Thursday, February 6, 2014

India needs 1 Paisa Company

1 Paisa Company
India is going through a major transformation where Startup ecosystem is booming like never before and the overall energy and sentiment has been electrifying. With some of the recent acquisitions by biggies like Google, Facebook, Apple etc. of few Indian Startups, it proves that we have now become a global force which cannot be stopped.

The Indian Government has started talking about it and reckoning it as the game changer in coming years. They have been trying to come out with various schemes and policies to boost interest and investments in Startups.

When everything is going in the right direction, there are few things which the Indian Startups deserve to strengthen the ecosystem, attract good talents and stay competitive globally. Being closely associated with the ecosystem through eLagaan, I had an opportunity to experience the pains and solve many of them by challenging the existing norms.

For last few quarters I have been toying around with this idea of 1 Paisa Company and firmly believe that this is one thing which India needs badly to align itself to best global practices. What is 1 Paisa Company?? Lets look at it in greater detail:

What is 1 Paisa Company?
* 1 Paisa Company refer to a private limited company whose shares have a face value of 1 Paisa (INR 0.01)

* When someone incorporates a Private Limited Company, the Indian Company Law mandates that it should have INR 100,000 as the minimum authorized capital.

* Most of the companies incorporate a 1 Lac capital with either 1,000 shares (of face value INR 100) or 10,000 shares (of face value INR 10) or 100,000 shares (with face value of INR 1).

* The face value of one share is a derived figure: Authorized Capital divided by Number of constituent shares.

What difference does 1 Paisa Company makes?
* It increases the liquidity and affordability of shares drastically (atleast 100x considering current minimum of INR 1 face value).

* It gives startups an opportunity to offer much much higher stocks to employees and other stake holders without diluting the essence of it.
Lets imagine you have incorporated a company with INR 1 as face value (which is lowest as per current trends) and have allotted a pool of 15% for ESOPs on a INR 200,000 capital base. This offers 30,000 shares for ESOP pool (which should typically be reserved and distributed among 50-100 team members). Lets talk about an employee, whom you want to give about 100 shares of the company (which still works out to 0.05% of the company). As per standard ESOP practices, you offer these 100 shares over a 4 year vesting period. So when you are hiring this employee and selling him the startup story, you say "Hey, I shall give you 100 stocks of our company if you work with us for next 4 years. So you get Twentyyyy Fiiive (25) shares per year for every year of your job with us". The employee gets tooooo excited hearing these numbers and says with a grin "Wow, thats a huuuuge number and I should certainly join this company :)
Lets look at the same scenario with 1 Paisa company. You have now 3,000,000 shares in ESOP pool. If you still want to offer same number of shares (0.05% of the Company) to him, it works out to 10,000 shares. If you feel this is bit high for him, you can look at reducing this to may be 5000 or 7000 shares or any other number that you deem fit. Imagine the reaction of the hire, when you give him these numbers.

* When startups raise funding, it also helps keep check on the premium paid per share, which is a cause of concern for many investors. Having handled multiple levels and rounds of investments for our clients @ eLagaan (right from angel/ seed to venture), it has been a common practice for investors to ask increase of authorized capital to accomodate abnormal share premium that results because of low number of shares. This is more true for larger round of funding which runs  from USD 200K to few Millions.
Lets assume that you have a INR 200,000 Authorized capital company with 200,000 shares (of face value INR 1). You are raising about USD 1M (or INR 60M at current rates of INR 60/ USD). The deal is for 25% ownership (50,000 shares). The share price works out to INR 1200 per share (INR 1199 as premium and INR 1 as face value). This price is very high and investors typically want it in the range of INR 200 - 400 per share. The only choice then remains is to increase the authorized capital (by paying associated fees) to increase the consituent shares. The reasons why investors want this are many:  
* It is challenging to justify such high premiums when the company has not even started operations properly.
* The risk factor for investors goes very high with extra-ordinarily high premium. 
* India now has a new law, where any amounts received in excess of fair value, are taxable.
In the same example, with 1 Paisa company, the share price works out to INR 12 only (premium of INR 11.99 and face value of 1 Paisa) without any changes or need to increase the authorised capital (thereby, resulting in substantial savings on time and costs to make required changes).

