Establishing a business is a thrilling adventure full of aspirations for expansion and success. However, amidst the excitement, it’s crucial for entrepreneurs to establish a solid legal framework to avoid potential pitfalls down the road. In this guide, we’ll explore seven critical legal documents that every startup founder should prioritize to prevent costly legal battles in the future.

Contracts for Startups

1. Articles of Incorporation

Often overlooked by eager entrepreneurs, the Articles of Incorporation lay the groundwork for a company’s organizational structure. Choosing the right business entity, such as a C corporation or a limited liability company (LLC), is essential. The decision impacts personal liability, taxes, and overall financial burden. Taking the time to weigh the pros and cons ensures a strong foundation and guards against personal liability risks.

2. Intellectual Property (IP) Assignment Agreement

In the tech-driven landscape, startups must safeguard their intellectual property (IP) to secure development finance. An IP Assignment Agreement is instrumental in establishing ownership of all IP assets, protecting against patent trolls and imitators. Two key contracts, Technology Assignment Agreements and Invention Assignment Agreements, enable startups to acquire pre-existing IP and gain legal rights to works developed post-founding, respectively.

3. Bylaws

Establishing robust rules early on is crucial for the effective operation of a startup. Bylaws outline internal processes, dispute resolution mechanisms, and shareholder obligations. Importantly, they set minimum support levels for significant corporate activities, such as electing board members or taking on debt.

4. Operating Agreement (Founder’s Agreement)

To prevent future conflicts, founders should sign a comprehensive operating agreement outlining ownership of work and establishing communication and conflict resolution procedures. This agreement solidifies the relationship between founders and ensures clarity on each member’s contributions and responsibilities.

5. Non-Disclosure Agreements (NDAs)

Protecting sensitive information is paramount, especially when dealing with third parties. NDAs are essential before engaging in any commercial transactions, ensuring confidentiality regarding closely guarded secrets. The agreement should address when information is classified as confidential, the care taken with it, decision-making authority, the duration of confidentiality, and the maintenance of secrecy.

6. Employee Contracts and Offer Letters

Drafting detailed employment contracts and offer letters is crucial before hiring employees. These documents clarify employment terms, roles and responsibilities, intellectual property rights, and company policies. Clear communication through written materials ensures compliance with legal duties and sets expectations for both parties.

7. Shareholder Agreements

When seeking private financing, a well-drafted shareholder agreement is essential. It defines shareholder rights, governance, the right of first refusal, redemption in case of death or incapacity, and the right to transfer shares. Founders selling shares must comply with state and federal laws to avoid severe fines.

Bonus 

• Website Terms of Use Agreement

As startups expand their online presence, a well-crafted Website Terms of Use Agreement becomes indispensable. This agreement regulates the relationship between the company and its clients, covering issues such as website usage restrictions, disclaimers, liability limitations, privacy policy disclosures, copyright warnings, and dispute resolution jurisdiction.

Conclusion

Establishing a startup is an exciting venture, but neglecting the legal foundation can lead to unforeseen challenges. Entrepreneurs must recognize the importance of seeking legal counsel to avoid potential pitfalls. While budget constraints may be a concern, hiring a qualified attorney is an investment that pays off in the long run.

Clear and comprehensive legal agreements not only protect the company but also make it more attractive to investors. A systematic and organized approach to legal matters demonstrates a commitment to professionalism, reducing the risk of legal challenges and allowing the company to focus on growth and development. As the saying goes, “an ounce of prevention is worth a pound of cure,” and in the startup world, these legal agreements are the preventive measures that pave the way for success.

Starting a new venture is an exhilarating journey filled with endless possibilities and potential for success. However, one of the most critical aspects of turning your idea into reality is securing adequate funding. While it may seem daunting, navigating the world of startup funding can be manageable with the right approach and knowledge. In this blog, we will provide you with a comprehensive guide on how to get started with startup funding.

