Issuance Letter- Duly signed by one of the promoters/directors of the company on the company's letterhead. Format of the same will be provided.
Submission of projections for financial year
Submission of duly signed authority letter on the company letterhead
Funding- provides valuation of the company to determine the share of the company to be given to an investor in exchange for money
Mandatory Compliance- a necessary action that needs to be taken before raising an investment round
Why does startup valuation matter?
Valuation matters to entrepreneurs because it determines the share of the company they have to give away to an investor in exchange for money. At the early stage the value of the company is close to zero, but the valuation has to be a lot higher than that. Valuation at the early stages is a lot about the growth potential, as opposed to the present value.
How does one decide valuation for early stage companies?
It is generally calculated through Discounted Cash Flow method(DCF) which uses future free cash flow projections and discounts them to arrive at a present value estimate.
Do I need a higher valuation always?
Not necessarily. When you get a high valuation for your first round, you need a higher valuation for the next. That means you need to grow a lot between the two rounds without putting in the pressure of a down round.
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