Fundraising for Startups in India: Pitch Deck to Funding
Raising capital is one of the most critical, and most misunderstood, milestones in a startup's journey. JustStart's fundraising advisory helps you build an investor-ready pitch deck and financial model, connect with the right angel investors and VCs for your stage, and close your round with watertight legal documentation, so you raise funds without giving away more equity or control than you need to.
- 3-6 Months to Close
- Pre-Seed to Series C+
- CA & CS Led Advisory
- Curated Investor Network
- Term Sheet to Bank Account
Everything included in your fundraising advisory package
- Pitch Deck & Financial Model Creation
- Investor Introductions & Warm Outreach
- Company Valuation Analysis
- Term Sheet & Deal Structuring Guidance
- SHA/SSA Legal Contract Drafting
- DPIIT Recognition Support
- FEMA & FC-GPR Compliance (for FDI)
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Overview
What is Startup Fundraising?
Startup fundraising is a strategic and comprehensive process of securing funds from investors, government programs, or lenders. By securing external funds, startups invest to build, launch, and scale a growing business. Beyond this, the raised capital from investors is used to cover operational expenses, hire talented workers at good salaries, and produce products.
The three primary capital structures play a major role when founders apply for funds. These primary capital structures include equity capital, debt capital, and grants & Non-Dilutive capital. On the other hand, as market demands grow, growing businesses require continuous investment. Funding is rarely a single event for businesses that are in their early stages. Whereas the business also secures the funds in consecutive stages known as rounds to hit new growth milestones.
Capital Structures
Three Primary Capital Structures
These three funding sources help a company to balance its risks and control.
- Equity Capital: Under this business structure, the company offers shares or stock in exchange for cash; as the new shares are issued to the investors, it holds a small percentage of ownership in the company. However, it is considered the most expensive among other capital structures if the business succeeds.
- Debt Capital: Under this structure, startups obtain funding from banks, term loans, or bonds. However, the repayments with interest are fixed in Debt capital. The total ownership and control percentage does no drops of the startup’s owner. The Interest payments are tax-deductible.
- Grants & Non-Dilutive Capital: The founder of the startup gets funding from research awards, government grants, or cash flow from sales. Under this capital structure, the founder does not need to give up control or ownership; instead, they only need to file multiple applications and track compliance formalities.
Stages
How Many Startup Funding Stages in India?
In India, startups go through several funding stages as their operations expand. These are the common startup funding stages in India:
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Different Stages
Purpose of Different Stages of Startup Fundraising
These different stages determine the purpose of funding for startups. Each stage serves a distinct purpose in a company’s lifecycle. This can be understood as:
Pre-Seed Stage
At this stage, startups get funding from friends, family, or founders and invest in idea validation, market research, and initial MVP/prototype building.
Seed Stage
The collected funds from the angel network, Micro-VCs, and Accelerators/Incubators are used for the purpose of product-market fit (PMF), hiring a talented team, and market tracking.
Early Stage (Series A & B)
At this stage, the collected funding is used for multiple purposes, such as business model scaling, customer acquisition, and revenue acceleration.
Growth Stage (Series C & D)
It is marked as the growth stage where founders scale further, position themselves as market leaders, and prepare for possible international expansion.
Late Stage (Series E+)
The founders of startups invest in Pro-IPO readiness, profitability, and international market expansion.
Growth /Last Stage/Pre-IPO
Invests funding to provide exits for early investors, transitioning to a public company.
Core Parameters
What Investors Actually Check Before Investing?
Before issuing the funds to the startups, the investors check the core parameters such as the founding team’s capability, the size of the business operation, financial compliance, early product traction, and clean legal standing. Prior checking is crucial to avoid risks and ensure that the company grows profitably. These are the core areas that investors verify before funding a startup:
Track Team & Governance
The investors check that the founder/co-founder has deep experience in the relevant domain as well as strong complementary skills. Further, checks the background, employment history, and legal/criminal records of founders.
Verify Market Opportunity
The investors verify the market opportunity. They check the Product-Market Fit (PMF), which includes analyzing customer retention, organic growth, etc. To invest in Saas/Tech models, the investors usually look for a 3:1 ratio or higher for unit economics.
Corporate Documents
If the startup is registered with any specific entity structure, required to provide proof of specific documents before securing funds from the investors. These legal documents include the incorporation certificate, MoA, AoA, and board resolutions.
Check Financial Status
To ensure consistency, the investors conduct the three verification stages. They first check the revenue against the bank statement as well as GST returns and TDS certificates, and further check the quality of revenue.
