There are a lot of the Startups in India which are looking for the funding to starting a business in India but these days Venture capital funding or angel funding are trends in India for the Startups. Even if you check out the Popular Blogs like YourStory then you got the daily deals about the Seed Funding in India. So LET’S Learn about Ultimate Legal Checklist for the Seed Funding in India.
You have to require following things before approach to any Angel Investor or VC Firms –
Legal Checklist for the Seed Funding in India
a) Register a Legal Entity –
You have to Register a Legal Entity like Solo Firm or Partnership Firm or Private Limited Company or LLP. for the Angel Investment or Venture Capital funding you have to always go with the Private limited Company because share among the shareholders is possible only in the Private limited Company.
There is some reason for the Choose the Private limited Company for the Funding –
- You can easily allot shares to the shareholders or investor in terms of Money.
- VC firms and angel investor need limited liability in the business because they are just investing their money.
- VC Firms or Angel can sell your shares in future for the exit strategy.
So above things are not possible in the LLP or other legal entities so Startups which want to raise the funds, they have to always go with the Private Limited Company in India.
b) Apply for all Tax and other required registration for the business.
You have to require some tax registration like VAT/CST or Service Tax Registration which may be imposed the penalty on the Company if not apply after the certain the turnover limits so you should always take care of this license.
c) Protect the Intellectual property rights of the Startups-
Startups and new business have some unique concept or some technology or their awesome brand behind the successful startup but if they are not protected this brand name then anyone other competitor playing with the same brand name or logo or website So you have to always the protect the website or brand name or logo by the IPR things like Trademark Registration or Copyright Registration. if you have some technology then you have applied for the Patent in India.
d) Create the NonDisclosure agreement –
You can create the NDA Agreements between the investor or startups if you have some products or technology which need privacy to secure from any person. NDA Agreements are called the NonDisclosure agreement which is sign by the both parties.
Learn about NDA Agreements for the Startups in India
So these are 4 important things which you have to take care while the approach to any angel investor or Venture capital firms in India. So this is the Legal Checklist for the Seed Funding in India. Its secure the startups and investor both in terms of legal hurdles which they can face after the investment.