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Get professional assistance to create pitch decks, connect with investors, and close your funding round.
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Seed Funding for Startups in India: Complete Guide 2026
Seed funding is the critical first external capital that transforms promising startup ideas into scalable businesses. In India's thriving startup ecosystem, seed funding typically ranges from ₹10 lakhs to ₹5 crore and comes from angel investors, seed-stage venture capital funds, incubators, accelerators, and government schemes. This early-stage capital is used to build products, validate market assumptions, hire key team members, and achieve the initial traction needed for larger funding rounds.
The Indian startup ecosystem has witnessed remarkable growth in seed funding activity. With over 100+ active angel networks and seed-stage VCs, and government initiatives like Startup India Seed Fund Scheme and SIDBI Fund of Funds, early-stage founders have more funding options than ever before. Sectors like SaaS, fintech, healthtech, edtech, D2C brands, and climate tech are attracting significant seed investment interest.
Raising seed funding requires careful preparation. You need a compelling pitch deck that tells your startup's story, a financial model with realistic projections, a validated minimum viable product (MVP), and a clear understanding of your target investors. The process typically takes 3-6 months from initial outreach to money in the bank, involving multiple investor meetings, due diligence, term sheet negotiation, and legal documentation.
Before raising seed funding, ensure your startup is properly structured. A Private Limited Company is the preferred structure for investment, as it allows equity issuance and provides investor protection. Also consider getting DPIIT Startup India Recognition which provides angel tax exemption and access to government funding schemes.
At IncorpX, we provide end-to-end seed funding assistance to early-stage startups. Our team has helped over 500 startups raise ₹100+ crore in funding. From creating investor-ready pitch decks and financial models to warm introductions with our network of 200+ angel investors and VCs, we support you through every step of your fundraising journey.
What is Seed Funding for Startups?
Seed funding is the initial capital investment made in a startup during its earliest stages, typically before or just after the product is launched. The term "seed" is used because this capital is meant to nurture and grow the startup, much like a seed grows into a plant. Seed funding bridges the gap between the founder's personal resources and larger institutional investments.
At the seed stage, startups typically have a minimum viable product (MVP) or at least a detailed business plan, early customer validation or interest, and a founding team in place. The funding is used to further develop the product, acquire initial customers, build the core team, and prove the business model before seeking larger Series A funding.
Seed funding amounts in India typically range from ₹10 lakhs to ₹5 crore, though exceptional startups in hot sectors may raise more. Investors at this stage take significant risk because the startup has limited track record. In exchange, they typically receive 10% to 25% equity and often provide mentorship and strategic guidance beyond just capital.
The seed funding landscape in India has evolved significantly. Earlier, founders relied primarily on friends and family. Today, there is a mature ecosystem of professional seed investors including angel networks (Indian Angel Network, Mumbai Angels), seed-stage VCs (100X.VC, Titan Capital, Better Capital), accelerators (Y Combinator, Techstars), and government schemes (Startup India Seed Fund).
Key Characteristics of Seed Funding:
Investment Size:
Typically ranges from ₹10 lakhs to ₹5 crore in India, depending on sector and startup maturity.
Equity Stake:
Investors usually take 10-25% equity in exchange for their investment at the seed stage.
Investor Types:
Angel investors, seed VCs, accelerators, incubators, and government funds participate in seed rounds.
Use of Funds:
Product development, team building, market validation, and initial customer acquisition.
Did You Know?
India ranks third globally in the startup ecosystem with over 100,000 DPIIT-recognized startups. In 2024, Indian startups raised over $10 billion in funding, with seed and early-stage deals accounting for a significant portion. Notable companies like Flipkart, Ola, Zomato, and Zerodha all started with seed funding before becoming unicorns worth over $1 billion.
Who Can Raise Seed Funding in India?
Seed funding is available to early-stage startups that meet certain criteria valued by investors. While there are no strict legal requirements, understanding what investors look for helps you prepare effectively.
Ideal Candidates for Seed Funding:
Strong Founding Team: Investors invest in people first. A team with relevant domain expertise, complementary skills, and full-time commitment is essential.
