Recent Trends in Start – Ups

Prepared and Presented by CA Lalit Valecha

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Startup Vs. Conventional businesses

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Venture Capital in India

Private Equity - Venture

Capital (PE-VC) firms
invested over $5.6 Billion
(across 184 deals) in
Indian companies during
the first three months of
2023

2022 - $ 2 4 B I L L I O N ( ₹ 1 8 8 k C r ) , 1 1 3 0 I N V E S T M E N T S

7%downbyvolume&32%downbyvalueYoY

Notes:1. VC includes: i) Seed to Series F investments in companies less than 10 years old; ii) Late stage
Source: Venture Intelligence tech investments

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Unicorns Created Q on Q

A unicorn company is any private company that

is valued at $1-Billion or more and is Venture
Source: Venture Intelligence Capital funded

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2022 Vs 2021 funding

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Top Sectors Attracting VC Funding – By Value

E-COMMERCE,EDTECHFELLHARD;ENTERPRISETECHHE
LDUP
Source: Venture Intelligence, ET

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Unicorns across years

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Established Unicorns still bleed money

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Sample Pre and Post Series A

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10
Latest News in startup world

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Cockroach startups to rule in 2023?

 Funding Winter
 A ‘cockroach’ startup is one that is resilient and
can survive through tough times – much like how
cockroaches are known to survive in even the
harshest environments.
 Profitability over glitzy valuation and high burn
rate time to measure earn rate
 India has not produced any new unicorn startup
firm in the last Six months, suggesting that
venture capitalists have shifted focus to
cockroach startups, as funding winter intensifies
due to global uncertainty.
 Recent collapse of US-based Silicon Valley Bank
(SVB)
 A startup that lost its unicorn status due to a
valuation degrading event. Ex: Hike, Quikr,
ShopClues, and Snapdeal
 Year of lower Series A and Series B, companies
may raise in form of bridge round in form of CN/
SAFE or CCD’s rather than priced round with a
Valuation cap and a Floor

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Latest Trends

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Externalisation Flip Structures – New ODI Guidelines for India Resident
Founders

Triggers for External structures

 Investor preference due to
Investor protection regulation
 YC
 Global Customers – mainly for
Tech/ SaaS companies
 IP protection
 No angel tax
 Other business reasons like Web3
/ Blockchain etc.
 Preferred Destination – USA or
Singapore
 Tax Incentives – Lower rates,
R&D credits, Dollar retention
 Crowd Funding simpler
regulations

LLP not required if the resident individual has overseas account from previous employment
outside India

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Put Call Option Agreement structure in flip Structures

Triggers for Put Call option agreement (also known as Shadow

structures)

 New ODI guidelines do not allow Indian resident to invest into SAFE of a
Foreign Entity
 RBI overall limit for AIF to invest in overseas company of USD 1.5bn
exhausted most of the permission are delayed or application rejected
since July/ August 2022

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Opportunities considering the latest trends for professionals

Structuring Entity Structure External or India Domiciled business

FEMA Compliances – FDI/ ODI

Transaction Advisory Due Diligence Deal support keeping data room ready

Transaction Valuation, CP And CS Support

Fund Raise Legal Support- End to end Term sheet to

Definitive

Founders Agreement and Governance

advisory- GRC

IP Assignment with founder and employees

Allied Support
ESOP Structuring

Regulatory Advisory for Specific Sectors like FinTech /

Insurance Tech etc.

Fractional CFO - Business plan and Financial Planning

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 Contact Us

Cell No: +91- 9422024019 (Lalit)

E-mail: lalit.Valecha@avallp.in

URL: http://www.avallp.org/ and

www.avallp.in

Pune | Mumbai | Bangalore | Dubai |

California

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Thank You

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