In 2015, India witnessed angel investments crossing $300 million mark for the first time from $196 million in 2014. Similarly VC funding grew from $2.28 billion in 2014 to $5.1 billion in 2015. With total number of startups at 4200 in 2015 which is expected to further grow at a rate of 40%, there are still many startups with disruptive ideas unable to raise funds.
The reasons could be many ranging from the lack of proper exposure to the lack of accessibility to credible and approved investors.
What is needed to bridge this gap between startups investors is a platform which provides a structured, easy and convenient way to the startups to raise capital from high quality, approved angel investors. Welcome GREX.
GREX (or GREX Alternative Investments Market) is one such platform and serves as a stock exchange for unlisted startups in the country. It is a seamless associated ecosystem which brings together private eligible Investors and high growth unlisted companies and enable exchange of information and securities among all these entities.
Founded in 2014, GREX aims to bring the experience of regular Capital Market available to private Investors so that they can discover, enter and manage their investment interests in exciting Unlisted companies.
On the other hand, small and medium entreprises (SMEs) and startups can get listed on the GREX platform and increase their visibility among these HNIs and angel investors and gain access to funding and mentorship. GREX encourages the companies to raise multiple needbased funding rounds and help them focus on building their companies and in turn generate superior overall value.
In India, we already have a legal process called Private Placement Process which allows companies to raise capital privately by investors. However, like many other legal processes, this process is also plagued by many inefficiencies and delays which deter new companies from going through it.
This is where GREX comes in as it has automated many parts of Private Placement Process. In addition to bringing the entire process online, the fintech platform has removed many inefficiencies and made the process more transparent.
At present, GREX allows companies to only raise equity capital through its platform. However, once it gets approval and gets through all regulatory aspects, it also plans to allow trading of shares among investors hence truly establishing itself as a stock exchange for unlisted companies.
The company has also tied up with many third parties such as law firms, investment bankers, custodians as well as a rating agency to grade companies in order to make them compliant with regulatory requirements. This is to ensure a completely organised and streamline structure of the platform where there can be efficient and effective interactions among all involved entities.
There are three types of entities which can get listed on GREX platform Sponsors, Investors, and Startups/Companies. Company users can opt to register on GREX by following below procedure step by step:
- A Company gets redirected from grex.in to registration page once it clicks ‘Login/Register’ button.
- On the registration page, a company can join GREX by providing various mandatory/additional details about itself.
- As and when a company submits its details, it gets an email on its registered email Id that 1st step of registration has done successfully. Now, to make sure that the company is being represented by an authorized person, it needs to upload following documents on the verification link provided in the email:
- Copy of Company PAN card
- Board Resolution in the specified format for your authorization Company Incorporation Certificate
- Once these documents are uploaded by the company, the registration request of that company is sent to the Operations team of GREX, where, based on certain criteria it gets approved/rejected/blocked.
- After approval of the registration request by operations team of GREX, the company receives an email with an activation link to set their passwords. In case, if a company’s registration is rejected then to reregister, the needful has to be done from company’s end as per mentioned in the rejection Email.
- In case, if a company is blocked for the reason mentioned in the email, it cannot register again on GREX platform.
- Once Company updates its password it is successfully registered with GREX and can now proceed further using the dashboard.
What Sets GREX Apart
There are numerous other platforms currently operational in India which allow a similar interaction between startups and investors. However, all these platforms are mostly limited to the early stages of a company and allow only primary transactions involving equity investments (Angel Groups/Aggregators). Moreover these platforms have limited or no regulatory aspects applicable to them.
GREX is first of its kind platform which allows investments at every stage of a company in the form of equity investments. It also allows secondary transactions so that existing investors have the option of exit by selling their shares to other investors.
In addition to above, GREX complies with the private placement and preferential allotment rules and regulations defined under individual country’s regulatory regime. It also has a much lower cost of access as it is more open to individuals who have the ability to evaluate companies on their own.
GREX’s technology vision and strategy are designed to be completely consistent with its overall mission. Technology at GREX aspires to play the role of enabler and watchdog at the same time in order to help realize its business strategy and create value for all the participants in its overall ecosystem, including companies and investors registered on the platform.
The key cornerstones of GREX’s technology strategy and goals are Security, Performance, Riskmanagement capability,Usability, User experience, and Scalability.The aforementioned goals are achieved through the usage of some highly refined proprietary algorithms, tools, and techniques developed in-house at GREX.
The focus on security and risk management gets manifested in the stringent authentication and authorization processes followed in all the critical parts of GREX platform.
The first cut of the tech platform that GREX started with was essentially a Java based web application using a relational database. The technology platform is undergoing rapid and radical transformation at the moment. Development of a significant number of use cases involving some of the most cutting edge technologies and concepts such as Analytics, Big Data, etc. is underway.
GREX is paying special attention to a game changer technological concept in the field of financial services called ‘Blockchain’. Generally speaking, a Blockchain is a distributed database or ledger that maintains a continuously growing list of data records or transactions hardened against tampering and revision, even by its operators.
GREX is spending a significant amount of time and resources on exploring various ways in which the concept of Blockchain can be used on GREX platform to make the transactions more costeffective, efficient, and secure for all the participants in GREX ecosystem.
Quite a few obvious and notsoobvious use cases at GREX present the opportunity to adopt and adapt the concept of Blockchain to create value for all the participants in GREX ecosystem.
The Road Ahead
Last year in August, GREX raised Rs 4 crore ($625,000) in its first round of fundraising from angel investor Kunal Bajaj, MSCI’s Chandru Badrinarayanan and a group of unnamed private investors. During that time, the company claimed to have over 350 companies and 500 investors already registered on its platform.
More recently, the company saw the first investment when an information management company called Kleeto raised an impressive investment of almost INR 1.5 Crore through its platform.