Gurgaon | 15 Feb, 2019 (11 months, 2 weeks ago)

Startup Funding and Finances

Founding partners contribution basis angel funding value rise.

we are a gurgaon based start up ( not registered with DIPP ) into adtech with an app. we have 2 founding directors and after incorp of the pvt ltd company in oct 2018, we got angel investment of about 50 lacs basis 10% stock. so we need to give 10% stocks for a a start up with zero revenue. should we raise the share price and give or should we increase the shares numbers and do a rights issues basis the new investors being there from the very begining, therefore existing shareholders. What about angel tax in all this ? what about founding directors, why should they be required to contribute also maintain their stake in the business by putting in money.
Answers
23 Feb, 2019 | 11:31

Dear Sir,
The Company can issue 10% shares for an amount of Rs. 50 lacs on face value of the shares plus premium, so that the founders needn’t to put additional money through rights issue. The premium can be justified through DCF valuation and future projections of the company.
Angel tax under Income Tax isn’t applicable where the total investment including funding from angel investors did not exceed Rs 10 crore. However, there are several precautions which may need to be taken care by the Company such as restrictions on transfer of shares, lock-in-period etc. which needs to be covered under Share Holders Agreement to be executed among the founders and the investors and the same to be adopted in the Articles of Association of the Company. For the same, it’s advisable to connect with any good lawyer and cover some major issues which may not concern right now but in future it may impact for another investor to invest in your company.
You may can also check out few does and don’t or raising fund by startups:
http://www.equicorplegal.com/uploads/knowledge/Does-and-Dont-of-Raising-Fund-by-Startups


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