FAQs

1 What 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 succesful partnerships in a highly dynamic environment.


2 How do Investors add value to Startups?

Investors particularly venture capitalists (VCs) add value to startups in a lot of ways:

1. Stakeholder Management: Investors manage the company board and leadership to facilitate smooth operations of the startup. In addition, their functional experience and domain knowledge of working and investing with startups imparts vision and direction to the company.

2. Raising Funds: Investors are best guides for the startup to raise subsequent rounds of funding on the basis of stage, maturity, sector focus etc. and aid in networking and connection for the founders to pitch their business to other investors.

3. Recruiting Talent: Sourcing high-quality and best-fit human capital is critical for startups, especially when it comes to recruiting senior executives to manage and drive business goals. VCs, with their extensive network can help bridge the talent gap by recruiting the right set of people at the right time.

4. Marketing: VCs assist with marketing strategy for your product/service.

5. M&A Activity: VCs have their eyes and ears open to merger and acquisition opportunities in the local entrepreneurial ecosystem to enable greater value addition to the business through inorganic growth.

6. Organizational Restructuring: As a young startup matures to an established company, VCs help with the right organizational structuring and introduce processes to increase capital efficiency, lower costs and scale efficiently.


3 Why do Investors invest in Startups?

Investing in startups is a risky proposition, but the low requirement for overhead capital combined with high upside potential, makes it lucrative for investors to put their bets on startups.

The Thomson Reuters Venture Capital Research Index replicated the performance of venture capital industry in 2012 and found that overall venture capital has returned at an annual rate of 20% since 1996 – far outperforming modest returns of 7.5% and 5.9% from public equities and bonds respectively.


4 How can I register a profile on the hub?

Registering a profile on the hub is a fairly simple process.

  • On clicking the “Register” tab on the top right hand corner of the page which you will be directed to our “mygov” platform for authentication where you will be asked to fill details such as your name, email address, etc. This will give you a one time password for verification as well as a link to set a new password.
  • Sign in using the login credentials you created in step 1. This will direct you to the Hub where you can select and create the profile of a stakeholder which best defines your role.

5 How do we connect to enablers after creating a profile?

The system is build to connect you to your relevant stakeholders based on your industry and preferred stage. Under the profile of every enabler there will be an option to “connect/apply”. Upon clicking, a request will be sent to the respective profile for acceptance. Once accepted, you will able to see the enabler as a new connection.

Please note that you can connect with upto 3 users per week.


6 Can a foreign company register under Startup India hub?

Any entity having atleast one registered office in India is welcome to register on the hub as location preferences, for the time being are only created for Indian states. However, we are working on international relations and will soon be able to enable registration for stakeholders from the global ecosystem


1 What qualifies as a “Startup” for the purpose of Startup India scheme?

An entity (Private Limited Company or Registered Partnership Firm or Limited Liability Partnership) shall be considered a “Startup” –

a)  Up to 7 years from the date of its incorporation/ registration; however, in the case of Startups in the biotechnology sector, the period shall be up to 10 years from the date of its Incorporation/ registration; and

b)  If its turnover for any of the financial years has not exceeded INR 25 crore, and

c)  It is working towards innovation, development, deployment or commercialization of new products, processes or services, or if it is a scalable business model with high potential of employment generation or wealth creation.

The entity should not have been formed by splitting up or reconstruction of a business already in existence.

A proprietorship or a public limited company is not eligible as startup. A one person company, being a private limited company is entitled to be recognized as a 'startup'.

For additional information, refer notification G.S.R. 180(E) dated February 17, 2016


2 How does a Startup obtain benefits under various Government schemes including the ones announced in the Action Plan on January 16, 2016?

For availing various benefits (except tax i.e. action points #9, #10 and #11 of the Startup India Action Plan), an entity would be required to be recognized as a Startup by applying on Startup India Mobile App/ Portal.

In order to obtain tax benefits, a Startup shall be required to be certified as an eligible business from the Inter-Ministerial Board of Certification. A Startup incorporated between April 1, 2016 and April 1, 2019 shall be eligible to obtain tax benefits proposed under the Finance Bill 2016.


3 For how long would recognition as a “Startup” be valid?

An entity would cease to be a 'startup' upon expiry of:

a)  Up to 7 years from the date of its incorporation/ registration; however, in the case of Startups in the biotechnology sector, the period shall be up to 10 years from the date of its Incorporation/ registration; OR

b)  If its turnover for any of the financial years has exceeded INR 25 crore

Startups would be required to intimate DIPP of any such cases within a period of 21 days.


4 Can an existing entity register itself as a “Startup” on the Startup India Portal and Mobile App?

Yes, an existing entity that meets the criteria as indicated in response to Question 1 can visit the Startup India Portal and Mobile App and get itself recognized for various benefits


5 What is the timeframe for obtaining certificate of recognition as a “Startup” in case an entity already exists?

The process of registration in such cases shall be real time and the certificate of recognition would be issued typically within 48 hours upon successful submission of the application


6 An entity is yet to be registered/ incorporated. Can I visit the Startup India Portal and Mobile App to register/ incorporate my entity as either a Private Limited Company or Registered Partnership Firm or Limited Liability Partnership?

There are two options available in such cases.

a) Option 1: An entity can register itself through MCA or Registrar of Firms using the existing processes and subsequently register itself on the Startup India portal and mobile app as a “Startup” to avail the benefits.

b) Option 2: An entity can register itself through the Startup India portal and mobile app using a seamless process. This facility would be made available in the second phase of the Startup India portal and mobile app launch.


8 Once my registration is successful, would I obtain a certificate for it? If Yes, would I be able to download the certificate?

Yes. On successful registration, you would be able to download a system generated verifiable certificate of recognition.


