Author Archives: Aristotle Consultancy
Starting a business overseas can be an exciting time for an entrepreneur. There are many people who dream of starting a company in another country, but very few of them actually go through with it. They are missing out on a huge amount of potential because opening a business abroad comes with a lot of key benefits.
These are the main reasons why now is the time to start considering a business move abroad.
Open Up Untapped Markets
The biggest problem entrepreneurs have today is that they are constantly competing with others in their home country. Getting a unique idea is nearly impossible, and the chances are that there are at least a hundred other companies with similar concepts. Standing out from the crowd can be hard, but it’s not the same all over the world.
Something found in India could be non-existent in a country like Canada. Establishing a base of operations in another country could open up a completely new base of customers.
A lot of countries have problems attracting foreign investors and businesses. To encourage people to come, they put the potential for tax cuts and grants on the table. Come up with a great business idea, agree to move to that country, and you can get a boost right from the beginning.
Just make sure that you’re weighing the pros and cons before you bother to chase these incentives.
Better Business Environment
Some countries are notoriously anti-business. That’s why more and more companies are deciding to move to other parts of the world where they don’t have to deal with the same bureaucracy.
More favorable rules can allow you to run your company without worrying about the paperwork that comes with running a company at home. Once you have your second citizenship you can get right to work with running your company.
More Business Recognition
Brand visibility is a major concern for newer companies. One of the first things to do when doing business in another country is to establish your brand. Many companies’ set up operations in their home country and then open a branch in another part of the world. This extra brand recognition makes it much easier to gain customers, and it gives your brand a sense of credibility.
Bring Your Business Back to Life
Not all entrepreneurs decide to start overseas. A lot of entrepreneurs decide to move overseas. Entering an overseas market can do a lot to bring an ailing business back to life. Companies that find themselves operating in saturated markets can acquire some breathing space by moving overseas.
Finding new customers and new outlets can completely turn your fortunes around.
How Can You Start a Company Overseas?
This is not a decision to take lightly. It’s something that you have to give a lot of consideration to because it can easily go wrong. If you don’t conduct research into your target market and execute your launch strategy properly, you could easily lose a lot of money.
So other than your target market what do you have to take into account?
You need to think about the rules and regulations of that country. The way things are done in other countries may be entirely contradictory to what you’re used to. Be prepared to adapt to a new culture and new business ideas that are completely foreign to you.
Consult a legal representative with experience in working with new companies in the country of your choice. They will be able to update you on what you need to know and what you have to be prepared to do in order to conform to the various rules.
Source – Entrepreneur India
Earlier this month, the Central Board of Direct Taxes (CBDT) issued a notification, repealing the much talked about angel tax in a bid to boost entrepreneurship in the country. However according to investors, the move has serious limitations and will only help a few start-ups owing to multiple riders associated with the definition of a start-up.
In a notification on June 14, the CBDT announced an amendment to Section 56(2) (viib) of the Income Tax Act. Under this, money raised by start-ups from domestic angel investors will not be taxed as income even if the investment exceeds the fair market value of the start-up’s shares. So far, the so-called extra inflow was taxable as income from other sources under Section 56(2) of the Income-Tax Act. It was charged the corporate tax rate which resulted in a tax of over 30%.
According to the government, an entity will be considered a start-up till five years from the date of its incorporation and if its turnover for any financial year has not exceeded Rs25 crore.
It is also supposed to be working towards “innovation”, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property.
In order to obtain the tax benefit, a start-up needs to get itself registered with the Department of Industrial Policy and Promotion (DIPP).
The catch is that out of multiple start-ups that will apply for this certification, not all will be eligible for that.
“The presumption is not everybody will get a certificate … The number of start-ups that have applied is far higher than what has been approved and that just tells you that there are many who will be just left out of the certification process for various reasons,” said Padmaja Ruparel, president at Indian Angel Network.
According to Dheeraj Jain, angel investor and partner at Redcliffe Capital, a UK-based hedge fund, while the government’s intentions were right, the on-ground reality post execution is different. “The Indian taxation system in itself is highly complicated, our government should endeavour to simplify it in order to give a much required impetus to entrepreneurs. Abolition of this tax after adding so many criteria does not help our situation, in fact it only adds another layer of documentation,” he said.
Ruparel also said that defining criteria such as “innovative” is subjective. “What is innovation? Those who are not “innovative” they will flip out of the certification process. There will be many who will not get covered. They will continue to be subject to section 56,” she said.
