a select few, with opportunities for high returns confined to the wealthiest and most connected individuals. This exclusivity has long kept retail investors—ordinary individuals—at bay. Tyke aims to break down these barriers by democratizing the investment space, providing retail investors access to opportunities that were previously available only to a small segment of the population. Through lower minimum investments and a user-friendly platform, Tyke opens the doors for a broader section of society to participate in startup investing while making it easier for founders to raise funds and build a community of engaged users.

Getting Started with Tyke

Registration Process

Registering as a subscriber on Tyke is a straightforward process. All you need to do is sign up using your mobile number, verify it, and provide your first and last name. In just a few steps, you’re ready to start exploring investment opportunities.

Subscription Process

Once you have completed the signup and created an account on the platform, you can explore various investment opportunities. Tyke provides detailed information about each opportunity to help you make informed decisions. After selecting a campaign, you can begin the subscription process. This involves reading and agreeing to the terms and conditions, transferring the money, and then sitting back to relax while your investment is processed.

Minimum Subscription Amount

The minimum subscription amount on Tyke starts at Rs. 5000, though this can vary depending on the specific campaign. The exact minimum amount for each campaign will be listed on the campaign page.

KYC Documentation

To complete the Know Your Customer (KYC) process on Tyke, you need a valid PAN card for identification purposes. Tyke attempts to fetch the required data automatically based on your mobile number and name. If needed, additional information may be requested for validation. Your bank account details will also need to be linked and validated.

Read Also: Investing in Startups vs. Investing in Stocks

Understanding Startup Investing

Early-Stage or Startup Investments

Early-stage or startup investments involve investing in companies that are still in the process of building their revenue models, growing their customer base, and scaling rapidly. These startups have significant growth potential and offer the opportunity to earn substantial returns. Historically, venture capital investments have outperformed traditional investments, with a study by the Thomson Reuters Venture Capital Research Index showing an annual return of 20.6% since 1996, compared to 7.5% for public equities and 5.9% for bonds.

Benefits of Investing in Startups

Investing in startups offers several benefits beyond potential high returns. These include the opportunity to support future disruptors solving today’s problems, access to networking opportunities with other investors and founders, and the satisfaction of playing a role in the growth of innovative companies.

Risks of Startup Investing

While the potential rewards are high, investing in startups comes with significant risks. Early-stage startups may struggle to find product-market fit or establish a market presence, and some may fail due to lack of funding, unsustainable margins, or insufficient market size.

Key Terms and Concepts

Private Placement of Securities

Private placement refers to the sale of securities to a small number of investors rather than through a public offering. This is governed by Section 42 of the Companies Act 2013, which limits the number of investors to 200 in a financial year. The process includes issuing a private placement offer letter in Form PAS-4 to the selected investors.

Capitalization Table (Cap Table)

A cap table details the ownership structure of a company, including the stakeholders, their respective stakes, and the valuation of each funding round. This is crucial for founders and investors to understand the impact of potential fundraising on ownership.

Alternative Investment Fund (AIF)

AIFs are pooled investment vehicles that invest in private equity, venture capital, or private debt. These funds can be structured as a body corporate, trust, or LLP, and are the only permissible vehicle for pooling funds from multiple investors as per SEBI regulations.

Direct Investments vs. AIF

All investments on Tyke are direct investments in startups, not routed through an AIF. However, Tyke has partnered with an AIF to facilitate private fundraises for founders with their own list of investors, though these opportunities are not visible on the platform.

General Guidelines for Subscribers

Eligibility

Any individual over 18 years with a valid PAN can subscribe to campaigns on Tyke. Non-individual entities like companies, partnership firms, LLPs, and HUFs can also subscribe after providing the necessary legal details during the KYC process.

Payment Modes

Subscribers can transfer funds from their Tyke Pocket or via online and offline payment modes. For offline payments, detailed instructions are provided to ensure funds are correctly transferred to your Tyke Pocket.

