Startup Registration

Startup India scheme launched by Prime Minister Narendra Modi to make India a leading startup hub by supporting startups and entrepreneurs with regulatory challenges.

Startup Registration

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    Process

    At Which Step Startup India Registration is Required

    1
    First you need to incorporate your business as a Private Limited Company, Partnership Firm or an LLP (Limited Liability Partnership)
    2
    Once you have incorporated your business, you can register the same as a startup. The entire process tends to be online and seamless. All you are required to do is to visit the official website of Startup India and then fill out the form with the necessary details.
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    Benefits

    Why Startup India Registration is Important

    Startups scheme comes with various benefits and incentives by government of India. The benefits of startup India scheme are:

    Financial Benefits

    The majority of the startups are patent-based. It implies they produce or give exceptional products or services. So as to register their patents, they need to acquire a heavy cost which is recognized as the Patent Cost. Under this scheme, the government gives 80% reduction on the patent costs. In addition, the procedure of patent registration and related is quicker for them. Likewise, the government pays the fees of the facilitator towards obtaining the patent.

    Income Tax Benefits

    The startup has a good amount of benefits under the Income Tax Act. After getting recognition a Startup can apply for Tax exemption under section 80 IAC of the Income Tax Act. After getting clearance for Tax exemption, the Startup could avail tax holiday for 3 consecutive financial years out of its first ten years since incorporation. After getting recognition a Startup might apply for tax-exempt under Section 56 of the Income Tax Act (Angel Tax).

    Special Benefits

    Manufacturing business startups are exempted from the criteria of ‘prior experience’ or turnover. However, there is no relaxation in the quality standards or the technical parameters regarding public procurement.

    National Credit Guarantee Trust Company or SIDBI ensures guaranteed funds for over 4 years.

    Labor Laws inspections shall not be carried out in the first 3 years of incorporation.

    Environment law compliances are only compulsory after self-certification.

    Winding up of the corporation could be completed in just under 90 days under Insolvency and Bankruptcy Code.

    Registration Benefits

    Under the Startup India scheme, an application is there to make easy the registration. A single meeting is arranged towards the Start-up India hub. Also, there is a single doubt and problem-solving window for them.

    Government Tenders

    Under startup India scheme, the startups have the benefit of participating in public procurement job by means of tenders in getting government tenders. Also, there is relaxation in prior experience, EMD or turnover criteria.

    Huge Networking Opportunities

    Networking Opportunities implies the opportunity of meeting with a variety of startup stakeholders at a specific place and time. The government gives this opportunity through conducting 2 startups fests annually nationally and internationally level allowing various stakeholders of a startup to meet. The Startup India scheme also offers Intellectual Property awareness workshop as well as attentiveness.

    Why Choose Vyapar Formations

    We are expert in Startup India Registration

    We help startups in getting the benefits under Startup India scheme

    Eligibility

    What is the Eligibility Criteria for Startup Registration

    The business should be a private limited company or an LLP or a Partnership Firm

    The business should remain a startup for the initial 10 years after the registration date.

    The company/ firm would remain a startup in case the annual turnover is not able to cross the mark of INR 100 crore in the given span of 10 years. Once the company is capable of crossing the given mark, it will no longer be eligible to be referred to as the startup.

    The Company/ firm should be funded by an Incubation Fund, an Angel Fund or a Private Equity Fund

    Documentation

    Documents Required for Startup India Registration

    1

    A letter of recommendation/support

    A letter of recommendation must be submitted along with the registration form. Any of the following will be valid-

    (i) A recommendation (regarding innovative nature of business) from an Incubator established in a post-graduate college in India , in a format specified by the Department of Industrial Policy and Promotion (DIPP);
    OR
    (ii) A letter of support by an incubator, which is funded (in relation to the project) by Government of India as part of any specified scheme to promote innovation;
    OR
    (iii) A letter of recommendation (regarding innovative nature of business), from an Incubator, recognized by the Government of India in DIPP specified format;
    OR
    (iv) A letter of funding of not less than 20% in equity, by any Incubation Fund/Angel Fund/Private Equity Fund/Accelerator/Angel Network, duly registered with SEBI that endorses innovative nature of the business;
    OR
    (v) A letter of funding by Government of India or any State Government as part of any specified scheme to promote innovation;
    OR
    (vi) A patent filed and published in the Journal by the Indian Patent Office in areas affiliated with the nature of the business being promoted.
    2

    Incorporation/Registration Certificate

    You need to upload the certificate of incorporation of your company/LLP (Registration Certificate in case of partnership)
    3

    Description of your business in brief

    A brief description of the innovative nature of your products/services.
    STARTUP

    What is Startup

    A startup is a newly established business that offers an innovative product or services. The business either develops a new product/ service or redevelops a current product/service into something better.