Check Regulatory & Compliance checks
The investors verify the FEMA & foreign investment approvals if the startup has previously received funding from foreign investors, NRIs, or overseas funds. Further, verifies the statutory tax filings and data privacy.
Sources
What Are the Sources to Raise Funds for Startups in India?
There is a wide variety of sources from which startups can raise funds in India. However, fundraising for startups entirely depends on their business stage, sector, and growth plans. These are the common ways or sources to raise funds for startups in India:
✅ Bootstrapping & Personal Network
- Bootstrapping: Under this source, the founder uses their own personal savings account for funding, including early customer revenue or freelance cash flow, to keep 100% equity.
- Family & Friends: Raise money from family or friends as informal early-stage funding based on personal trust. No heavy documentation is required with the best structure.
- Reward/Equity Crowdfunding: Use micro-funding platforms like Ketto or Wishberry for fundraising for startups in India.
✅ Government Schemes & Grants
- Startup India Seed Fund Scheme (SISFS): DPIIT-recognized startups get up to ₹20 lakh in funding for proof of concept or prototype, along with up to ₹50 lakh for market entry and commercialization.
- SIDBI Fund of Funds for Startups (FFS / FFS 2.0): The government does not directly fund startups; instead, it invests in SEBI-registered Alternative Investment Funds (AIFs). Then AIFs provide funds to the startups for business operations.
- Credit Guarantee Scheme for Startups (CGSS): The government does not lend money to the startups; instead, it gives a government-backed safety promise to banks and lenders. In case your startup fails to repay the loans, this government-backed safety net promises to pay most of the loan.
- SAMRIDH Scheme: Under this scheme, businesses get access to funding up to ₹40 lakhs per startup alongside intensive business acceleration. It is a MeitY-backed initiative that provides financial support and accelerates operations for Tech & SaaS startups.
✅ Alternative & Debt Financing
- Revenue-Based Financing (RBF): The investors pay cash to startups in exchange for a fixed percentage of ongoing monthly revenue. The startups pay back money to investors by using a small slice of their ongoing monthly sales instead of paying fixed EMIs.
- Invoice Discounting: One of the fastest funding methods for startups. Here, the startup borrows the money against an unpaid bill. The startup receives 70% to 90% of the bill’s value upfront from a lender. The customer pays the bill, and the lender returns the rest of the money, less a small fee.
✅ Private Equity & Institutional Investors
- Angel Investors: High-net-worth individuals who use networks like the Indian Angel Network, LetsVenture, or Mumbai Angels to invest in startups. The investment typically varies from ₹5 lakh to ₹2 crore in exchange for equity or convertible notes.
- Venture Capital (VC) Firms: These are SEBI-registered institutions. The VC firms invest in high-growth startups for a percentage of equity. Typically range from Seed to Series C+ stages.
- Incubators & Accelerators: Such investers demands for smalle equity in startups in exchange for funding, mentorship, and office space. Major real-world examples are T-Hub, NASSCOM 10,000 Startups, Y Combinator, and 100X.VC, IIM Ahmedabad's CIIE.
Process
How to Raise Funds for a Startup in India?
The funding in India starts from internal readiness to deal closing. The whole funding-securing process is structured and detailed. The process is as follows:
Step 1: Analyze Stage & Funding Needs
The dealer must start the process by fixing the capital requirement for 18-24 months runway. According to your current revenue and Product-Market Fit (PMF), analyze your target funding stage. This varies from Pre-Seed to High Growth (Stages C & D).
Step 2: Make Pitch Assets for Review
Prepare the 10- 12-slide deck for review, which must cover the problem, solution, economics, TAM, and team. Further, prepare the 3 -year integrated financial model and a short introduction.
Step 3: Make a Virtual Data Room
Prepare all the supporting legal documents: Certificate of Incorporation, MoA/AoA, DPIIT registration. As well as preparing the financial records and other core assets like audited statements, GST returns, TDS receipts, and customer agreements.
Step 4: Target & Contact Investors
Start by preparing a list of all investors to select the right one, e.g, angel investors, micro-VCs, or institutional VCs. For a warm introduction, use the founder’s platform, visit LinkedIn, or use angel platforms. Include applying for government schemes for seed support.
Step 5: Work on the Term Sheet
Once the investor accepts your proposal and expresses its intent, review the Term Sheet. This term sheet generally covers pre-money valuation, investment instruments, liquidation preferences, and governance rights. Before signing the documents/agreements, you must contact a startup attorney to review the clauses.
Step 6: Fully Complete Legal & Financial Due Diligence
The investors' legal counsel will audit your VD to check statutory compliance, IP ownership, and accounting practices. If any issues or non-compliance discrepancies arise, it results in red-flag, cause rejection.