1. Define Your Business Idea and Validate It: Before seeking funding, it is essential to have a clear understanding of your business idea and its potential in the market. Validate your idea by conducting market research, identifying your target audience, and assessing the competitive landscape. This groundwork will help you refine your business plan and make it more appealing to potential investors.
2. Bootstrap and Self-Funding: At the initial stages, consider bootstrapping your startup by using personal savings or seeking funds from friends and family. This self-funding approach demonstrates your commitment and confidence in your venture, making it more attractive to external investors later on. Bootstrapping also gives you greater control over your business decisions and equity.
3. Craft a Solid Business Plan: A well-structured business plan is crucial for attracting investors. It should include an executive summary, market analysis, competitive advantage, marketing and sales strategy, financial projections, and a clear funding request. A comprehensive business plan showcases your understanding of the market and demonstrates the viability and growth potential of your startup.
4. Explore Funding Options: There are various funding options available for startups, depending on their stage of development and specific needs. Some popular options include:
   a. Angel Investors: Angel investors are individuals who provide capital in exchange for equity. They often bring industry expertise and valuable connections along with their investment.
   b. Venture Capitalists (VCs): Venture capitalists invest in high-growth startups in exchange for equity. They typically fund businesses with significant potential and often provide mentorship and guidance.
   c. Crowdfunding: Crowdfunding platforms allow you to raise funds from a large number of individuals who believe in your idea. It is essential to create a compelling campaign and engage with your backers to maximize your chances of success.
   d. Government Grants and Programs: Research local, regional, and national government grants, loans, and programs that support startups. These initiatives often focus on specific industries or social impact ventures.
   e. Incubators and Accelerators: Joining an incubator or accelerator program can provide funding, mentorship, networking opportunities, and access to resources. These programs often have a competitive application process, so ensure your startup aligns with their focus areas.
5. Build Relationships and Network: Networking plays a pivotal role in securing funding. Attend industry events, startup meetups, and conferences to connect with potential investors, mentors, and other entrepreneurs. Leverage social media platforms and professional networking sites to expand your network and establish relationships that can lead to funding opportunities.
6. Prepare a Compelling Pitch: Craft a concise and compelling pitch to communicate your business idea effectively. Your pitch and pitch deck should highlight the problem your startup solves, the market opportunity, your unique value proposition, and your growth strategy. Tailor your pitch to different types of investors and be prepared to answer questions and address concerns.
7. Due Diligence and Negotiation: Once you find potential investors, they will conduct due diligence on your startup. Be prepared to provide detailed financial information, legal documents, and any other relevant documentation. Negotiate terms that are favorable to both parties, ensuring you protect your interests while demonstrating flexibility.

Conclusion: Securing funding for your startup is a crucial step towards transforming your entrepreneurial vision into reality. By following the steps outlined in this guide, you can navigate the startup funding landscape with confidence.

Company Overview

• Founded in the year 2015 by Mayank Kumar, Phalgun Kompalli, Ravijot Chugh, and Ronnie Screwvala, UpGrad is an online higher education platform providing programs in Data Science, Technology, Management, and Law 
• UpGrad’s range of programs consists of digital marketing, product management, entrepreneurship, data analytics, data-driven management, and digital technology management. It offers industry insights and student support services. 
• Founded by three IIT-graduates namely Amit Mahensaria, Alok Choudhary, and Manish Kumar, Bengaluru-based Impartus, now a subsidiary of upGrad, has been integrated into the company and has been rebranded as ‘upGrad Campus’. 
• Impartus was one among the many front-runners in allowing schools and colleges to migrate online at zero cost. The platform has successfully on-boarded over 280 higherEd institutes, 50,000 teachers, and 6 lakh learners within a short span of seven years.

Acquisition Overview

• Mumbai-based edtech startup upGrad has acquired Impartus, a video-enabled learning solutions provider for a deal worth INR 150 Crore. 
• With this acquisition, upGrad, which predominantly focuses on working professionals, will now be able to strengthen its presence among HigherEd institutions & learners. 
• Given the market opportunity, upGrad expects this move will enable the company to add 50,000 paid learners in the very first year of the acquisition. 
• According to the company, upGrad Campus will now have two business verticals — B2C and B2B. Under B2C, it’ll be offering job-oriented courses in areas of Full Stack Development, Artificial Intelligence, Digital Marketing, Business Analytics, etc  

FundTQ served as an exclusive advisor for the deeptech startup, which manufactures carbon fiber parts  and has recently raised INR 8 crore in a pre-series A round from Inflection Point Ventures. FundTQ is the lead sourcing partner of Inflection Point Ventures on this transaction. Existing investors Keiretsu (Chennai chapter) and Vijay Kedia, MD, Kedia Securities also participated in the round.

