It is simple. You invest 1 cr. in a company at 9 crs. pre-money valuation. IT department has asked to justify the 9 crs. valuation based on any of the 5 methodologies. Valuation through any of the chosen method should not be less than 9 crs. 
  
 This is needed because 1% (or 10%?) of people who use random shell companies to transfer money and ownership from here to there. Not in startup ecosystem but traditional companies. 
  
 Venture Funds are excluded from this requirement.

Investor

What is Angel tax and what are the consequences for Indian startup’s as the valuation method may not be best for startups

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Angel Tax

Product Marketing Manager

Angel Tax- Grapevine

I have got an offer from a US startup that includes stock options. But their exercise period is of three months. While I did some research and got to know that an individual has to pay tax while exercising stock options, so if i exercise I will be taxed on  (Stock value - exercise price)*Quantity. The amount will be huge. Need your inputs on how i should navigate this given that exercise period is going to be three months, so If I leave I will have to pay this amount within 3 months.

Employee Stock Options - US Startup

Growth Manager

Hi folks, 

I'm Kashish, the CEO of EquityList and Founder of Cloud Capital which I run as a solo GP.
A little bit about what we do: 

EquityList is a full-stack equity management platform by AngelList India. Companies across India, US and Singapore use EquityList to manage their cap table, stock options (ESOP/SAR), shareholders, and related compliances. Managing equity for 10k+ stakeholders, 250+ companies and ~$1B in stock options.

Cloud Capital has deployed $8M+ in 55+ startups such as Airmeet, Rupifi, Orange Health, DevRev, ZET (OneCode) and others. I've also angel invested in startups such as OSlash, Atlys, Chronicle, Even Healthcare and others.

Excited to do this AMA, and look forward to answering any of your questions about ESOPs, cap table management, investing, entrepreneurship, and more!

LinkedIn: https://www.linkedin.com/in/kashisharma

Live AMA: Hey everyone, I'm Kashish, CEO of EquityList. Ask me anything!

Welcome to News Discussion's Private Community

The Morning Vine 🍇

Journalist

Hey people. 
Have any of you tried angel investing? 
How did you go about it? 
What is your usual cheque size and how do you evaluate?
How many startups have you invested?

As an individual what tax and government compliances  one should be aware of?

How did you decide to start Angel investing?

It's always something to look forward to in a startup. But wanting to know if it's actually meaningful. Are you making good money from it? Anybody around you who is making good money from it. 

This would really help a lot of us in startups know what to expect 🙏

People at Meesho, can you share experience on ESOP buyback?

Product Manager

Copy pasting his post:
Angel investing in startups will make you feel cooler, but eventually poorer Investing in a future $1Bn unicorn at a $5M valuation is unreally good. A greater than 100x return in 5-6 years is a godly 115% rate of return. 5 lakhs can become 5 Cr. It seems worth the risk But 53% of companies of Indian angel companies die without ever raising, and 98% don’t become unicorns All kinds of angel investing success stories circulate. Uber, AirBnB, Flipkart, have made angels multi-millionaires. Being the first investor in iconic companies is a badge of honour In reality, it is harder to make money to beat a 5% fixed deposit Unlike public markets where you can invest in any stock you want, you cannot invest in every startup you want. Access to startups is a competitive advantage in itself. As a new angel investor without connections in the ecosystem, if you’re getting to invest, the company has likely been passed by everyone. Fundraising is done in a priority order. The best angels will get access to the best deals Even if you’re someone with access to deals, you need to have money. Barring a few founders or investors, few have the ability to invest in 20+ companies. For you to even have a shot at a unicorn, you need to invest in at least 20+ companies. I ran 500 simulations on a portfolio of 1Cr investing in 20 companies, based on real, cold, Indian startup data. 78% of the simulations lost money. Imagine what happens if you invest in 5. There’s a reason why VCs usually have portfolios larger than 50. VCs tend to do better because it is their job to pick companies. Evaluating founders, markets and models all day makes you better than average. Just like leaving public markets to professionals, this too is a full time job. If you have access, ability to deploy capital in 20+ companies, and picking skill you could eventually make money. A rare group have all three. Beyond that, it is at best support for your founder friends, and at worst an expensive hobby

"it is harder to make money in angel investing in startups to beat a 5% fixed deposit"- says VC Aviral Bhatnagar

Software Engineer

Welcome to Personal Finance's Private Community

I am also keen to know about the process - documentation and legal aspects. Is it complex or easy with well defined steps?

How can one start angel investing in India?

There are essentially four parties in the startup economy:

1. The Consumer
2. The Enabler(read, Startup)
3. The Service Provider
4. The Investor

Now let's look at Game Theory motivations:

1. The Indian Consumer wants to minimise money spent per unit value extracted, the Western Consumer wants to maximise value extracted per unit money spent. (There's a massive difference.)

