• What are Startups?
• Startup Culture.
• Startup Ecosystem & Its Components.
• Problems faced by Startups.
• Type of entities
• Government Initiatives for Startups.
• Tax Exemptions by Government.
• Funding Options
What are Startups?
Startup is :
• An entrepreneurial venture
• In a newly emerged, fast-growing sectors
• By usually a group of co-founders
• Working on validation of MVP
• For hyper growth later
An ideal Startup culture characterized by
• Informal culture
• Lack of hierarchy/ Flat organisation
• Quick decision making, nimble footed
• Focus on growth & profitability
• Receptive to market/customers
A startup ecosystem consists of
• startups in their various stages & types
• support organisations like universities, funding
organizations, incubators, accelerators, co-working
• research organizations,
• service provider organizations (like legal, financial
• Clients (large corporations & other entities)
• Last but not least, Government
Types of Entities
• Sole Proprietorship
• One Person Company
• Private Limited Company
• Public Limited Company
• Public Limited, Listed
Suited for small, mid
sized &/or family held
Startup India program
• Simplification and handholding of Startups
• Making available Funding Support and Incentives.
• Industry-Academia Partnership and Incubation
• Reducing the burden of tax, compliance & regulatory
Mobile App & Portal
• To serve as the single platform for Startups for interacting with
Government and Regulatory Institutions for all business needs & info
• In order to commence operations, Startups require registration with
relevant regulatory authorities.
• a checklist of required licenses covering labour licensing,
environmental clearances etc. be made available on portal
• Effective April 1, 2015 Central Government, State Government and PSUs have to
mandatorily procure at least 20% from the Micro Small and Medium Enterprise
• In order to promote Startups, Government shall exempt Startups (in the
manufacturing sector) from the criteria of “prior experience/ turnover” without
any relaxation in quality standards or technical parameters.
• To make it easier for Startups to wind up operations, a swift and simple process
has been proposed for Startups to wind-up operations.
• Exemptions on Capital Gains for Angel,VC/AIF investors If invested via funds
of funds recognized by GOI
• Recognized Startups exempted from IncomeTax for three years post
• If consideration paid is higher than FMV then the difference is taxed as other
income in hands of investors. Investors in Startups have been exempted
1. LongTerm (> 3 years)
• VC & Angel Funds, Friends & Family Equity, Long term Loans, Media
2. MidTerm (1-3 years)
• Personal, Short term Loan, Incubators, Angels, Bootstrapping
3. ShortTerm (<1 year)
• Credit cards, Factoring, Barters, Customer Advances
Fundraising questions – 1/2
• How much funding should I raise?
• When should I raise money?At what stage should I not?
• What heads and stage should I raise money for?
• What are the relevant sources of finance for me and how
should I prioritise? What are the pros and cons of each
• How much equity should I give? At what terms?
• How should I value my company?
• How should I give equity when I am unable to value my
• How should I reach out to investors?
• How many investors would I have to reach to find
• How long will this process take ?
• Should I appoint anyone for the process ?
• How much will the fund raising process co?st
• What is the right structure/instrument?
Fundraising questions –2/2
• Define your round – amount, tranche, dilution
• Structure a process – Project Plan and CRM
• Seeking advice – entrepreneurs, investors, mentors, industry
guys – ask for advice, you get money; ask money, get advice
• Selecting aVC –Terms, Follow On, Strategic Support, Brand
Name,Time to money, Integrity/Competition, Dilution
• Finding a good lawyer
SHOW OF HANDS How many of you have work ex How many of you want to work post your program How many of you wish to Start up How many are undecided How many of those who wish to start up have family business or profession
Takeaway: The guy had a vision & was resourceful enough to get others on board that vision to realise his dreams. Start up founders have a similar role
COMMENTS?? In a corporate you will be running an invented wheel whereas in a start up you invent your wheel & take it up the Hill. But if you succeed then the satisfaction is 100 times better & even if you fail, there is always a next time
Informal culture Lack of hierarchy/ Flat organisation Quick decision making, nimble footed Focus on growth & profitability (ASK) Receptive to market/customers
people, startups in their various stages & types support organisations like universities, funding organizations, incubators, accelerators, co-working spaces etc., research organizations, service provider organizations (like legal, financial services etc.) Clients (large corporations & other entities) Last but not least, Government
Problems faced by Startups & reason for their failures Plan: Benjamin Franklin: If you fail to plan then you are planning to fail Customer Acq: LTV> CAC Fund raising: empahsise on cash flows/ organisation may be profitable yet run out of cash & vice versa HR: Good management team
With over $9 billion worth investment in 2015 and three to four startups emerging every day, India has paved its way to secure the third position in the world in terms of the number of startups, 4200 and counting, a growth of 40%, by the end of 2015. The latest report by industry body NASSCOM and Zinnov, analyzes the current scenario and emerging trends across the various dimensions that define the Indian startup ecosystem, and gauge India’s position as a global startup hub that is becoming attractive for investors, startups, & corporates. As per the statistics given in the report, the number of active investors in the ecosystem has grown from 220 in 2014 to 490 in 2015, depicting a 2.3X growth. Further, 8 out of every 10 top VC/PE Firms in India are foreign, and global investment in the Indian ecosystem is leading to an increased FDI.
Ask questions on structures Explain difference in structures, compliance & governance
Startup India is a flagship initiative of the Government of India, intended to build a strong eco-system for nurturing innovation and Startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. The Government through this initiative aims to empower Startups to grow through innovation and design.
The above promote entrepreneurs to experiment with new and innovative ideas, without having the fear of facing a complex and long-drawn exit process where their capital remain interminably stuck.
With this objective, exemption shall be given to persons who have capital gains during the year, if they have invested such capital gains in the Fund of Funds recognized by the Government. This will augment the funds available to various VCs/AIFs for investment in Startups.
Profits of Startup initiatives are exempted from income-tax for a period of 3 years. This fiscal exemption shall facilitate growth of business and meet the working capital requirements during the initial years of operations. The exemption shall be available subject to non-distribution of dividend by the Startup.
Refer to Valley of death vs Seed & Angel
Like not everyone can become a Mukesh Ambani, Steve Jobs or PM Modi, similarly not everyone can have a unicorn start up. Its good to have them as ref. The fun is in journey & not in destination
Don’t be tied down by Dogmas, false insecurities & fears. It’s a big world out there waiting for you. Go out as a gladiator & slay your dragons and emerge winner. Even if you don’t succeed, there is always a next time. All the best, God bless!