Both the examples shows the number game, and may or may not yield much direct financial benefits to the company depending on their specific scenario. Irrespective of the direct financial benefits, the numbers do give an edge and many indirect benefits to companies. Currently the companies spend lots of cash to hook on to the talent pool, to keep them motivated etc. as they donot value the ESOP numbers much.

What are the global best practices?
Most of the developed countries allow promoters to choose their face value (XXX amount of authorized capital divided into YYYY shares as per promoter's preference). The promoters generally follow some best practices prevalent in the Industry or takes opinion of their attorneys before deciding on right numbers in their scenario. e.g. in USA, most of the times we see that companies are incorporated with USD 1000 as capital base and underlying shares in the range of 10M to 100M (in either scenario the face value works much lower than 1 cent)

* Few places, it is also possible to form companies without any face value.

What Indian Company Law says?
The Indian Company Law doesnot specify any limits (minimum or maximum) for face value and is silent on the same.

* The Company Law specifies a minimum of INR 100,000 as the authorized capital to start a Pvt. Ltd. company. Currently the standard practice in India is INR 10 face value companies (most of them), INR 100 and INR 1 face value.

* SEBI (which governs the rules for listing of a Public Limited company in a stock exchange) specifies minimum face value of INR 1. This is no way related or connected with a Private Limited Company.

Summing Up
I strongly believe that Indian companies do deserve fair platform to empower themseleves with globalbest practices so as to ease out lot of their pains and get more bandwidth to focus on their core activities. Many startup forums and meets have highlighted the fact that HR is one of the biggest challenge for startups in the country. Its time that India should see rise of 1 Paisa company. The advantages are numerous and disadvantages none except for some age old thought processes and adamancy on how it can be done.

We at eLagaan has already started our journey to incorporate India's 1st 1 Paisa Company (LawArmy India Private Limited) at Bangalore. I shall continue to share the experiences that we encounter during the process to make this change happen. Stay tuned here for updates on the same.

If you also believe in power of 1 Paisa Company, please visit our exclusive page on 1 Paisa Company and register your petition. Also visit our Facebook page to share your feedback, comments or Likes.

Lets come together to make this happen.


About the Author: Navin Rungta is co-founder of eLagaan. He is a passionate Entrepreneur committed to ease out multiple pain points existing in Legal, Taxation and Business compliance domain using technology as a major disruptive force to change some of the age old practices prevalent here. Having worked on both sides of the table - Customer & Service Provider, he had opportunities to experience the pain points on both sides and is working towards addressing it.

Tuesday, January 1, 2013

Steps to Incorporate a Private Limited Company

Main Steps:
1. Getting DIN (Director Identification Number) for every proposed Director
2. Getting Digital Signature for one of the Directors
3. Getting Name approved for proposed company
4. Incorporating the Business

Document Checklist
1. For DIN
  • # Valid ID Proof: 
    • * PAN Card copy - Mandatory for Indian Citizens (Resident or NRI)
    • * Passport Copy - Mandatory for Foreign Nationals (whether residing in India or not)
  • # Address Proof - For the Current Address - should be latest (not older than 2 months) - Can be any of these:
    • * Utility Bills like Telephone, Electricity, Gas, Water Bill etc.
    • * Government ID & Address proofs like Driving License, Passport, Aadhar Card, Voters ID card, Ration Card etc.
    • * Bank Statement (not credit card statement)
  • # Indian Passport Size Colour Photograph (dimensions - 45mm High x 35mm wide)
  • # DIN Affidavit & Declarations - to be supplied by eLagaan team
Notes: For NRIs & Foreigners (who is not residing in India) - All documents needs to be Notarized from a Public Notary of the Country where the person is residing. For Indian Citizens, a permanent address proof of India is also needed (any document as per list above)