9 If during the Registration process, an applicant marks the response to “Do you want to avail Tax benefits” as “No”, would I be allowed to change the response to “Yes” later?

Yes. In such cases, option to opt for such benefits may be indicated at a later stage as well.

Once a user opts for availing the benefits, his/ her application would be evaluated by the Inter-Ministerial Board. Once certified by the Board, the benefits may be availed.


10 If an entity does not have a PAN. Would I be allowed to register my entity as a “Startup”?

Yes. An entity without a PAN can be registered as a Startup. However, it is advised that a valid PAN of the entity is provided at the time of registration, as each entity is separately taxable person.


11 Can I provide two mobile numbers in the registration form?

It is advised that only one mobile number of the authorized representative of the entity is provided at the time of registration. The portal and the mobile app would be sending an OTP on the mobile number provided for the user to complete authentication and registration process.


12 What will be the constitution of the Inter- Ministerial Board?

The Inter-Ministerial Board of Certification would consist of:

a)  Joint Secretary, Department of Industrial Policy and Promotion;

b)  Representative of Department of Science and Technology;

c)  Representative of Department of Bio-technology; and

d)  Ministry of Electronics and Information Technology


13 Would a One Person Company (OPC) be eligible to avail benefits under the Startup India initiative?

Yes. One Person Companies are eligible to avail benefits under the Startup India initiative.


14 How would the Inter-Ministerial Board review the applications received for the purpose of tax?

The Board shall review the supporting document(s) provided to ascertain if the entity qualifies as an eligible business for availing tax


15 What is the timeframe for obtaining certification of Inter-Ministerial Board for availing tax in case an entity already exists?

An application for a certificate from the inter-ministerial board shall be processed within a period of 10-25 working days.


16 If a startup has submitted an application and the application gets rejected due to missing documents. After receiving the required documents, should the startup edit the existing application or resubmit another application?

If the application of the Startup Applicant has been rejected, he may edit his application by visiting the link http://www.startupindia.gov.in/editRejApp.php and upload the recommendation letter. If the application has received Startup Recognition Certificate, he is required to submit through mail the recommendation letter.


17 Is partnership firm eligible for benefits under StartupIndia scheme?

Yes, a partnership firm is eligible for all the benefits except tax incentives which are provided to a recognised startups.


18 If a Startup is recognised with DIPP. What are the next steps required for raising funding?

A startup can approach SIDBI for funding in the following two cases:

Case 1: Equity funding for early and growth stage startups:

a) SIDBI invests in funds of fund format and invest in daughter funds which invests in Startup.

b) The list of fund of funds, focus sector, e-mail ID and company website can be checked on the link: http://venturefund.sidbi.in/?q=content/contact-vcfs

c) Kindly send an e-mail on the given e mail IDs of the said funds.

Case 2: Debt funding for mature stage startups (proven revenue model, market traction):

a) Approach the nearest SIDBI office.

b) Submit a business presentation and the pitch to the SIDBI office.

c) Once the information has been submitted, SIDBI would scrutinize the application and the shortlisted   applications are directed to SIDBI, Mumbai for financial evaluation.

d) As per the decision of SIDBI Mumbai, debt may be sanctioned.

Additionally, you can send an email Startup India Hub (dipp-startups@nic.in) with a business presentation. The following aspects need to be covered:

a) About the idea/company

b) Background of the founders

c) How is the idea/product/service innovative?

d) Fund Requirement (Detailed segregation)

e) End usage of the funds


19 Can a foreigner enter into partnership under LLP Act & get registered that LLP with StartupIndia?

Yes, a foreign national can enter into a partnership under LLP Act. Also, an LLP can register with StartupIndia HUB and get recognised by DIPP.


20 Can a foreign national, a partner in LLP invest in the said LLP recognised by StartupIndia?

Funding from a foreign partner will be subject to regulations of FDI. 100 % FDI is allowed in LLP given that LLP operates in business sectors where 100% FDI is allowed via automatic route and there are no performance linked FDI conditions.


21 I have an innovative idea that I want to pursue as a Startup. What guidance can Startup India provide to me?

DIPP has launched Learning & Development module for budding entrepreneurs, the learning Program is a 4-weeks free program for early stage entrepreneurs across the country. This online program is aimed at teaching new and existing entrepreneurs on how to start a new business and how to scale an existing one.

Interested individuals can enroll for this free course at this link: http://www.startupindia.gov.in/learning-development/ For more courses, please visit the Learning & Development section

Also, incubators all across India provide guidance to budding startups and you can approach these. There is a list of incubators listed on the Startup India portal for your reference.


22 Is a recognition from DIPP a prerequisite for advertising on Startup India portal?

No, any startup is eligible to advertise on Startup India Portal. Please refer to the link http://startupindia.gov.in/advertisement.php

Final discretion on advertisement will remain with DIPP.


23 How can a foreign national, NRI and PIO benefit from start-up India scheme.

Start-up India benefits are for Private Limited Company or Registered Partnership Firm or Limited Liability Partnership. A foreign national, NRI and PIO can register itself through MCA or Registrar of Firms using the existing processes and subsequently register itself on the Startup India portal and mobile app as a “Startup” to avail the benefits.


26 Facilitator is not responding or I am unclear on how to select a facilitator which will be a right fit for my Startup. What should I do next?

If the startup is unable to select a facilitator, it should contact the Head of Office of the respective Patent Office as per jurisdiction, who shall provide 3 names of facilitator and the startup shall finalise.


27 What part of cost for filling a patent will have to be borne by startup?

Fee for filing patent application and other statutory fees, as per First Schedule, shall be borne by the startup.


1 What 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.


2 What 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. 


1 What 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  

9. Management and Team: The execution and passion of founder and the management team to drive the company are equally crucial in addition to the all the factors mentioned above


2 How 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.


3 What 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.