DailyNinja Delivery Services’ new round of funding involved drafting of a deed of adherence (DOA) to help the company, which has many angel investors, raise capital faster in the future, said a lawyer involved in the deal.
“Even though we were acting for Matrix Partners India, we suggested and helped draft documents to implement the DOA construct … We’ve found in other early to mid-stage companies that a lot of individual angel investors on the cap table means that when raising a round of funding, there are a lot of logistics issues for the company (such as running after so many folks for review of documents, signature pages, approvals, etc.),” said Prasad Subramanyan, a principal associate at Rajaram Legal, the adviser to investor Matrix Partners India.
“Accordingly, we’ve started bringing stakeholders on board with the DOA concept to fully protect the angel investors’ rights without involving them in the larger transaction document. The concept was accepted by all parties in this round of financing and now going forward, the company will be able to easily raise funds, and will only need to seek consent from the angels if they are making any changes that adversely affect them(which is rarely the case). This will help them engage in faster fund raises in the future.”
Existing investors Sequoia Capital and Saama Capital also participated in the current round of capital raising.
“Considering three equally big funds were involved, there was a complex interplay of rights [between] the set of investors as there was no lead investor among the three,” said Sambhav Ranka, a partner at IC Universal Legal, the adviser to Daily Ninja.
Apart from the primary component, there was also a secondary transaction as several of the company’s angel investors were also exiting in this round of fundraise, he said.
DailyNinja, a subscription-based hyperlocal delivery platform, is promoted by Sagar Yarnalkar and Anurag Gupta and has operations in Bengaluru, Hyderabad and Chennai. The funds will be used to finance its expansion plans and recruit technology and operations specialists.
“We had to analyse the business model from an FDI [foreign direct investment] and payment systems perspective to ensure it was in compliance with the applicable law, which is a very interesting aspect of the delivery based e-commerce model in India,” Subramanyan said.
IC Universal Legal’s team included Ranka, senior associate Kanishka Bajpai and associate Niharika Rao.
Associate Steve Thomas worked alongside Subramanyan at Rajaram Legal to advise Matrix Partners.
Themis Associates represented Sequoia Capital and Saama Capital was advised by its in-house team.