Validated Problem: You should have identified a real, significant problem that people are willing to pay to solve.
Product or MVP: Having a working product, prototype, or detailed development plan demonstrates execution capability.
Market Opportunity: The addressable market should be large enough to build a venture-scale business (typically ₹1000+ crore market).
Early Traction: Users, revenue, partnerships, or strong engagement metrics validate market interest in your solution.
Structural Requirements:
Must be registered as a Private Limited Company (preferred by investors for equity issuance)
Clean cap table with founder majority ownership
No significant legal or compliance issues
DPIIT Startup India recognition (recommended for angel tax exemption)
Proper intellectual property ownership and documentation
Types of Early-Stage Funding:
Understanding the different stages of early funding helps you identify where your startup fits and what type of capital to pursue.
Pre-Seed Funding:
The earliest external capital, typically ₹5 lakhs to ₹50 lakhs from friends, family, or angel investors. Used to build MVP and validate the initial concept. Founders often retain most equity at this stage.
Seed Funding:
First significant professional investment, ranging from ₹10 lakhs to ₹5 crore. Comes from angel investors, seed VCs, or accelerators. Used for product development, team building, and achieving product-market fit.
Bridge Funding:
Short-term financing between major rounds, often from existing investors. Uses convertible notes or SAFEs to extend runway while preparing for the next round.
Series A:
First institutional venture capital round, typically ₹5 crore to ₹30 crore. Requires proven product-market fit, scalable business model, and significant traction.
Most startups raising seed funding are between the pre-seed and Series A stages, having validated their concept but needing capital to scale.
What Are the Key Features of Our Seed Funding Assistance?
Our comprehensive seed funding assistance is designed to maximize your chances of successfully raising capital. Here are the key components of our service:
1. Pitch Deck Creation
Professional, investor-ready pitch decks that tell your startup's story compellingly and address key investor concerns.
2. Financial Modeling
Detailed 3-5 year financial projections with revenue models, unit economics, and key business metrics.
3. Startup Valuation
Fair market valuation based on comparable transactions, traction metrics, and market potential.
4. Investor Matching
Connect with the right investors from our network of 200+ angels and VCs based on sector and stage fit.
5. Warm Introductions
Personal introductions to investors increase meeting conversion rates significantly compared to cold outreach.
6. Due Diligence Prep
Organize your data room with all legal, financial, and business documents investors will request.
7. Term Sheet Review
Expert review and negotiation support to ensure founder-friendly terms and fair deal structure.
8. Legal Documentation
Draft and review Shareholders Agreement (SHA), Share Subscription Agreement (SSA), and related documents.
9. Govt Scheme Assistance
Apply for Startup India Seed Fund, SIDBI schemes, and state-level funding programs.
10. Ongoing Support
Post-funding compliance, investor reporting, and preparation for subsequent funding rounds.
Benefits of Raising Seed Funding:
Seed funding provides much more than just capital. Here are the key benefits of raising external investment for your startup:
Accelerate Growth
Capital enables faster product development, quicker team hiring, and aggressive market expansion without bootstrapping constraints.
Investor Expertise
Experienced investors bring industry knowledge, strategic guidance, and lessons from other portfolio companies.
Network Access
Investors open doors to potential customers, partners, future investors, and top talent through their networks.
Validation & Credibility
Backing from reputed investors signals quality and builds trust with customers, employees, and partners.
Attract Top Talent
Funded startups can offer competitive salaries and ESOPs to attract the best engineers, marketers, and operators.
Focus on Building
With runway secured, founders can focus on product and customers instead of constantly worrying about cash flow.
Join 500+ startups that have raised funding with IncorpX support!