    FAQ

    FAQ on Startup India Scheme

    1Who can register with startup India?
    An entity incorporated as a Private Limited Company, Partnership Firm or a Limited Liability Partnership can register themselves under the startup India scheme. The annual turnover of these business entities should not exceed 100 crores, and they should have been in existence for up to ten years from the date of its incorporation/ registration. Such an entity should be working towards innovation, development or improvement of products or services or processes.
    2Can a foreign company register under Startup India hub?
    Yes, provided the corporation incorporated in India and fulfil all specified criteria to become eligible for registration.
    3What is the time-frame for obtaining certificate of recognition as a ‘Startup’ in case an entity already exists?
    The certificate of recognition is issued typically within 2 working days upon successful submission of the application.
    4What Is The Validity Of Startup Recognition Certificate?
    Up to 10 years from the date of incorporation/registration or valid until its turnover in any previous year does not exceed Rs. 100 crores, whichever is earlier.
    5How do I know my registration is complete?
    Once the application is complete, and the startup gets recognised, you will receive a system-generated certificate of recognition. You will be able to download this certificate from the Startup India portal.
    6For how long is a company recognised as a startup?
    Any business entity that has completed 10 years from the date of its incorporation/registration, and has exceeded the previous years turnover of 100 crores shall stop to be a startup on completion of 10 years from the date of its registration/incorporation.
    7When An Entity Shall Cease To Be A Startup?
    After the completion of 10 years from the date of incorporation or registration.
    In case the turnover for any previous year surpasses Rs. 100 crore
    8What kind of business structure should I choose for my startup?
    The most preferred business structures for a startup are Private Limited companies and LLPs. A Private Limited company is legally recognized and generally favoured by investors. However, it has stricter compliance and may have a higher cost of incorporation.
    Whereas incorporation cost is lower for LLPs and they tend to have relaxed compliance in comparison to Pvt. Ltd. Co. In addition to that, LLPs have limited liabilities and are equally recognised by investors and all over the world.
    9Whether The Tax Exemption Is Attached By Default With All Startup Recognition?
    No. According to the current notification dated 11.04.2018, in order to claim Tax benefit or exemption under the income tax act, one is required to apply separately after getting the startup recognized.
    10If a startup has applied for DIPP-recognition and the application gets rejected or marked incomplete due to missing documents or insufficient information, should the startup edit the existing application or submit a new one?
    If the application for recognition has been marked incomplete, the startup needs to follow the given steps:
    1. Log in with their startup credentials on www.startupindia.gov.in 
    2. Select ‘Recognition and Tax Exemption’ button on the right panel 
    3.  Select the ‘Edit Application’ button and proceed with completing your application

