Category: General Corporate, M&A and VC/PE

In Part V of this series, we discussed the intricacies of negotiating the SSA in the context of VC funding. Next would be to focus on another crucial document in the investment process – the shareholder agreement (SHA). The SHA governs the post investment inter-se relationship between the shareholders of the startup, including the VC fund. In this article, we will explore important negotiation points in relation to the SHA and how founders can navigate this agreement while safeguarding their interests and minimizing potential liabilities.

In Part IV of this series, we discussed that the SSA records the terms and conditions of issue of shares to the VC fund, and the obligations of each of the parties to facilitate the conclusion of the investment. When negotiating the SSA, it is crucial for founders to understand the obligations they take upon themselves and their startup. It is common for founders to agree to overtly onerous obligations in the SSA in the interest of quickly closing the investment round. We have discussed below some of the important heads that are usually covered in an SSA and the nuances that founders should keep in mind.

In today’s fast paced lifestyle, it is difficult to catch shows at their scheduled timings on cable television. But over the top video (OTT) platforms have drastically changed the way we consume content. An OTT platform essentially provides direct media streaming services over the internet, skirting traditional cable providers. All you need is a stable internet connection and an electronic device – both easily accessible today. The COVID-19 pandemic has only accelerated the rate at which OTT platforms have been progressing. OTT platforms are giving a tough competition to other mediums of entertainment like, traditional television and the cinemas. With the increase in internet accessibility, cricket-frenzied masses can now catch their heroes batting a six, on their mobile phones via OTT platforms. What’s interesting is that users from all age groups are now “binging shows” on streaming platforms, and that too in various local languages. This article analyses the regulatory regime that applies to OTT platforms in India and its impact for investors in the sector.

Once the term sheet has been negotiated and signed by the parties, the transaction moves to the process of subscription. The investment process commences with the VC fund initiating their due diligence and proceeds further with negotiation and signing of the detailed transaction documents. Once the conditionalities are fulfilled by the founders and startup, the VC fund wires the investment amount to the startup; and closes the funding round. What processes are followed from signing of term sheet to closure of funding round? How do the founders and startup negotiate and navigate through the conditionalities imposed by the VC fund? How should the founders and VC fund deal with the issues highlighted by the due diligence teams? And what is a win-win situation for all parties involved? We have touched upon these aspects in this Part IV of the VC Series.

When founders are offered a term sheet by a VC fund, they are in a rush to close the deal as soon as possible and start using the funds. So, should they go ahead and sign the term sheet? Of course, yes. But they should first understand the terminology used in the term sheet and how it impacts the startup, its founders and the VC fund. We have tried to explain the meaning of some important jargons stated in the term sheet, their importance and legal implications. Founders would do well to read through the term sheet carefully, understand the legal implications and negotiate to achieve a balanced position.

As of 2021, India has the second largest armed forces and the third largest defence budget in the world. However, historically, the defence sector in India has been a monopoly for public sector companies. In 2001, the defence sector was unlocked for domestic private businesses subject to certain licensing requirements. This was also the same time foreign investors were permitted to invest in the defence sector. Initially, foreign direct investment (FDI) was permitted up to a maximum of 26%. Over the years, the FDI cap has been substantially increased and currently stands at 100%, subject to certain conditions. More recently, due to external aggression from neighbouring states, the Government has been keen to further develop the Indian defence manufacturing sector. The thrust has been to encourage the development of indigenous solutions for its defence requirements and reduce its external dependency. In this article, we will discuss the opportunities for foreign and domestic investors in the Indian defence industry.

Initial discussions between founders and VC funds are usually centred around the business and valuations. When commercial discussions materialise, the first step towards the investment is execution of a term sheet. But when the VC fund offers a term sheet to the founders, it comes with certain legal terms and conditions – what are those terms and conditions? In Part II of the VC Series we discuss the approach to negotiate a term sheet – the need to understand the implications of the legal terms used in the term sheet and the market standards in India

Over the last few decades while India went through radical changes, so did the world of venture capital (VC) financing for start-ups. While seasoned institutional investors are well versed with the legalities of VC financing, first-time founders are often struggling to find their feet in the journey. Likewise, first-time investors in India also grapple at times with adopting some of the market standards that have been established in the Indian market. This series is an endeavor to offer guidance to first-time founders and investors in India. What should they do? How should they do it? What are the accepted VC practices in India? We have tried to answer these and other questions.

The conventional idea of schooling has undergone a drastic change over the last century. Schooling has evolved with the integration of technology that has enhanced both learning and teaching experiences. The prevailing Covid-19 pandemic has only accelerated this trend by further embedding technology into the learning process. The result has been that tech savvy students now use engaging apps and attend online courses; seamlessly enhancing education despite the lockdown caused by the pandemic. This fast-emerging sector is better known as education technology (EdTech). The essential aim of EdTech is to make learning more fun by using interactive methods of teaching and in the bargain improving the standard and quality of education. This article analyses the regulatory regime that applies to the EdTech sector in India and the emerging opportunities in this space.