2. For Digital Signature
  • # Valid ID Proof: 
    • * PAN Card copy - For Indian Citizens (Resident or NRI)
    • * Passport Copy - Mandatory for Foreign Nationals (mandatory)
  • # Address Proof - Latest (not older than 2 months) - Can be any of these:
    • * Utility Bills like Telephone, Electricity, Gas, Water Bill etc.
    • * Government ID & Address proofs like Driving License, Passport, Aadhar Card, Voters ID card, Ration Card etc.
    • * Bank Statement (not credit card statement)
  • # Indian Passport Size Colour Photograph (dimensions - 45mm High x 35mm wide)
  • # Signed Digital Signature Application Form - to be supplied by eLagaan team
Notes: For NRIs & Foreigners (who is not residing in India) - All documents needs to be Notarized from a Public Notary of the Country where the person is residing.

3. For Company Incorporation
  • # Subscriber sheets for Memorandum & Articles (MoA & AoA) - to be supplied by eLagaan Team
  • # Address proof of the premises where the company shall be incorporated
    • * Rental Agreement - Template can be obtained from eLagaan team
    • * Any Government Document specifying details of the Premises Owners. e.g. Electricity Bill, Municipal Tax paid receipt, Registered Sale Deed etc.
    • * No Objection Certificate (NOC) from the Premises owner to use the premises for Company Incorporation - Template can be obtained from eLagaan team
Notes: For NRIs & Foreigners (who is not residing in India) - All documents needs to be Notarized from a Public Notary of the Country where the person is residing and also Apostilled from designated office (Public Apostille Officer or Indian Embassy).


Additional Requirement when incorporating a Subsidiary Company in India
  • # MoA, AoA & Certificate of Incorporation of Parent Company
  • # Board Resolution authorizing formation of a subsidiary company - To be supplied by eLagaan Team
  • # Board Resolution authorizing specific persons to represent the Parent Company and sign on its behalf - To be supplied by eLagaan Team
  • # Request Letter to Registrar of Companies - To be supplied by eLagaan Team
Notes: For Foreign companies - All documents needs to be Notarized from a Public Notary of the Country where the company is registered and also Apostilled from designated office (Public Apostille Officer or Indian Embassy).


Monday, May 7, 2012

eLagaan makes attending TiECON 2012 affordable - Save $450

eLagaan makes TieCON 2012 affordable by providing $450 worth of coupons (that's upto 75% of cost) ticket prices. Here is what we have to offer:

  1. [Increased] $150 OFF 2-day or  $70 OFF Ticket prices 1-day Conference and Exhibit Pass. To learn more about events and pricing visit  http://www.tiecon.org/ 
  2. $100 voucher for advertising your business on Google Adwords, when you signup for a Google Adwords account. Learn more about google adwords at http://adwords.google.com/ . Voucher valid for limited time. 
  3. $100 Voucher for eLagaan Business Services. Valid for any of the business service that you take from eLagaan. Learn more about eLagaan at http://elagaan.com . Voucher valid for 1 year, voucher applied towards eLagaan fees and can not be applied towards legal or govt payments or personal services. Complete voucher amount be used in one use.
  4. $100 Voucher for advertising your business on BayAreaDesi. To learn about BayAreaDesi visit http://bayareadesi.com Voucher valid for 1 year. Complete voucher amount to be used in one use
Total of $450 saving - $150 Off tickets + $100 Google adwords + $100 eLagaan + $100 BayAreaDesi

To get the discount & vouchers all you to do is send us an email at support@elagaan.com ! There is no purchase necessary or any kind of hooks/strings. However we can only give these vouchers to very limited number of people, so hurry up !



And while you are there, do visit our booth at TiECON !


Reasons to attend TiECON 2012:

Networking. Meet thousands of fellow entrepreneurs. Exchange ideas, find a co-founder, build your team. Many companies are formed at this conference.