    If the application has been marked ‘Incomplete’ thrice, the application is rejected.
    Rejected applications cannot be edited, and a new application can be submitted after three months from the date of communication of the rejection email.
    11What is the procedure to claim reimbursement by patent facilitators to services offered to startups?
    After a patent application is received by the Patent Office, the facilitator shall submit the claim for fees as per the fee schedule given in SIPP Scheme. A letter addressed to the Head of Office of the respective Patent Office, giving details of claimed fee for drafting of application and his ID proof as a registered Patent Agent, shall be submitted along with the invoice.
    12What is the procedure to claim reimbursement by Trademark facilitators to services offered to startups?
    The facilitator shall submit the claim for payment of fees to the respective Head of Office of the Trade Marks Registry. A letter addressed to the Head of Office of the respective Trade Mark Office, giving details of claimed fee for drafting of application and his ID proof as a registered Trade Mark Agent, shall be submitted along with the invoice.
    13What can I do to attract investors for a start-up?
    To attract investors, not only do you need a stellar product with a scalable model, but you also need visibility. Make sure that your product receives healthy engagement and traction. You’ll need to register your startup on startup India and proactively seek out investors. Make sure you are able to effectively communicate your business idea to the investor and the sustainability of your business model.
    14What is the difference between an accelerator and an incubator?
    Startup incubators are typically institutions that help entrepreneurs by developing their business, especially in the initial stages. Incubation function is usually carried out by institutions who have experience in the business and the tech world.
    Startup accelerators support early-stage, growth-driven companies. These programmes usually have a timeframe in which individual companies spend anywhere between a few weeks and a few months working with a group of mentors who are educated and may also provide financial help.
    15What is Startup India Hub?
    Startup India Hub is a one-stop platform for all stakeholders in the Startup ecosystem to interact amongst each other, exchange knowledge and form successful partnerships in a highly dynamic environment.
    16What factors are considered by the Investors to invest in startups?
    Different investors use different criteria to judge an investment. The importance of these factors would wary depending on the stage of investment, sector of startup, management team etc. Listed below are typical investment criteria used by investors:
    1. Market Landscape: Refers to the addressable market which the startup is catering to.
      Factors: Market size, obtainable market-share, adoption rate, historical and forecasted growth rates, macroeconomic drivers, demand supply
    2. Scalability and Sustainability: Startups should showcase the potential upscale in the near future, a sustainable and stable business plan.
      Factors: Barriers to entry, imitation costs, growth rate, expansion plans
    3. Objective and Problem Solving: The offering of the startup should be differentiated to solve a unique customer problem or to meet customer need. Ideas or products that are patented showcase deemed potential in the startups.
    4. Customers & Suppliers: Laying out your customers and suppliers, helps investors understand your business better.
      Factors: Customer relationships, stickiness to the product, vendor terms, existing vendors
    5. Competitive Analysis: A true picture of competition and other players in the market working on similar things should be highlighted. There can never be an apple to apple comparison, but highlighting the service or product offerings of similar players in the industry is important
      Factors: Number of players in the market, market share, obtainable share in the near future, product mapping to highlight similarities or differences between competitor offerings
    6. Sales and Marketing: No matter how good your product or service maybe, but if does not find any end use, there is no good.
      Factors: Sales forecast, targeted audiences, marketing plan for the target, conversion and retention ratio etc. 
    7. Financial Assessment: A detailed business model that showcases the cash inflows over the years, investments required, key milestones, break-even point and growth rates should be made out well. Assumptions used at this stage should also be reasonable and clearly mentioned.
      See sample valuation template here (to be sourced under templates section)
    8. Exit Avenues: A startup showcasing potential future acquirers or alliance partners becomes a valuable decision parameter for the investor  
    17How do Investors earn returns from investing in Startups?
    Investors realize their return on investment from startups through various means of exit. Ideally, the VC firm and the entrepreneur should discuss the various exit options at the beginning of investment negotiations. A well performing, high-growth startup that also has excellent management and organisational processes is more likely of being exit-ready earlier than other startups.
    Venture Capital and Private Equity funds must exit all their investments before the end of the fund’s life. The common exit methods are:
    1. Mergers and Acquisitions: The investor may decide to sell the portfolio company to another company in the market. For ex: The $140mn acquisition of RedBus by South African Internet and media giant Naspers and integrating it with its India arm Ibibo group, presented an exit option for its investors, Seedfund, Inventus Capital Partners and Helion Venture Partners.
    2. IPO: Initial Public Offering is the first time that the stock of a private company is offered to the public. Issued by private companies seeking capital to expand, it is one of the preferred options for investors looking to exit a startup organisation.
    3. Exit to Financial Investors: Investors may sell their investment to other venture capital or private equity firms
    4. Distressed Sale: Under financially stressed times for a startup company, the investors may decide to sell the business to another company or a financial institution
    5. Buybacks: Founders of the startup may also buyback their investment from the fund.
    18What is a Term Sheet?
    A term sheet is a “Non-binding” list of propositions by a venture capital firm at the beginning stages of a deal. It summarizes the major points of engagements in the deal between the investment firm and the startup.
    A term sheet for a venture capital transaction in India typically includes four structural provisions: valuation, investment and management structures, and changes to share capital.
    1. Valuation: Startup valuations is the total worth of the company as estimated by a professional valuer. There are various means of valuing a startup company, like Cost to Duplicate approach, Market Multiple approach, Discounted cash flow (DCF) analysis and Valuation-by-Stage approach. Investors choose the relevant approach based on the stage of the investment and market maturity of the startup.
    2. Investment Structure: It defines the mode of the venture capital investment in the startup, whether it is through equity, debt or a combination of both.
    3. Management Structure: The term sheet details out the management structure of the company, including the composition of the board of directors, and prescribed appointment and removal procedures.
    4. Changes to share capital: All investors in startups have their own investment timelines, and they accordingly seek flexibility in seeking exit options through subsequent rounds of funding. The term sheet addresses the stakeholders’ rights and obligations in respect to subsequent changes in the company’s share capital.
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