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Starters' CFO - Presentation

This document summarizes key aspects of the Start-up India Action Plan and funding for startups in India. It discusses Starter's CFO, a firm providing financial services to startups. It then outlines the Startup India Action Plan, including setting up incubation centers and a INR 10,000 Cr corpus fund. It describes tax exemptions for startup profits and easier patent and business registration processes. It also discusses definitions of startups, recommendations for funding, tax incentives including capital gains and income tax exemptions, and ease of business processes like incorporation and intellectual property rights. Finally, it covers funding dilution over time and the fundraising process including term sheets.

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Abhishek Gupta
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113 views27 pages

Starters' CFO - Presentation

This document summarizes key aspects of the Start-up India Action Plan and funding for startups in India. It discusses Starter's CFO, a firm providing financial services to startups. It then outlines the Startup India Action Plan, including setting up incubation centers and a INR 10,000 Cr corpus fund. It describes tax exemptions for startup profits and easier patent and business registration processes. It also discusses definitions of startups, recommendations for funding, tax incentives including capital gains and income tax exemptions, and ease of business processes like incorporation and intellectual property rights. Finally, it covers funding dilution over time and the fundraising process including term sheets.

Uploaded by

Abhishek Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Start-up India Action plan and

Funding Insights Revealed


About Starters’ CFO
• Starter’s CFO is a virtual Chief Financial Officer for startups
offering complete financial and taxation services including –
management consultancy, tax consultancy, accounting services,
manpower management, secretarial services, financial accounting
consultants, payroll management and other financial service. etc.

• We are a professional firm having our presence in different cities


across India and abroad.

•Our team is proactively and efficiently assisting more than 250


startups with their regular compliances.

•Our privilege clients include alumnus of IIT Delhi, IIT Varanasi, IIT
Indore, IIT Bombay, BITS Pilani, IIT Roorkee, NSIT, DTU, ISB HYB.
etc.
Startup India – Action Plan

Setting up of
Incubation Centers Setting up of INR
10,000 Cr. Corpus
Fund

Easier Patent
Filings
Ease of setting
up of Business

Tax Exemption on
Profits
Faster exit
mechanism
Start-up India Action
Plan and Policies
Definition of a Start-up

An Entity
Pvt Ltd Co./ LLP

Innovation,
Turnover < 25 Crores Development,
Tenure < 5 Years
Deployment,
Commercialization
Recommendation (in
‘DIPP’ Format) from
Incubator in PG college

A patent filed and Letter of Support by


published in the Incubator funded by
Journal by the Government
Indian Patent Office

Recognition as a
Start-up
Letter of funding of Recommendation (in
‘DIPP’ Format) from
not less than 20 per Incubator Recognized by
cent in equity Government

Letter of funding by
Government of India or
any State Government
Tax Incentives

Capital Gains
Tax Income Tax
Exemptions Exemption for 3
Years
Capital Gains Tax Exemption

Existing capital
Capital gains
gains exemption Investment in
exemption Exemption of
for investment in computer or
mechanism has Capital gains
newly formed computer
been proposed invested in
manufacturing software to
for investors “Fund of Funds”
Micro, Small qualify as
investing in the recognized by
and Medium purchase of
Startup the Government
Enterprises “new assets”.
ecosystem
(MSMEs)
Income Tax Exemption

Exemption subject to non-


Income-tax exemption proposed for
distribution of dividend by the
Start-ups for a period of 3 years
Start-up
Tax exemption for investments made above
Fair Market Value (FMV)

Any consideration received by Start-ups


for issuance of shares over FMV to
incubators, not to be taxed in the hands
of the Start-up.

The term “incubator” is yet


to be defined for the above
purpose.
Incentives for
Ease of Doing
Business

Incorporation Self - Intellectual Ease of


& Other Certification Property Rights Winding Up
Formalities
Incorporation and other Formalities

Checklist of
Simplified Form various
and Mobile applicable laws,
Application licenses and
FAQs provided

Filing for compliances


and obtaining information
on the status of
clearances and approvals
is possible on the app
Intellectual Property Rights

General advisory on intellectual property rights;


Fast Tracked Examination & Disposal Eligible Start-ups would be given an
filing and disposal of applications for patents,
of Patent Applications 80% rebate in filing of patents
trademark and design provided
Ease of
Winding Up

Start-ups with Simple


Introduction of Debt Structures may be
Insolvency and wound up in 90 days from
Bankruptcy Bill 2015 date of making
to fasten voluntary application on a fast track
closure of business basis
TDS Compliance

Payer Deducts Tax From Payment

Payer deposits the same to credit of Government

Payer files return of TDS

Payer issues TDS Certificate to payee

Payee Claims refund of the TDS in his Return


Income Tax
Compliance

Corporate Litigation and


Income tax
Personal Tax Advance Tax
Return Calculations Scrutiny
Return Assessments
Funding
Dilution in Equity over the life cycle of the
start-ups with each investment

Year 0 1 3 5
Start Initial Seed Create VC Pool 2nd
Hires Round Pool Round Refresh VC
rou
nd
Founders 100% 90% 68.4% 59.9% 44.9% 43.2% 32.4%
Seed Investors 0.0% 0.0% 24.0% 21.0% 15.8% 15.2% 11.4%
Initial VC Investors 0.0% 0.0% 0.0% 0.0% 25.0% 24.1% 18.1%
Later VC Investors 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 25.0%
Early Employees + 0.0% 10.0% 7.6% 6.7% 5.0% 4.8% 3.6%
Advisors
Employee Pool 0.0% 0.0% 0.0% 12.5% 9.4% 13.0% 9.8%
Total 100% 100% 100% 100% 100% 100% 100%
The Funding Process
Private Equity – General Process
What is a Term-sheet?

First major step in


“Letter of Intent”, transaction
“Memorandum of -Focus on the deal is at More detail generally
Understanding”, its maximum better (especially for
“Agreement in -Gives road map for the company)
Principle” lawyers to draft actual
docs
Principles of Term-sheets

Valuation
• Percentage of Company

Control-
• Board Composition,
• Protective Provisions and
• Restrictions on Founders Stock

Exit Strategy
• Redemption
• IPO –Registration Rights
• Acquisition –Liquidation Preference

Down- side Protection


• Anti-dilution adjustment
Importance of Legal and
Financial Compliance

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