Learning. Over 100 speakers sharing their knowledge to help you succeed. They range from iconic companies (e.g., Google, Facebook) to serial entrepreneurs, top investors and industry analysts.

Mentoring. Chance to meet face-to-face with luminaries for a mentoring session.

Innovation Expo. Showcase of innovative startups.

TiE50 Awards. Prestigious award given to the 50 most enterprising startups every year.


Sunday, April 29, 2012

eLagaan sponsors Indus Heritage Day @ ICC, Milpitas, CA

eLagaan is happy to be a sponsor of the event Indus Heritage Day to be held at India Community Center in Milpitas, California.

Indus heritage day is a great initiative by three organizations ICC, PACC & 1947 Partition Archive. Its going to be a great event, so hope to see you there.

Event details:
Event Date:  Sunday, April 29, 2012 - 10:00am
Event Location:  India Community Center
10:00 AM (Come early for Breakfast!)
-Activities-

Indus seal, jewelry, hat making, ancient photo booth, Mohenjodaro walk-through, Indus inspired Henna art and more!
11:30 AM
-Film-

In Search of Meluhha: The Untold Story of Indus Civilization by emerging Pakistani film maker, Saqib Mausoof
12:00 PM
-Keynote-

"Ancient Cities of the Indus Civilization," by leading archeologist, Dr. Jonathan M. Kenoyer
1:00 PM
-Performance-

Indus regional folk Dance and Music by Xpressions dance company.

Visit http://www.indiacc.org/indus_heritage_day for more details of the events.
About The 1947 Partition Archive:
The 1947 Partition Archive is a grassroots, non-political, 100% volunteer run effort to document and preserve eye-witness accounts from ALL communities affected by the partition of British India, for future generations.
We are global citizens coming together to document the world's largest human displacement. Join us.
While we are late, as Partition occurred 64+ years ago, we are not too late. There are still those who hold vivid and important memories of the chaos that unfolded during Partition, the pre-Partition life and culture and the post-Partition changes/loss of a way of life. We are a people powered project that collects, archives and immortalizes these stories. Contact us to share your stories or to join hands with us in preserving memories before they are forever lost.
About ICC:
The India Community Center was conceived as a place where every generation of the Indian Diaspora could find comfort in various facets of their culture, preserve and practice unique traditions and celebrate festivals and social milestones in a welcoming environment. It was also designed to be a center where people of other cultures can explore and experience Indian traditions and values.

Tuesday, April 24, 2012

eLagaan featured on ET-Now TV (Starting UP by Sudhir Syal)

eLagaan was recently featured in Starting UP series by ET-Now hosted by talented Sudhir Syal.
The special segment covered the hot topic of "Startup Tax" which is currently heavily discussed among the startup circle.

Here is the clipping from the show:

To see the commentary by eLagaan skip over to 4:05min on the video.

About ET Now TV's Starting UP:

Starting Up captures the spirit of the Indian Start-up Community - it features the different elements of the startup ecosystem and profiles the journey of the most innovative Indian startups. To learn about Startup Up visit http://www.facebook.com/StartingUponETNOW

To learn about Economic Times (ET-NOW's parent org) visit http://economictimes.indiatimes.com

About Sudhir Syal:


Sudhir Syal is a qualified Computer Science Engineer, so qualified that he hasn’t written (thankfully) or been made to write a single line of code in his last 4 years.His career than saw him take him a linearly un-linear route with him dabbling in Finance, Technology till finally making his way to the hallowed (cold) studios of ET NOW, where he is today the Editor and Co-Anchor of the Starting Up show on ET NOW. You can reach him at http://www.sudhirsyal.com/

Some more Snapshots from the show:






Thursday, April 19, 2012

eLagaan exhibits at Foothill College, Los Altos, Califronia

It was a beautiful day here in Los Altos, CA at the Foothill College. eLagaan team had a fun time exhibiting its capabilities and meeting up with folks from the college. Thanks for inviting us.

