1. Summer Internship Presentation
Development Process of Startups from
Start to Maturity
Dinesh Kumar, PGDM - 87

2. About Starters’ CFO
• Starters’ CFO is a virtual Chief Financial Officer for startups offering
complete financial and taxation services including – management
consultancy, tax consultancy, accounting services, secretarial services
financial accounting consultants, payroll management and other financial
service. etc.
• They are a professional firm having our presence in different cities across
India and abroad.
• Their team is proactively and efficiently assisting more than 125+ startups
with their regular compliances.
• Privilege clients include alumnus of IIT Delhi, IIT Varanasi, IIT Indore, IIT
Bombay, BITS Pilani, IIT Roorkee, NSIT, DTU, ISB HYB. etc.

3. Start a Business
Start-up Special
Registrations
Business
Maintenance
Services
ROC Return
Filing
Winding-Up
Overview of Services

4. OBJECTIVES
Understanding
the concept of
the startup
ecosystem
Understanding
the structuring of
the startups
Analyzing what
sort of entity a
startup would
like to function
Study on the issues
that startups are not
aware of once they
are incorporated
Understanding
the myriad of
contracts
startups enter
Specific risks
faced by the
startups in which
they are
operating
Analysis of various
stages in the growth of
the startup and seeking
investments at different
stages of their lifecycle
Analyzing the
due diligence
process by
investors and
financers
Study on the exit
routes for startup
at the time of
their maturity
Analyzing different
ways of leveraging
Intellectual
Property for
startups

5. Overview of the Project
Startup India
Action Plan and
Policy
Structuring of
Startups
Incorporating a
LLP in India
Incorporating a
Company in
India
Basic
Documentation
Seeking
Investment from
Angel Investors
Applicable
Employment
Laws
Risk
Management
Leveraging IP
Financing Maturity

7. Start-up India Action Plan
and Policies

8. Setting up of
Incubation Centers Setting up of INR
10,000 Cr. Corpus
Fund
Easier Patent
Filings
Tax Exemption on
Profits
Ease of setting
up of Business
Faster exit
mechanism
Startup India – Action Plan

9. Stages of a
Start-up
Cycle

10. An Entity
Pvt Ltd Co./ LLP
Definition of a Start-up
Tenure < 5 Years Turnover < 25 Crores
Innovation,
Development,
Deployment,
Commercialization

11. Recognition
as a
Start-up
Recommendation
(in ‘DIPP’
Format) from
Incubator in PG
college
Letter of Support
by Incubator
funded by
Government
Recommendation
(in ‘DIPP’
Format) from
Incubator
Recognized by
Government
Letter of funding
by Government
of India or any
State
Government
Letter of
funding of
not less than
20 per cent in
equity
A patent filed
and published
in the Journal
by the Indian
Patent Office

12. Pvt Ltd/ Partnership/ LLP
DIPP
Whether
Tax
Benefits
and IPR
benefits
Required
No Yes
Recognition Inter- Ministerial
Board
•JS, DIPP
•DST
•DB
Application

13. Startup India Action Plan and Policy
Incentives
given by RBI
Tax
Incentives
Incentives of
Ease of Doing
Business

14. Intellectual property
lead global business
Indian
promoters/founders
investing outside
India
Flipping business to
go global
Potential tax
implication arising
from
promoters/founders
conducting business
of offshore
company in India
Structuring

15. Incorporating a Business
Governing Act
Types of Business Entity
Incorporation Process (as per Companies
Act, 2013) along with timelines
Post Incorporation Steps
Royalties and Fees for Technical Services

17. Confidentiality and Non-Disclosure Agreement
Offer Letter/Employment Agreements
Non-Competition and Non-Solicitation Agreements
Intellectual Property Assignment Agreement
HR Policy/Employee Handbook
ESOP’s
Basic Documentation

