How to Raise Startup Funds in an early Unvalued Round [Video]

How to Raise Startup Funds in an early Unvalued Round

👉If you wish to raise your first round of funding from Friends & Family or Angel Investors, without valuing the company, the options available to you are as under.

👉Convertible Notes: Easiest to do, with an agreement of normally not over 7 pages – however, the investor must put in a minimum amount of Rs 25 lakhs

👉compulsorily Convertible Preference
Shares (CCPS) through iSAFE Agreement: process is longer than that of a Convertible Note and paper work much larger, but depending on the state your startup is registered in, you may have to incur a substantial amount on increasing the Authorized capital of the company in the MOA, which for a total Fundraise of over 1 crore may result in a government fee of over 2 lakhs.

👉Compulsorily Convertible Debentures
(CCD): Paperwork similar in length to CCPS but you can substantially reduce the govt fee which is incurred in the case of CCPS through iSAFE.

👉Loan from Directors’ Relatives: But the relatives don’t get any meaningful return in the form of higher equity valuation later, so not preferable if you want to make them a genuine investor in your company.

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