Before the start of the event !


Friday, April 6, 2012

eLagaan is the Official partner of Asha for education event- Stanford University

eLagaan is proud to be the official online partner for the Asha For Education - Stanford University chapter (well known as asha-stanford) upcoming event this week.
So here is the deal, in USA holi is celebrated, not just for a day but for weeks, with various organizations organizing the event at various dates. Having said that Asha Stanford holds the biggest Holi event in the entire county. This year they are expecting 10,000 people to show up to play Holi, what Fun! They do an awesome job, and we are humbled to be one of their partners. 

Here is the details of the Asha Stanford Holi:
April 7th and April 8th, 11 am - 3 pm, Sandhill Fields, Stanford
Different experience! 2 days full of fun! Deserving cause!

Yes, you can get all that at one event! Asha Stanford brings you the best way to start off Spring 2012 Holi, the biggest communal celebration of the eponymous Indian festival in the Bay Area! 

Holi is all about celebrating the colors and vitality of spring, with family and friends and we figure about 5500 lbs of food-grade colors and tons of water should be enough to get you started with the celebrations! Your first time at Holi? Make sure you read below on how Holi works! Come join us in this day long party, and help us raise funds for education projects for disadvantaged children! 

No alcohol is allowed at the event. For details about he event visit http://www.ashanet.org/stanford/events/holi2012/

About Asha For Education:
Asha for Education is a non-profit organization dedicated to the support of basic education in India. Asha, which means hope in many Indian dialects, was founded at the University of California, Berkeley in 1991 and has since grown to over 66 chapters scattered throughout the United States, Europe, East Asia and India. Each of these chapters raises funds to support various education-related projects in India. 

Asha Stanford was founded in the fall of 1992 by a group of students who understood the importance of education and the need to provide such opportunities for the underprivileged. Today, the chapter draws members from a diverse group of students from Stanford University as well as Bay Area professionals. The aim of the group is to mobilize the Bay Area community to collectively support and provide financial assistance to grass-roots educational movements in India. Members of Asha Stanford attempt to maintain a close personal involvement with the organizations and projects which are funded. To maximize the effectiveness of our efforts, the group selects diverse projects. Asha Stanford works closely with other Asha chapters to ensure quality support is provided to educational efforts in India. Visit http://www.ashanet.org/ for details

About Stanford University:
Located between San Francisco and San Jose in the heart of Silicon Valley, Stanford University is recognized as one of the world's leading research and teaching institutions.
Leland and Jane Stanford founded the University to "promote the public welfare by exercising an influence on behalf of humanity and civilization." Stanford opened its doors in 1891, and more than a century later, it remains dedicated to finding solutions to the great challenges of the day and to preparing our students for leadership in today's complex world. Visit http://www.stanford.edu/ for details. 



Monday, April 2, 2012

eLagaan to sponsor an evening with Sramana Mitra (1M/1M) - hosted by OCC/BEMUG

eLagaan is happy to be a sponsor at the upcoming event with Sramana Mitra (1M/1M) for the upcoming event hosted by OCC, Bangalore & BEMUG.

The event is focused on "Do Customers Know What They Want?".

Here are the details of the event:
Date: 03 Apr 2012
Time: 06:30 PM - 09:00 PM (Followed by Networking over Dinner).
Venue: P.U. Quadrangle, Ground Floor, P.U. Building, Christ University, Hosur Road, Near Dairy Circle, Bangalore 560029 (Attention: No tobacco campus)
Parking: Within Christ Campus
Agenda / Proceedings:
- Welcome Note
- Entrepreneur Dysfunctions - Talk by Sramana Mitra
- Debate: "Do Customers Know What They Want?"
Sramana Mitra (1M/1M) & Team Vs Mukund Mohan (Jivity) & Team
Moderated by: Ravi Gururaj (Citrix)
-Vote of Thanks
-Followed with Networking over Dinner

Sramana Mitra has been an entrepreneur and a strategy consultant in Silicon Valley since 1994. Her fields of experience span from hard core technology disciplines like semiconductors to sophisticated consumer marketing industries including fashion and education.

