Startup Legal & Fundraising.
Incorporation, DPIIT recognition and Section 80-IAC, ESOP design, cap table modelling, shareholder agreement drafting, Rule 11UA valuations, and fundraise readiness — for founders raising their first institutional capital.
Our work in this practice
Founders approach institutional fundraising with a multi-year compliance, structural, and contractual workload that, if neglected, becomes a material drag on valuation when the first term sheet arrives. Our startup legal practice exists to make foundational decisions cleanly at incorporation and to maintain a defensible posture through each subsequent round.
Incorporation begins with structural choices that have multi-year consequences: founder shareholding and vesting, authorised share capital and class structure, founders' employment terms, IP assignment from founders and early contributors, and initial Employee Stock Option Pool sizing. Decisions made hastily at this stage create dilution, governance, or contractual constraints that emerge later in due diligence.
DPIIT recognition under the Startup India scheme provides access to Section 80-IAC of the Income Tax Act, which permits a 100% tax deduction on profits for three consecutive years out of the first ten, subject to conditions. The application requires the company to be incorporated as a Private Limited Company or LLP, with turnover not exceeding ₹100 Cr, working towards innovation, and not formed by splitting up an existing business.
Employee Stock Option Plans are governed by the Companies Act 2013, the SEBI ESOP Guidelines, and the Income Tax Act provisions on perquisite taxation. Our ESOP practice covers design (plan size, vesting, cliff, exercise window, exit clauses), Board and shareholder approvals under Sections 62(1)(b) and 196, grant documentation, Rule 11UA valuation for exercise pricing, perquisite tax implications under Section 17(2)(vi), and secondary buyback structuring. ESOP pool sizing is calibrated to the expected fundraise — Indian Series A institutional investors typically expect a 12% to 15% pool refresh at term sheet stage.
Cap table modelling is the operational discipline that anchors every fundraise. We maintain dynamic models reflecting each financing round, ESOP grants and exercises, secondary transactions, and dilution impact under various term sheet scenarios. Founders enter term sheet negotiations with the full dilution picture across stated and unstated scenarios already modelled, which materially strengthens negotiating posture.
SHA, SSA, and CCD or SAFE drafting requires legal precision combined with commercial judgement. Standard institutional templates contain investor-protective provisions that, while market-standard, can be calibrated through negotiation. Our drafting covers each clause family: liquidation preferences (1x non-participating is the Indian Series A standard), anti-dilution (typically broad-based weighted average), pre-emption and tag-along rights, drag-along thresholds, reserved matters, information rights, exit milestones, and founder vesting.
Rule 11UA valuation under the Income Tax Rules, 1962 is the statutory mechanism for fair market value determination, applicable to share issuance to residents under Section 56(2)(viib) and to non-residents where applicable. Our valuation practice covers Discounted Cash Flow, Net Asset Value, and comparable company methodologies, with certified reports issued by Chartered Accountants or SEBI-registered Merchant Bankers as required.
Client profiles
Engagement structure
Illustrative engagements
Questions clients ask
Need a Rule 11UA valuation for your round?
Before the round documentation begins, you typically need a defensible fair-market-value position. Founder Math, our self-service valuation engine, produces a sector-calibrated valuation report suitable for Section 56(2)(viib) and FEMA Rule 21 conversations — typically in 30 minutes, with the Chartered Accountant certification optional and separately quoted.
Tell us about your facts. We will respond with a structured approach.
Each engagement begins with a structured workshop covering your specific facts, timeline, and constraints. We respond with an option analysis and indicative fee within five working days of the initial discussion.