Brad Feld - Do More Faster India

One of the things I’ve learned as a founder and as a mentor is that everyone is learning, because creating a new business is, well, new. There aren’t any easy answers and ideas; there are not even existing answers to questions you need to answer. You have to explore and test everything. This is true for both mentors and founders and no matter how successful someone is, they can always learn. That’s what makes being a mentor exciting. But as a mentor, you should never feel that you’re in a one‐sided relationship, that you’re providing all the ideas and all the energy to the founder. So, as a founder, find out how you can provide value to your mentors and make a point to offer them your help or better yet, explore something together.

Mentors will help founders who they believe have a lot of potential and where the mentor feels that a founder can learn from them and their business. If you’re a founder, don’t be shy about asking for a mentor’s help. It will build long‐term personal and professional trust for you, just as it has for me.

To make a mentor relationship truly mutual, you have to be willing to ask for help. You already have your list of qualities that you want from a mentor, but now you’ll have to think about how you want them to help you. Do you need advice on strategy, or operations? Do you need them to make introductions, help with financing, or provide advice on how to hire the right people?

Those are the easy things to ask a mentor; the difficult conversations are the follow‐up questions, the ones where a mentor doesn’t follow through on a commitment made to you. How do you get a mentor to follow up on something they promised you?

I’ve run into this situation a lot, as a mentor and as a mentee, so you should expect it to happen to you. I’ve found that a lot of times a polite follow‐up question works great, because a lot of mentors are busy and your requests can get lost or pushed aside. I always try to craft a follow‐up question that will provide them an option of “I can’t do it now,” or “no.” It’s better to have an answer from a mentor rather than a nonresponse.

As a mentor, if I say I’m going to help a founder, I help them. I don’t talk a big game and not follow through. But if I let things slip, then I expect a founder to (politely) remind me that I promised them something. Mentors and mentees should both feel comfortable holding each other accountable for commitments.

Finally, realize that many mentor relationships don’t work out. If you find that a mentor is not working out, it’s okay to talk with them frankly and end the relationship. If you find that a mentee isn’t doing what they said they’d do, it’s okay to talk with them frankly and terminate the relationship. If you have developed a relationship based on trust and mutual respect, parting ways will not be a big deal for founders or mentors.

Sharda Balaji

Sharda is founding partner of NovoJuris Legal, an innovative new-age law firm specializing in corporate, private equity, fund formation, fund investments, technology, cross-border transactions, IP, mediation, and settlements. NovoJuris is consistently ranked top 5 in India's private equity placements and has participated in 360+ transactions representing entrepreneurs, VCs, acquisitions, and exits.

India is gaining the world’s attention with the very high number of startups and unicorns. While the government is continuously making strides in ease of doing business in India, there are a lot of things—like regulations—that can derail a good idea from getting to the market. If you’re starting a business, then legal advice is certainly advisable, especially from lawyers who understand the path from starting up and scaling up exponentially. As a lawyer who has worked with hundreds of startups, I wanted to provide startup founders with an overview of the legal challenges involved in starting a business so that you can budget your time and resources effectively.

The first thing to consider is, where will you incorporate? With 29 States and seven Union Territories founders would like to optimize for talent, government‐friendly policies, networks of entrepreneurs, market demographics, and other factors, your company could have operational offices anywhere in India. But the registered office, that is, the address you provide to the Registrar of Companies (ROC), is the legal address of the company and that address has lots of consequences for the startup. Shifting the registered office from one state to another is a long process, so choose your location wisely.

Upon incorporation, there are many registrations which are mandatory, such as professional tax, goods‐and‐services tax, and shops and establishment tax for the office location. If the registered office is to be shifted, then all of these registrations will have to be modified to reflect the changed address.

A second consideration about location has to do with whether you anticipate a global presence. Many startups would like to have their holding company in other parts of the world for a variety of reasons, like raising further rounds of capital, being closer to the customer, tapping into larger markets, and having opportunities to merge with an international company or be acquired by or acquire an international company. But Indian regulations make it tough for resident Indian founders to remit capital into such a holding company while still wanting to have a subsidiary in India which would provide software development and other services. The regulatory policies such as Liberalized Remittance Scheme or Overseas Direct Investment are complex to comply with.

It is a tad easier to start the holding company outside India than to start in India first and then flip over the holding structure. So, if you believe that your company will eventually want a global presence, think carefully first about where you locate your initial business.

It is also important to consider the Place of Effective Management (POEM) by considering the location of the founder, where the management and control resides and other parameters, in order to ensure that tax jurisdiction is clear. You can’t register your company in a place with liberal tax policies, for example, while actually conducting business from another location. The POEM and legal registration must match.

After you decide on a location for your startup the next critical decision that will have a big impact on your business is the legal structure you choose for incorporation. All of the typical corporate forms (private limited company, limited liability partnership, or partnership) will work for startups, but if you need to raise capital, the private limited company is the appropriate structure.

If you started your company somewhere else in the world and you wanted to test the waters in India, you wouldn’t have to necessarily incorporate but could instead operate as a liaison office or a branch office, with prior permission of Reserve Bank of India. There are very few activities permitted for a liaison or branch office. However, a subsidiary company structure has many benefits. You will note that a venture capitalist would invest into a holding company.

Expanding into India through a subsidiary company structure provides the ability to be funded through equity, debt, or raising invoices for services provided to the parent company. All subsidiary companies are treated as domestic and are taxed accordingly.