Indian is where global corporate communities want to invest. It’s the most preferred destination for them. The reason for this happening is growth prospect in this economy, which attracts foreign investors in this country.
For having incredible growth prospects, many non-residents of India (NRI) are showing their interest in investing their money here. If you, also, are an NRI and are willing to invest in Indian startups, this blog can help you a lot.
How can NRIs invest in Indian startups?
- Become an Angel Investor
He can be any informal investor, angel funder, private investor, or seed investor. The main role of these professionals is to provide capital for a business, which includes startups. In return, he receives convertible debt or ownership equity. Being so, your way to investing here would be by far the easiest one.
Many startups storm into a business with a little capital. Since it’s an initial stage, they prefer to raise capital from the market. Here, you have an opportunity. You can become an angel investor for one of them. For this purpose, you should be a member of an angel investment platform. Fortunately, online membership is available. So, you can start from here.
As you join, there would be a listing of startups. You can explore it and finalise the one that you feel is the best fit option for investment. Typically, these platforms have the funds of many angel investors, which is pools and then, invest in them. But, this is not the only option. There may be another alternative, which is called Alternative Investment Funds (AIFs). These are special funds pooled separately here.
As an answer to how can NRIs invest in Indian startups, you have two different preferences to pool your money here as an angel investor, which are already discussed above. Just search out and discover pros and cons of this investment.
- AIFs is a Better Investment Option
When you’re likely to invest in any AIFs, search if the AIF is registered with the Securities and Exchange Board of India (SEBI). It is the highest authority that governs trading entities here. Its enrollment protects your funds if something is unethical or wrong. If your funds are not put into a registered entity, there would be a higher risk to your hard-earned investment money.
Easy Tips for NRIs to Remember While Investing in Indian Company
Let’s access to some vital points that can help you to invest here carefully.
- Ceiling Limit is There
Ceiling limit refers to the maximum principal amount of the Secured Credit. Customers choose this authority and later, the bank accepts him if no such election happens in accordance with the bank.
It should be noted that equity investment in Indian startups has a ceiling limit. The Reserve Bank of India has set it to avoid exceeding it. However, it is as per the type of the company. It can be between 10% and 24% of the total paid-up capital of the company. So, NRIs should consider this limit.
If an individual NRI is investing, this ceiling limit is a 5% of the total paid-up capital of the company. Therefore, always ensure that your investment limit goes well with the limited set by the RBI in order to avoid breaching of any provision set by this apex bank.
- Take repatriation into account
NRIs have two different investment account options here. These are the equity of the company through a Non-Resident Ordinary (NRO) account. You may also use a Non-Resident External (NRE) account.
Take into account that the NRO account is a non-repatriable account. It means that you cannot transfer the funds from that account to your country of residence. On the other hand, the NRE account holders can freely transfer any amount.
So, it’s an excellent idea to prefer an NRE account if you want to transfer sale proceeds or dividend income to your country of residence.
It is advised to look into risk factors accordingly. Indian companies are, undoubtedly, the best NRI investment options that you have is this. If you invest upon a deep research, your investment would be profitable, and you would certainly get an overwhelming rate of return.
