Final answer:
Promoters are founders with a stake of 10% or more in a company, categorized as such in offer documents to highlight their importance and involvement. The categorization helps provide potential investors with information about the key individuals behind the company's operations.
Step-by-step explanation:
When a company files offer documents, the founders with a stake of 10% or more are typically categorized as promoters. In this context, promoters are individuals who have a significant interest in the company and play a key role in its formation and success.
By categorizing founders with a stake of 10% or more as promoters, the company is highlighting their importance and involvement in the business. This information is included in the offer documents to provide potential investors with a clear understanding of the key individuals behind the company's operations.
For example, if a startup has three founders and one founder has a 15% stake, that founder would be considered a promoter according to the categorization in the offer documents.
Angel investors and venture capital firms often seek this information to assess the trustworthiness and engagement of the management, and to guide their investment decisions. They endeavor to mitigate the risks of imperfect information by building personal relationships with the founders and understanding their business plans intimately.