Fabheads is a renowned company for being the first and only company in India to have developed their patented continuous fiber 3D printing process, a feat only a handful of companies across the world have achieved. Founded in December 2015 by experienced ISRO engineers Dhinesh Kanagaraj, Abhijeet Rathore and Akshay Ballal, Fabheads Automation develops automation equipment to manufacture high-end carbon fiber parts in the country. The startup primarily deals in the Aerospace, Automobile, and Biomedical sectors.

It is also the winner of the National Award for Technology Startups (2021) by the Department of Science and Technology, National Startup Awards (2020) in the 3D Printing Category by Startup India, DRDO’s DaretoDream Award (2019), JEC’s Outstanding Innovation in composites award (2018) and the Top Startup in Manufacturing (2018) by CII.  

Fabheads is offering design and manufacturing services to drones, robotics, and shipping companies in India. It counts E-plane Company, Synergy Marine, Planys Technologies and ADA (Aeronautical Development Agency) as clients. It has also onboarded a couple of Singapore clients and recently started pilot operations across Asia.

“Fabheads is a niche deal, therefore, choosing a right partner for it was of the utmost importance. We believe the partnership and expertise of IPV will assist Fabheads in growing faster and effectively. We believe it’s vital to have right investors onboard, and that too at right valuation” said by Aanchal Malhotra, growth partner of FundTQ

FundTQ is a Digital Funding Assistance Platform for Institutional Investment and Mergers & Acquisitions known as One of its kind fundraising platform with products such as  “Valuation Software” and “Choose right investors platform”.

FundTQ follows a hybrid approach for fundraising and M&A for startup companies through their distinctive technology products, holistic advisory services and their network of firms. Two of their exclusive product offerings include a Proprietary Valuation software available on Subscription basis which allows companies to value their venture in 10 minutes using 15 data points in the most complex and highly data driven manner; and Choose Right Investors platform that helps startups pick and choose right institutional and strategic investors from a pool of 3000+ investors anytime, anywhere in a click of a button.

Close to a 100 startups and mid corporates are currently using FundTQ’s products to raise capital. Founders need to approach fundraising through a filtered process. You start with a large pool of potential investors and trickle down to investors that you feel connected with. FundTQ helps you build that pool of investors and connect with them. Their primary focus is to get you the right investors, at the right valuation, and at the earliest. 

Company Overview

• Adani Green Energy is a renewable energy company that develops, builds, operates, and maintains solar and wind farm projects. 
• Founded in 1988 by Gautam Adani, AGEL is part of the Adani Group’s promise to provide a better, cleaner, and greener future for India. 
• The company develops, builds, owns, operates, and maintains utility-scale grid-connected solar and wind farm projects. The electricity generated is supplied to central and state government entities and government-backed corporations. 
• With over 87 locations in 11 states, AGEL has generated more than 4,373 million units of electricity and saved 4 million tonnes of equivalent CO2.

Acquisition Overview

• Adani Green Energy will acquire 5 GW of renewable power portfolio from SB Energy India for a fully-completed enterprise evaluation (EV) of $3.5 billion. 
• The share purchase agreement was signed on May 19 for acquisition of 100 percent interest in SB Energy from SoftBank Group and Bharti Group, which held 80 percent and 20 percent stake, respectively. 
• In recent times, this is the fourth successive deal struck in the solar segment by Adani Green Energy whose stock has surged by almost 13 percent in the last month – the previous deals included domestic assets of Sterling and Wilson and Toronto-based SkyPower Global. 
• The deal is expected to enable Adani Green Energy to achieve its target renewable portfolio of 25 GW, four years ahead of the timeline, and takes the company’s present total renewable capacity to 24.3 GW and operating renewable capacity of 4.9 GW. 

