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Seemant ShrivastavManaging PartnerAttentio Corporate Services LLP
Startup India: Overview
Agenda
• 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• Conclusion
The Stone Soup
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
Startup Culture
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
Startup EcosystemA startup ecosystem consists of • 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
Startup Ecosystem
Government
Problems faced by Startups
• Planning• Execution• Customer acquisition & retention• Fundraising• Human Resources
Growth in Recent Years.
Major Areas
Types of Entities• Sole Proprietorship• One Person Company• Partnership• HUF• LLP• Private Limited
Company• Public Limited Company• Public Limited, Listed
Company
Suited for small, mid sized &/or family held businesses
Suited for professional growth oriented businesses
Startup India program
Objectives• Simplification and handholding of Startups• Making available Funding Support and
Incentives.• Industry-Academia Partnership and Incubation• Reducing the burden of tax, compliance &
regulatory framework
Mobile App & Portal
• To serve as the single platform for Startups for interacting with Government and Regulatory Institutions for all business needs & info exchange
• 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
Other Initiatives
• Effective April 1, 2015 Central Government, State Government and PSUs have to mandatorily procure at least 20% from the Micro Small and Medium Enterprise (MSME).
• 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.
Tax Exemptions
• Exemptions on Capital Gains for Angel, VC/AIF investors If invested via funds of funds recognized by GOI
• Recognized Startups exempted from Income Tax for three years post recognition
• 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
Biggest Question facing Start-ups
PRE-SEED SEED EARLY STAGE, THEN GROWTH
SEED CAPITAL – $100K to $1MM
PRE-SEED CAPITAL – RARE - SUB $25K -
$50KSERIES
A SERIES B,C,D….
Lifecycle of Startup
Major Cities For Start Up•Bengaluru.•Delhi NCR.•Mumbai.•Chennai.•Hyderabad.
Ahmedabad.Pune.Kochi.Chandigarh.Kolkata.
The Indian Unicorns
Point to be noted..
• Angel Investors & Angel funds• Venture funds &• Private Equity
Are not the only source of funds for your start up
Sources of Resources & Funds
Equity Debt Barter (exchange) OthersVenture Funds Credit CardsPartner at VC's, Corporate Heads Personal Loans Saas instead of ProductAngel Funds & Networks SME Loans by NBFC's Get Senior people to workAngel Syndicate Platforms Factoring Customer AdvancesMedia Barters Leasing License your products in other mktHNI's Loan against Collaterals Government Grants & IncentivesIncubator/Accelerator CGTMSE Barter-Consignment Biz Win Prizes in contestsCrowd Funding Back offi ce support Managing with own revenuesFriends & Family Offi ce Space vs product/equity Moonlighting on jobBootstrapping Exchange resources Get Free resources
Cost
of f
und
Finance Sources
• By Term1. Long Term (> 3 years)
• VC & Angel Funds, Friends & Family Equity, Long term Loans, Media Barters
2. Mid Term (1-3 years)• Personal, Short term Loan, Incubators, Angels,
Bootstrapping3. Short Term (<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 type?• 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 company?
• How should I reach out to investors?• How many investors would I have to
reach to find one?• 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
In Conclusion
• 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 a VC – Terms, Follow On, Strategic Support,
Brand Name, Time to money, Integrity/Competition, Dilution• Finding a good lawyer
Finally..