2. The Startup depending on the stage wants to maximise User Growth and Free Cash Flows.

3. The Service provider wants to maximise financial incentives.

4. The Investor is wants to maximise the XIRR of their fund. For this they need to reach a multibagger liquidity event.

Now let's look at what happens when:

1. The Consumer gets f'ed over: 

The startup attains pricing power through deep competitive moats allowing for monopolisation. They can jack up the prices to ensure nice FCF, greater rewards for Service Providers and great returns to their investors. (Think, Uber can charge anything to you now)

2. The Startup gets f'ed over: 

The users get bang for their buck, the service providers get good incentives, the investors push for higher growth but unfortunately the startup does not have enough capital to service their Cost of Operations through their unit economics, so they will either run out of cash or investor patience. Either ways, they are doomed. (Think every legit startup that failed)

3. The Service Provider get f'ed over: 

This is the likeliest scenario as they have the least power in this dynamic. Rewards will be reduced over time or made harder to achieve. They have no option because they got no option for sustenance. (Think any on-demand service providing app)

4. The investor gets f'ed over: 

Now imagine there is a startup that can balance the act very well. They have a service that users are willing to pay a margin on. They pay their service providers fairly and have decent unit economics. Now, the investor will do halla about destruction of shareholder value from little growth. (Is this the case with BluSmart?)

Maybe that's why building in India is tough.

[Rant] Here's why someone usually ends up f'ed over, for a startup to get successful in India

I am building something, say like a social network, for the consumer where they will use it. Now, I don't feel good raising from any VC because of their heinous nature, 

Can I raise pre-seed funding for my startup via equity as tokens worth 1 lakhs- 5 lakhs for my own customers to purchase and minimum hold for 3 years as investment? (Given the value proposition and vision aligns with their customers) 

Is this possible? Ofc. Yes.

Questions: Is this legal? If not, can it be made legal via some procedure like crowd funding? Unlike, ICO.

Can we raise from equity tokens?

Solution Architect

I am raising an angel round for my D2C startup. Can anyone share a list of angel investors in India, with their contact details?

Angel Investors

Brand Marketing Manager

Hi founders / early startup teams here,

Who are the investors you have seen that actually added value to the startup in terms of consistent mentorship across tech/growth? 

I am not talking about super angels who just come with a large brand value, we have a good share of that. But basically people who add value in the startup journey 

Thanks

Which are the best angel investors in India?

Founder

What should I do to reach 100 cr in 10-15 years?

I'm an ambitious person who can work his ass off. But I lack direction, I don't know what I should do to get there.

Any answer can give me a better perspective. But please refrain from questioning the ambition.

I'm in tech and I make 22 lacs/year (4 years of exp)

My current portfolio split up:
6 lacs - Nifty 50 MF
5 lacs - FD
10-20 lacs - real estate

20 lacs to 100 crores

1. Wake up at 4am 
 2. Plan the day ahead by brainstorming new ideas for profitability 
 3. Go to gym, invest in your body 
 4. Reach out to your customers before your morning coffee, helps set the tone for the day. 
 5. Rob a bank 
 6. Repeat till you reach your target of 100 crores.

Analyst

Where did you work and how much money did you make?

Asking as it looks like a lot of promise of ESOPs and wealth creation has failed employees in this bloodbath slow growth, layoffs, and job changes.

"ESOPs made me rich af"

I have had ESOPS in 2 companies 
#1 - company got acquired ..I got 45 Lacs IN ESOP ...thats 1.5X of my last annualized salary  ( so additional salary for 18 months) 
#2 - Company became unicorn ... I quit and company bought my ESOPs . Got 2 Cr
That is 3X of my annualized salary

Company 1 - I had joined at very early stage ; Company 2 - I joined at mid-stage

UX/UI Designer

Guys... I made some good decisions and ended up having an opportunity to pay myself 36 LPA but, that means, about 9.4LPA tax.

What do I do? I want to get a home loan so keeping a higher salary would make the banks happy but then I also lose almost half of it to taxes.

Any advice from high earners and other fellow startup founders?

Tax 😨😨😱

How to save income tax when you for a US based startup and pays you in dollars?

I have an MVP version of a startup idea. No revenue yet. Someone is keen to angel invest. How does this work? Can someone answer these questions for me?

- If suppose Person X puts in 50L, how do I value my company and thereby equity? 
- How do I authorise and distribute shares?
- Someone mentioned I should do a SAFE - can someone explain how'd that work and would that be a better option than choosing a random number
- If I give 20% of company for 50L, how does that change if I raise a future round? Do I issue additional shares?

Anyone who has had experience here will help

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