Step 7: Close the Deal
Sign the Share Subscription Agreement (SSA) and Shareholders’ Agreement (SHA). Agree to all Conditions Precedent (CPs). Once all these formalities are complete, receive the funds in your bank account. File the Form PAS-3 with the Registrar of Companies. If you receive Foreign Direct Investment (FDI), submit the Form FC-GPR on the RBI FIRMS portal within 30 days.
Common Mistakes
Common Mistakes Founders Make While Fundraising
Protecting your company from the critical startup fundraising challenges is an essential move to keep it investable, profitable, and to shield founder ownership. These are the common mistakes that founders usually make during capital raises for startups in India:
- Contacting VCs too early: The common lead rejection arises when a founder approaches for institutional funds without a Minimum Viable Product (MVP) to track.
- Skipping DPIIT Recognition: DPIIT recognition is a government initiative for startups. Missing the DPIIT registration results in the loss of Angel Tax exemptions and access to government schemes (like the Startup India Seed Fund Scheme).
- Undocumented Friends-and-family Capital: Accepting funds from your friends or family without proper documents or agreements can cause extreme legal red flags, mostly during investor due diligence.
- Raising Less than 18-24 Months of Cash: Securing the fund for a short duration or using it before the company grows, it forces you to re-raise funds at a low stage. This situation impacts your ownership as well as your control.
- Sharing too Much Equity Early: Giving away over 20-25% of your company in the seed round leaves founders with too little ownership.
Why Choose JustStart?
Why Choose JustStart Startup Funding in India?
Walking alone in fundraising for a startup in India is challenging, as it includes legal readiness problems as much as pitching problems. But JustStart has covered this gap by helping the founder with complex statutory requirements.
Support Private Limited Registration
Our professional CA, CS, and legal advisors help the Startup founders to streamline the company incorporation. From end-to-end company incorporation document collection to a guide to share capital.
DPIIT Recognition
Help you to get DPIIT recognition by fulfilling the registration formalities so that you can get access to tax exemptions and government startup schemes.
SHA/SSA Drafting & Review
With us, you are one step forward as our active professionals draft watertight Shareholder and Share Subscription Agreements so you can work on your company's growth without worrying about control.
FEMA & FC-GPR Compliance
We help you during Foreign Direct Investment (FDI) clearance to make the statutory reporting on the RBI FIRMS portal seamless and faster.
GST & ROC Compliance Cleanup
Manage the full audit and correction of historical tax. Further maintain the accounting and secretarial records before investor due diligence.
Locations
Startup Fundraising in Other States and Cities
FAQs
LET'S CLEAR ALL THE DOUBTS!
To raise funds in India, start by building a Minimum Viable Product (MVP) and showing early traction. Register your startup as a Private Limited company and secure DPIIT recognition to enjoy vast benefits and schemes, prepare a pitch Deck along with a 3-year financial projection, and look for the right investors. Further, in the end, sign a Term sheet and complete all legal/financial formalities.
Startup India Seed Fund Scheme (SISFS)Government of India initiative launched by DPIIT. It was launched to provide financial assistance to early-stage businesses and startups.
Yes, a business can raise funding without incorporating as a Private Limited company; it can register as a Limited Liability Partnership (LLP), a registered partnership firm, a sole proprietorship, or a cooperative society. However, a private limited company is mostly preferred by investors and can raise equity.
Fundraising for startups requires major documents, including pitch, financial, corporate, and compliance documents. Legal & transactional agreements, along with IP & commercial contracts, are further required for accurate fundraising.
DPIIT registration is operated by the Department for Promotion of Industry and Internal Trade (DPIIT) under the Ministry of Commerce and Industry. With DPIIT recognition, the startup enjoys tax exemptions, government funding, self-certification, easier IPR funding, and relaxed procurement rules.
The founders typically issue 10%-20% total equity (dilution) to outside investors in a pre-seed round.
Government schemes depend on sectors, stages, and geography. The major government schemes for startups are Startup India Seed Fund Scheme (SISFS), NIDHI Schemes (DST), BIRAC Schemes (Biotech/MedTech), SAMRIDH Scheme (MeitY), Fund of Funds for Startups (FFS), and State Startup Policies.
It typically takes 3 to 6 months during a typical seed or early-stage round in India, from the initial meeting to funds in the bank.
Technically no, but practically yes. The standard venture capital and angel investing practices in India prefer Private Limited companies because they can easily use the convertible instruments like CCPS (Compulsorily Convertible Preference Shares) or iSAFE (India Small Amount Fast Equity).
As a startup, you must start the process when you have 6 to 9 months of cash left, as the procedure takes longer than expected.
