A consistently active member of the startup ecosystem in India for many years, Jiten Gupta offers a unique perspective of the inner workings of what it takes to build a successful business.
\nJiten founded Citrus Pay<\/b> in 2010 (acquired by PayU in 2016) and Jupiter<\/b> in 2019. He is also an active angel investor.<\/p>\nEvolutions in the Fundraising Landscape<\/b><\/h2>\n
According to Jiten, a lot has changed in the startup world over the last decade. Funding is relatively more readily available now; but startups face more pressure to deliver specific returns at predetermined milestones. He believes that investors take this stance since the market is growing rapidly, and staying relevant depends on economic contexts.
\nHowever, Jiten adds, investors were reluctant even when he was raising funds for Citrus Pay in 2011. In fact, he had to make around 30 pitches and wait for eight months for a concrete offer. But Jiten notes that since the market he was operating in was an untapped one, the capital of $1.8 million he had raised for Citrus Pay lasted for two years!
\nOn the other hand, finding investors for Jupiter Pay was much easier. Jiten attributes this ease to good credentials and business relationships.
\nBut Jiten asserts that success is never guaranteed, especially since it depends largely on timing and the relevant economic contexts. \u201cIn a fast-moving market, expectations are <\/i>different, and you have to deliver constantly,<\/i>\u201d says Jiten.
\nJupiter-founder Jiten Gupta\u2019s Thumb Rules for 1st-time Fundraising and Negotiations<\/b>
\nHere are the thumb rules and negotiations shared by Mr. Jiten Gupta in the webinar:<\/p>\n1. Staggering your fundraising<\/b><\/h3>\n
For anyone planning to lead their company even 20 years after its inception, it is incredibly important to retain maximum equity. Jiten advises maintaining at least 40% to 45% in equity after the series C <\/b>round to ensure having a meaningful stake in the business. Negotiating the T&Cs of a Term Sheet or Shareholder’s Agreement (SHA) can be difficult, but Jiten advises understanding what matters to investors<\/b> while simultaneously setting boundaries on what is non-negotiable<\/b>, such as:<\/p>\n Jiten advises fundraising when capital is available, but only at the correct dilution. However, he cautions against sacrificing dilution levels and agreeing to unfair terms to pursue a higher valuation<\/b>. The seed for startups may be product ideas, but efficient management ensures growth. Jiten stresses the importance of creating a yearly plan with expenditure estimates and having quarterly reviews to track progress.<\/b> A consistently active member of the startup ecosystem in India for many years, Jiten Gupta offers a unique perspective of the inner workings of what it takes to build a successful business. Jiten founded Citrus Pay in 2010 (acquired by PayU in 2016) and Jupiter in 2019. He is also an active angel investor. Evolutions in the Fundraising Landscape According to Jiten, a lot has changed in the startup world over the last decade. Funding is relatively more readily available now; but startups face more pressure to deliver specific returns at predetermined milestones. He believes that investors take this stance […]<\/p>\n","protected":false},"author":15,"featured_media":5466,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[40],"tags":[54,131,152,200,264,267,391],"yoast_head":"\n
\nAnything less than 40%, and business owners run the risk of being at the mercy of shareholders and having to beg for more stocks and stock incentives. \u201cYou lose interest and become like any employee who holds stock options,<\/i>\u201d he says.
\nHowever, retaining equity is unimportant if the plan is to sell the company after 4 or 5 years. <\/b>
\nBut let\u2019s work backward, and take a look at how new business owners can stagger their fundraising to retain maximum equity:<\/p>\n\n
2. Dealbreakers: what should you be firm on?<\/b><\/h3>\n
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3. Determining valuation<\/b><\/h3>\n
\nValuation is irrelevant without equilibrium, and the amount of capital raised at the desired dilution level should take precedence. This automatically filters out the extra capital.
\nJiten asserts, \u201cWith equilibrium, goals become clearer, and you have a better outcome.\u201d<\/i><\/p>\nBuilding Leadership Team and Managing Capital<\/b><\/h2>\n
\nThis method keeps businesses accountable and ensures financial responsibility while chasing growth. Additionally, Jiten counsels hiring a financial expert<\/b> who can manage and grow the capital, while simultaneously taking care of compliance and accounting responsibilities. \u201cYou can pretty much count on the capital and the salary of this expert being recovered in no time if they do their job well and manage the capital wisely,\u201d<\/i> he chuckles.
\nLastly, it is essential to have employees invested in the company\u2019s growth and who have the skills to expand with it. Hence, it\u2019s crucial to hire for fit and scale<\/b>.
\nSARs vs. ESOPs<\/b>
\nEmployees increasingly understand the value of company stocks, and while rampant buybacks of Employee Stock Ownership Plans (ESOP) may reinforce their value, they are restrictive in terms of exercise rights and tax benefits.
\nFor these reasons, Jiten favors Stock Appreciation Rights at Jupiter. SARs are tax-friendly and afford employees flexibility and choice<\/b> while cashing out, either for stocks or cash. They simply work better in the long-term incentivization of employees.
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