Company Overview

• PhonePe is a mobile payment app that allows users to transfer money instantly to anyone by just using their phone number.
• PhonePe was found in December 2015 and was acquired by Flipkart in 2016. In 2018, Flipkart was acquired by Walmart and PhonePe was also part of the transaction.
• Flushed with funds after a massive $700 million funding round led by Walmart, PhonePe has been very aggressive with its marketing and acquisition. PhonePe was valued at $5.5 billion, making it the second most valuable fintech after Paytm.
• In April, it processed 1.19 billion UPI transactions, worth Rs. 2.34 lakh crore, cornering nearly 45% of the market. And with this recent acquisition, it has hit another milestone in the business world.

Acquisition Overview

• Bengaluru-based India’s leading UPI payment platform, Phonepe is all set to acquire homegrown content and app discovery platform, Indus OS for a deal valued at $60 million.
• This is believed to be the second acquisition PhonePe has made. In 2018, PhonePe had acquired point-of-sale startup Zopper as well, as part of its aggressive expansion.
• The rationale behind this acquisition is to boost its ‘super app’, called Switch, designed to offer a wide range of services under one umbrella. The super app aggregates 400 apps across verticals including categories such as food, travel, shopping, and lifestyle which users can access.
• With this acquisition, PhonePe not only gets Indus OS’ customer base of English-speaking 100 million users, but also plans to expand it for users not having English as their primary language.

Urban Company Overview

• Urban Company is a developer of a home service platform that connects customers looking forspecific services with experienced and skilled professionals. The services include spa and salon,plumbing, photography, servicing and repairing, and so forth.
• It was founded in 2014 by Abhiraj Singh Bhal, Raghav Chandra and Varun Khaitan.
• Based on their business model, Urban Company’s major revenue streams are commissions fromservice providers, lead generation, ads on the platform, and reverse auction.
• Urban Company grew especially rapidly in the Post-Pandemic Period because of their policy ofoffering different price points, a more affordable price point, and a luxury price point, to cater tothe entire market, which is valued at around $12 Bn.

Funding History

• Urban Company has raised funding worth $380 Mn in aspan of over 8 years and 11 rounds.
• Their latest investors were Prosus Ventures, raising $193Million in April 2021.
• Urban Company doubled its revenue from $17.7 Mn in FY 19to $35.2 Mn in FY 20 and was looking at a valuation of $2Bn.
• Their lead investors include Bessemer Venture Partners,Tiger Global Management, Vy Capital, Trifecta CapitalAdvisors, Steadview Capital, amongst others.

While everyone else was looking for a job through placements, Shashank ND and Abhinav Lal decided to start their own company. Of course, this was a risky choice, but they believed it was preferable to having a job through their placements. They only dreamed of one thing: success, and they knew that if they followed the right direction, they would receive higher rewards than they had previously received. As a result, they both began the tale of one of the country ‘ s most successful healthcare startups. 

Total Funding: $251M 

Last Funding Round: $32M, Series D, Aug 03, 2020 

Valuation: $904M as on Aug 04, 2020 

Bewakoof’ s founders, Prabhkiran Singh and Siddharth Munot, were sitting outside their campus, brainstorming possible business ideas. Tshirt printing was chosen because it fit with their goal of introducing a sense of humor into the lives of college students. Bewakoof was born as a result of this. When Prabhkiran Singh and Siddharth Munot were looking for a domain name for their newly launched t-shirt printing company in 2010, they came across Bewakoof.com and bought it right away.

Total Funding: $20.5M 

Last Funding Round: $4.13M, Series B, Mar 18, 2021

Valuation: $70M as on Oct 05, 2019 

While pursuing a Bachelor of Commerce at Shri Ram College of Commerce, Anshul Gupta evolved into an entrepreneur at a young age. A football and house music enthusiast founded Fabence, a personalized fashion discovery engine, and shopping assistant. Shopping in real-time is not the same as clicking “Buy Now ” and piling up products in shopping carts. By personalizing the products you buy, Faience hopes to bridge that gap. 

Total Funding: $157K 

Last Funding Round: $157K, Angel, Jun 01, 2015 

Divyansh Saxena co-founded Notemybook with Vikramank while studying Computer Engineering at Vivekanand Education Society ‘ s Institute of Technology in Mumbai. They were inspired by their seniors, who had adopted a similar concept during their college days, and decided to carry it on, so Notemybook was born. Customers are 80,000 engineering students, since the program is currently only available to engineering students, although it will be extended to include medical, MBA, and other fields in the near future.