As an entrepreneur CEO, Sramana founded 3 companies: Dais, Intarka and Uuma. Two of these were acquired, while the third received an acquisition offer from Ralph Lauren which the company did not accept.
As strategy consultant, Sramana has consulted with over 70 companies, including public companies like SAP, Cadence Design Systems, Webex, KLA-Tencor and Tessera among others. Her work has also included numerous startups and VCs, and she played Interim VP Marketing roles for seven such ventures. Sramana has a proven track-record in turn-arounds for both small private companies (Example: think3) and divisions of larger companies (Example: a $100 Million Business Unit of Cadence). She has also created major growth strategies through new market penetration, M&A, Industry Roll-ups, etc.

Sramana has a Masters degree in EECS from MIT and a Bachelors degree in Computer Science and Economics from Smith College. She is on the Board of the MIT Club of Northern California's Entrepreneurship Program (http://mitcnc.org/Entrepreneurship.htm).
Visit her site: Sramana Mitra on Strategy ( http://www.sramanamitra.com/ )



Friday, March 30, 2012

Why we moved from salesforce's desk.com to freshdesk

We recently moved eLagaan's support system from desk.com to Freshdesk. We just wanted to share our experience and reasoning of why we did this.
eLagaan was using Assitly which later became Salesforce's Desk.com. However we were not too happy with some of the missing features, but we were hopeful that the big daddy Salesforce.com will invest more money and we should have some of these obvious features.
But after waiting long enough, we started looking around for a better solution to enhance our user experience. We looked at many systems including revisiting desk.com, zendesk, OTRS, zoho & freshdesk.
desk.com has some good features. However some of the things that bothered us was:
1. Slow in feature releases
2. No way to allow customers to review their support request (past & new thru web)
3. Cost was high, add another agent and you pay $49/month

So why Freshdesk apart from the fact that they have a fresh design and a intuitive interface:
1. We needed a way for our customer to review and comment on their case. Freshdesk does an awesome job creating a login id for every case that opens
2. Price, we just loved the fact that first agent is free & any additional are $9/month. Hence overtime as we grow, our price is going to be manageable.
3. They seem to be adding features faster then anyone else. It shows they are hungry, and we will probably see more innovation from them in the future. In case of desk.com we saw the feature additions were more towards things like salesforce api etc, which are great features, but being a startup we needed more features locally then integration

Ofcourse there are few areas we would like Freshdesk to improve on (I don't think others have it either):
1. A way to open tickets via sms or notify people/agents via sms on updates
2. A good way to open case when called via phone (its not very complicated guys)
3. A way to subscribe users who open a case with us to a mailing list
4. Mobile support - don't need an app, but optimize it for mobile web
Overall we are very happy with Freshdesk for providing a great service for very reasonable price, thank you Freshdesk !
And in this war of Freshdesk Vs Desk.com , Freshdesk has our business !

Sunday, March 25, 2012

eLagaan to Sponsor Startup Weekend Delhi Education, India - Apr'2012

eLagaan is happy to be a sponsor company registration & other business services in the upcoming Startup Weekend Delhi Education to be held on April'13 - April'15 2012.
About Startup Weekend Delhi Education:
Startup Weekend Education is an innovative, non-profit, community-building event that brings together entrepreneurs of all backgrounds including software developers, designers, marketers and educators to build teams and credible businesses over an intense 54-hour weekend. Attendees have 60 seconds to make a pitch (optional), the pitches are whittled down and teams form around the top ideas. Next the teams proceed through a rapid roller-coaster of idea refinement fueled by expert coaching and customer validation. Finally, the weekend culminates with demonstrations of sustainable solutions to education problems in front of a panel of judges and potential investors. We tackle big problems like communication, access, cost, delivery methods and content availability all in the pursuit of making the act of teaching and learning more effective and accessible to all.