Address and Profile Management

The address used for KYC purposes will be the one on your address proof (e.g., Aadhar). However, you can edit your current address for communication purposes through your profile settings, where you can also update other details like email, mobile number, and bank account information.

Campaign Selection and Communication

Tyke reviews multiple aspects of a startup before allowing it to launch a campaign on the platform. These include financial statements, founder credentials, fundraising history, market position, and social media presence. Subscribers can find all open campaigns in the “Subscribe” section and contact startups through provided social media handles.

Managing Your Subscriptions

Multiple Subscriptions

Subscribers can invest in multiple startups and diversify their portfolio. They can also subscribe multiple times to the same startup as long as the campaign is open, with each transaction meeting the minimum subscription amount.

Account Deletion

To delete your account, contact Tyke support via email. The request will be processed, and the account will be deleted within 30 days.

Types of Instruments on Tyke

Community Stock Option Plan (CSOP)

A CSOP is a contractual agreement that entitles the subscriber to community benefits and potential Stock Appreciation Rights (SAR). Community benefits can include discounts, exclusive event access, beta testing opportunities, and brand ambassador roles.

Stock Appreciation Rights (SAR)

SAR grants the right to receive value equivalent to the appreciation in the company’s value without issuing equity shares. This value can be settled by the company through cash or other incentives.

Discount Cap and Valuation Cap

A discount cap protects early-stage investors by offering a discounted valuation in future funding rounds. A valuation cap sets a maximum valuation at which the subscription is valued, ensuring investors get more equity in high valuation scenarios.

Compulsorily Convertible Debenture (CCD) and Preference Shares (CCPS)

CCDs are debentures that convert into equity shares at a predetermined date, offering hybrid benefits. CCPS provides fixed income until conversion into equity shares, determined at the time of issuance.

Non-Convertible Debentures (NCD)

NCDs are secured debt instruments offering regular interest payments over a fixed tenure. They are regulated by the Companies Act 2013, requiring full security by the company’s assets and the appointment of a Debenture Trustee.

Taxation and Returns

Return on Investments

Tyke does not guarantee any returns on subscriptions. Returns can be realized through exits during mergers or acquisitions, buybacks, or sale of securities.

Tax Treatment

The tax implications for various instruments vary. For example, income from CSOPs is taxed as “Income from Other Sources,” while returns from CCDs and CCPSs are taxed as capital gains upon redemption. NCD interest is taxed based on the subscriber’s income tax slab, with TDS applicable under certain conditions.

Managing Your Portfolio

Latent Portfolio

This section highlights subscriptions from which future earnings are not expected due to the company’s operational status. Tyke provides timely updates on these subscriptions.

Earnings and Repayments

Subscribers can view annualized earnings and gain/loss calculations in their portfolio. “On Time” repayments indicate timely crediting of repayments, and details of closed subscriptions can be accessed through the portfolio.

Customer Support and Assistance

Issues and Queries

For any issues such as e-signing problems or general queries, subscribers can contact Tyke support via email, Contact Us: [email protected]. The customer support team is available to assist with various concerns, from technical difficulties to subscription management.

Refund and Cancellation

Subscribers can cancel or reduce their subscriptions within 48 hours by contacting support. Refunds will be processed within 2-3 working days. However, cancellations in the final 48 hours of a campaign or for discounting campaigns are not permitted.

Payment Compliance

Payments should ideally be made from the registered bank account to avoid subscription rejection. Offline payments from other accounts will be rejected and credited back, ensuring compliance with regulations.

Conclusion

Tyke is revolutionizing the investment landscape by providing retail investors access to lucrative opportunities and simplifying the fundraising process for startups. By lowering entry barriers and offering a range of investment instruments, Tyke empowers ordinary investors to participate in the growth of innovative companies while fostering a vibrant community of engaged users and supporters. Through detailed information, user-friendly processes, and robust support, Tyke is set to democratize investments and drive the future of startup funding.

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