Sunil Goyal, founder and chief executive officer of YourNest Angel Fund termed the move as merely an incremental step. “The start-up needs to be registered and the process of that particular application, the criteria and the approval process is all very tedious,” he said.
Source – Livemint
Delhi-NCR has emerged as the most funded city in 2016, according to a report by startup analyses firm Tracxn. In the first six months of 2016, Indian startups raised $1.8 billion, out of which Delhi-NCR received $917 million.
This was helped by $250 million and $200 million funding raised in February by Gurgaon-based Ibibo Group and Delhi-based Snapdeal respectively.
Bengaluru was the second most funded with $489 million, followed by Mumbai with $296 million.
Pune and Hyderabad took the fourth and fifth spots, with $59 million and $4.6 million respectively.
The country’s capital also led in the number of deals (155). The average ticket size was $5.8 million.
This mirrors last year’s results for the same period, when Delhi NCR had been the most funded city, having raised $1.1 billion with an average ticket size of $10 million. Bengaluru and Mumbai had followed with funding of $951 million and $490 million respectively.
The funding amount has significantly reduced this year.
In the first six months of 2015, startups in the top five cities raised $2.7 billion, a billion more than this year’s figure.
Out of top 10 funding rounds this year, six were raised by e-commerce companies, four of which were based out of Bengaluru.
“Delhi-NCR has a disproportionate number of ecommerce startups. E-commerce is a mature sector and most of these companies were raising later stage funding rounds,” said Tracxn co-founder Neha Singh. “The other cities have more technology-centric startups.”
However, the number of funding deals rose to 402, from 324 last year.
This signifies that the space is seeing a correction in the investment size and not in the general attractiveness of Indian startups.
Nitin Sharma, principal at venture fund Lightbox Ventures, said this was a good sign for the ecosystem since the angel, seed, pre-series A round funding flow is still healthy.
“A correction was bound to happen since the funding had expanded almost eight to nine times between 2013 and 2015, faster than what the ecosystem could absorb efficiently and sustainably. It’s a good time to invest. Valuations aside, startups being built right now are more lean and mean, and hopefully more product UX (user experience) focused than discount-dependent. Of course, the near-term challenge has to do with later stage rounds,” he said.
In June, Lightbox Ventures had participated in a $30 million funding round for Gurgaon-based used car marketplace Droom.
The study finds that Ahmedabad, Chennai, and Jaipur are emerging as new startup hubs.
The three cities raised $34 million and accounted for 30 deals this year.
Source – The Economic Times
Startups in India for long have been the favorites of private equity and venture capital investors doling out funds. Banks, however, have been tough players on the funding scene. While banks in India (both private and public) are beginning to introduce initiatives to cater to startups, the efforts remain largely limited to regulatory guidance and corporate banking incentives. Some of them have stretched out as an incubator for startups but extending loans has been missing from most banks’ strategy to attract entrepreneurs.
JSW Ventures has received mandatory clearances from SEBI to invest $15 Mn (INR 100 crores) in early stage startups over a period of three years. The initial focus will be on technology-enabled startups operating in education, healthcare, financial services, SaaS and enterprise software space.
The fund will be overseen by Parth Jindal, son of group chairman Sajjan Jindal, and Managing Director, JSW Cement. Gaurav Sachdeva, a former executive of Brand Capital, has been appointed as Managing Partner.
As per an earlier announcement, JSW Venture Fund is eyeing a sweet spot of INR 3- 6 crore per deal, investing across seed to Series-A rounds of funding.
“Technology innovation is happening across sectors, from old-fashioned verticals like real estate to research-driven work being done in machine learning and artificial intelligence. We think that the opportunity to innovate across sectors and businesses is immense and want to be a part of this transition,” said Parth.
He further added that, “As an early-stage fund, we will not only provide capital but will remain strong partners of our investee companies as they grow, leveraging the JSW Group’s expertise and experience to help them blossom into world-class companies.”
Team, product-market fit, scalability and technology innovation will be the key criteria while assessing companies. “We typically like to lead investment rounds and work with founders helping them discover and solve business critical problems,” said Gaurav.
JSW Ventures is part of the $11 Bn JSW Group with interests in steel, energy, infrastructure and cement. The cue for launching this fund came in late 2015. The fund will invest proprietary capital of the family and not as a strategic investment vehicle.
Source – Inc42