At the age of 21, Satwik Mishra formed his first company, Mechjunction. During his time as a student, he encountered many obstacles in meeting his educational needs. As a result, he came up with the concept of putting all mechanical engineers ‘ needs in one place, thus promoting his field of interest. Focusing on the same MECH JUNCTION is rolling out in a great fashion towards its goal and targets. They provide a large range of services and opportunities ranging from training programs, prototype projects, conferences, competitions, internships. 

Bluegape was established by Ayush Varshney and Sahil Baghla, both IIT Kanpur students, in their hostel rooms. They didn ‘t have much of a financial problem because Sahil had an internship in the United States. Printing posters piqued their interest as a possible business venture, and they began by selling to students on campus.

Total Funding: $1.1M 

Last Funding Round: $600K, Series A, Aug 20, 2015 

Paytm, the fintech decacorn, announced that it is preparing to airlift 21,000 oxygen concentrators (OCs) to India as part of the #OxygenForIndia project, which is scheduled to arrive in the first week of May. Government hospitals, Covid treatment centers, private hospitals, nursing homes, and Resident Welfare Associations will all receive these machines right away. People have already contributed INR 5 crore to the project, which the corporation has matched rupee for a rupee, bringing the total to INR 10 crore. Paytm is now targeting to collect over INR 14 Cr to source over 3,000 OCs over the next few days, buoyed by the immense support and contribution from people across the country.

In collaboration with logistics startup Delhivery, Zomato Feeding India has launched the “Help Save My India ” project to procure oxygen and related supplies for hospitals and families in need. Unacademy, the edtech unicorn, has donated INR 7 crore to Zomato ‘ s Feeding India project to purchase medical supplies.

Dream11, the fantasy gaming unicorn, has donated INR 15 Cr to GiveIndia and ACT Grants (a million each) to aid in emergency Covid response efforts in India. “Half of this will be spent on addressing the current issue of supplying medical equipment and hospital beds, while the other half will be used to support large-scale vaccination drives.

CRED, headquartered in Bengaluru, has also initiated a fundraising campaign to help healthcare organizations purchase oxygen concentrators. Milaap has invited its members to donate their CRED coins toward the purchase of oxygen-related equipment, which will be facilitated by the startup. The initiative ‘ s goal is to raise funds to purchase equipment capable of producing one billion litres of oxygen. 

Fintech unicorn Zerodha has announced plans to include ambulances and a step-down hospital to tackle the deadly second wave of the COVID-19 pandemic. In the cities of Mumbai and Bengaluru, fully equipped ambulances will be available. Each ambulance is fitted with a ventilator, critical care equipment, medicine, a nurse, and a paramedic, according to Zerodha. Half of them will have a doctor on board, while the other half will use remote doctors, according to the study. Five ambulances are also fitted with freezing capabilities.

Overview

• Razorpay started with the objective of making online payments accessible to all companies whether big and small. Company offers a fast, affordable and secure way for merchants, schools, ecommerce and other companies to accept and disburse payments online. 
• With the new funds in hand, Razorpay has a wide range of goals that it has set out to achieve. The company is looking to expand its presence in South East Asian countries, scale up its business banking suite and also invest in acquiring new companies. 
• The company had recently acquired two startups – Opfin, a payroll and HR Management software company, and Thirdwatch, an Artificial Intelligence (AI) startup. It also plans to hire over 600 employees for the expansion plan. 

Revenue and Valuation

• Razorpay raised $160 million from Sequoia India and Singapore-based GIC in Series E funding round that has trebled the valuation of the payment gateway startup to $3 billion in less than six months. 
• Razorpay’s core business is payment gateway Company registered 2.6X jump in its revenues to Rs 509 crore in FY20. While it posted loss of Rs 6.15 crore during the same fiscal, it turned cash flow positive at the operational level during the fiscal. 
• Now Razorpay has become the 3rd most valued company in the fintech segment after Paytm and PhonePe.