The Challenges of Raising Foreign Money for Indian Startups
This blog explores the challenges Indian startups face when raising foreign money. From paperwork and compliance to taxation and re-domiciling outside India, discover the obstacles startups must overcome to receive a term sheet from a cross-border venture capital firm.
Rahul Mathur
Now: Building @Insurance_Dekho Earlier: Founder @VerakInsurance (YC W21; acquired) Hiring for Eng, Marketing, Sales & Ops roles
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When your company gets a term sheet from a cross border / foreign venture capital firm - you & your team get super excited...
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
Until - reality hits: Many VCs require Indian startups to re-domicile outside India (e.g. Singapore, Delaware etc) as a prerequisite to wiring funds: -
I've spoken with 1000s of Indian biz owners in the past 2.5 years: Each of us don't look forward to compliance, taxation, paperwork etc within India
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
Imagine this: Now, to raise foreign money - you have to do paperwork, compliance, taxation etc in India AND in one more geography -
When we had incorporated Verak in Delaware 2.5 years ago, there was one person who was always available on WhatsApp to share knowledge / insights about running a cross border business - Anand @getak100 (who was a YC alumni)
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
This is where things get fun / interesting: -
Running a cross border structure has unique challenges:
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
1. Need an address for official communication in EACH jurisdiction
2. Need to comply with various local laws in EACH jurisdiction (constant change)
3. Indian <> Foreign legal / accounting partner aren't always 100% aligned -
TL;DR - this becomes a distraction from building your business.
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
There hasn't been a solution until Anand set up @InkleHQ (https://t.co/byG8UGHd4x) - a one-stop compliance offering for USA domiciled cross border companies.. -
They've literally done "everything" as a service:
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
1. Tax filing
2. Regulatory compliance
3. Virtual address
4. Lawyer <> CPA communication
5. Transfer pricing templates
6. Cross border wires
FYI: Insane depth to solve the {X} - {Y} cross border company structure problems ! -
IF you're running a company which has operations in Delaware (USA) - due to YC funding, investor requirements or global clients (e.g. SaaS) - do check out what @InkleHQ has built.
— Rahul Mathur (@Rahul_J_Mathur) March 29, 2023
This is a solution which I wish I had on Day 0 - would have saved a lot of precious time early on!