Mindful Musings

Last week's Budget 2023 had many amendments that are still brewing with tense conversations. One such change is the taxes on startup capital raised. While in 2019 startups excluded from the angel tax exhaled a sigh of relief, the dreaded levy on capital receipts is now reinstated.   What is an angel tax and why was it imposed in the first place?  In simple terms angel tax refers to the tax levied on the amount of funding obtained by businesses from angel investors. It was mainly introduced in India to avoid tax evasion via the guise of angel investments. The whole agenda of bringing this act was to prevent money laundering, the conversion of black money into white by round-tripping, etc. What is round tripping and how does it come into play with the angel tax?  Round-tripping refers to the act of routing funds via an overseas system in order to make it appear as a legitimate transaction when it is actually just a domestic transaction.  Let's take a simple exampl...

Let's talk about the Berkus valuation method for startups  We see a wide variety of methods in evaluating a startup, but one of the best simple, and easiest rule of thumb for pre-revenue startup valuation is the Berkus method. The Berkus method is a systematic process used for assessing a startup's viability in its early stages. It was named after its inventor Dave Berkus, a well-known Californian angel investor, and is said to be a popular tool in the startup world for determining if a company will succeed. It's common knowledge that nine out of ten new enterprises fail. Uber, Airbnb, Slack, and other unicorn companies only make up 1% of all startups. For first-time founders, the success rate is 18%. These cold stats are not to discourage any entrepreneurs but in fact, encourage them to work harder and smarter. The lack of revenue data and the fact that even if the product is on the market, it is nearly always an MVP are some of the biggest difficulties for an early-stage ...