18. Factories Act, 1948
Shops and
Commercial
Establishments Act
Industrial
Employment
(Standing orders Act,
1946
Contract Labour Act,
1970
Maternity Benefit
Act, 1961
Sexual Harassment of
Women at Workplace
Act, 2013
Minimum Wages Act,
1948
Employees’ Provident
Funds and
Miscellaneous Pro-
visions Act, 1952 (‘EPF
Act’)
In total 19 Employment
laws
Applicable Employment Laws

19. Funding

21. Information Memorandum/
Business Plan
Copy of charter documents and
any existing founders agreement
Draft term sheet
Seeking Investments from Angel
Investors

22. What is a Term-sheet?
“Letter of Intent”,
“Memorandum of
Understanding”,
“Agreement in
Principle”
First major step in
transaction
-Focus on the deal is at
its maximum
-Gives road map for
lawyers to draft actual
docs
More detail generally
better (especially for
the company)

23. 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
Principles of Term-sheets

25. For an E-
commerce/Internet
based company
The IT Act, 2000 Content Regulation
Risk Management

26. Leveraging IP
Patents Trademarks Trade SecretsCopyrights

27. •CCPS
•CCD’sFinancing
•IPO
•M&AMaturity

29. India is amongst the top five countries in the world in terms of startups. US ranks
number one on the list with 83,000+ startups.
Findings and Interpretation

30. Findings and Interpretation
Indian startup industry composition

31. India is ranked 130th out of 189 economies on the ease of doing
business, 133rd on the ease of trading across borders and 157th on
the ease of paying taxes;
India is ranked 155th in case of starting a business;
On an average, Indian businesses need to make 33 tax payments
annually with around 243 hours spent to prepare and pay taxes in a
year.
In contrast, China requires just nine tax payments annually, while the
US doesn’t trouble its taxpayers more than 11 times annually for tax
payments;
Among South Asian economies, India made the biggest improvement
in business regulation, increasing its distance to frontier score.
Challenges faced by the startups
According to the World Bank’s Report: Ease of Doing Business

32. Challenges faced by the startups
Culture and
Awareness
Social Issues
Technological
Issues
Financial
Issues
Sustainability
Issues
Regulatory
Issues

33. Geographies of Startups (2011-2015)

34. Dilution over Lifecycle of startups
Year 0 1 2 3 4
Start Initial Hires Seed Round Create Pool VC Round Pool
Refresh
2nd VC
round
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 +
Advisors
0.0% 10.0% 7.6% 6.7% 5.0% 4.8% 3.6%
Employee Pool 0.0% 0.0% 0.0% 12.5% 9.4% 13.0% 9.8%
Total 100% 100% 100% 100% 100% 100% 100%

35. Recommendations
Government
Policy
Funding
Marketing

36. A wide gamut of services including the rules, regulations, and
application of various agreements for which two months were not
sufficient and further extension to pursue the internship was not
granted even on request.
In my view, a minimum of four months are required to understand the
application of compliances properly and to get well versed with the
operations and the technical jargon.
However, the privacy policies of Starters’ CFO were very stringent.
Therefore, data was hypothetically modified before incorporating the
same in this project.
Also, in the startup ecosystem since the new policies and regulations
are been constantly revised and formulated therefore there is lack of
stability and clarity on some issues.
Limitations
The entire project of understanding and analyzing various aspects of the startup
ecosystem i.e. the processes involved from start to maturity, involved:

38. Clean Electric
Pvt Ltd
Our Clients
Kreatryx
(IIT Indore)
Control N
Solutions
(IIT Bombay)
My Ti
(BITS PILANI)
Mad Guys Lab
(IIT Roorkee)
Clean Electric
Private Limited
(IIT Varanasi)
ZIKR Studio
(IIT Delhi)
Angel Hearts
(ISB HYB.)

39. Our Clients
Tominto Drive Bud Credofy
Accuit
Technologies
Telispire Ink Tree Desi Chain
Bigzoo Techguard