Sources of Seed Funding in India:
Understanding where seed funding comes from helps you target the right investors for your startup. Here is a comprehensive overview of seed funding sources in India:
Funding Source
Typical Investment
Key Examples
Best For
Angel Investors
₹10 Lakhs to ₹1 Crore
Individual HNIs, successful entrepreneurs
Early validation, first external capital
Angel Networks
₹50 Lakhs to ₹3 Crore
Indian Angel Network, Mumbai Angels, Chennai Angels, Lead Angels
Larger seed rounds with multiple angels
Seed VCs
₹1 Crore to ₹5 Crore
100X.VC, Titan Capital, Better Capital, First Cheque
Startups with initial traction seeking institutional capital
Accelerators
₹10 Lakhs to ₹1 Crore
Y Combinator, Techstars, GSF Accelerator, Surge (Sequoia)
Intensive growth programs with demo day access
Incubators
₹5 Lakhs to ₹50 Lakhs
IIT incubators, T-Hub, NASSCOM, Atal Incubation Centers
Very early stage with mentorship needs
Government Funds
₹5 Lakhs to ₹50 Lakhs
Startup India Seed Fund, State startup funds
DPIIT-recognized startups, non-dilutive options
Corporate VCs
₹50 Lakhs to ₹5 Crore
Infosys Innovation Fund, Reliance Jio GenNext
Strategic fit with corporate parent
Crowdfunding
₹5 Lakhs to ₹1 Crore
LetsVenture, AngelList India
Consumer products with mass appeal
Comparison of Funding Instruments:
Different funding instruments have different implications for your startup. Here is a comparison to help you understand your options:
Instrument
Equity Round
Convertible Note
SAFE
Revenue-Based Financing
Valuation Required
Yes, upfront
Deferred to next round
Deferred to next round
Not required
Dilution
Immediate and known
At conversion with discount
At conversion with discount
No equity dilution
Interest Rate
None
Yes (typically 5-10%)
None
Repayment multiple
Maturity Date
None
Yes (typically 18-24 months)
None
Based on revenue
Legal Complexity
High (SHA, SSA required)
Medium
Low
Medium
Board Rights
Often included
Usually none until conversion
Usually none until conversion
None
Best For
Established traction, clear valuation
Quick raise, defer valuation
Speed and simplicity
Revenue generating, avoid dilution
What Documents Are Needed for Seed Funding?
Being well-prepared with proper documentation accelerates the funding process and builds investor confidence. Here is the complete checklist:
Category
Document
Purpose
Pitch Materials
Pitch Deck (10-15 slides)
Primary tool for investor meetings, tells your startup story
Executive Summary (1-2 pages)
Quick overview for initial investor screening
Business Plan
Detailed strategy, operations, and growth plan
Financial Documents
Financial Model (3-5 year projections)
Revenue, costs, margins, and key metrics forecast
Cap Table
Current shareholding pattern and equity structure
Bank Statements
Verify current financial position and cash flows
Legal Documents
Certificate of Incorporation
Proves company legal existence
MOA and AOA
Company constitution and governance rules
Founder Agreements
Terms between co-founders including vesting
IP Assignment Agreements
Confirms company owns all intellectual property
Due Diligence
Customer Contracts
Validate revenue and customer relationships
Team Bios and Employment Agreements
Key team information and employment terms
Compliance Certificates
GST, ROC filings, and regulatory compliance
Investment Documents
Term Sheet
Key terms of investment (provided by investor)
SHA and SSA
Final legal agreements for investment closure
Step-by-Step Process to Raise Seed Funding
Raising seed funding is a structured process that requires preparation, persistence, and professionalism. Here is the complete roadmap:
Step 1: Prepare Your Foundation
Before approaching investors, ensure you have a validated product or MVP, some initial traction (users, revenue, or strong engagement), a committed founding team, and proper company structure (Private Limited Company is preferred). Get DPIIT Startup India recognition for angel tax exemption. Without these basics, fundraising will be extremely difficult.
Step 2: Create Your Pitch Deck
Develop a compelling 10-15 slide pitch deck covering: Problem (the pain point you solve), Solution (your product or service), Market Size (TAM, SAM, SOM), Business Model (how you make money), Traction (users, revenue, growth), Competition (your differentiation), Team (why you will win), Financials (projections and unit economics), and Ask (how much and what for). Practice your pitch until it flows naturally.
Step 3: Build Financial Model and Valuation
Create a detailed financial model with 3-5 year projections. Include revenue forecasts, cost structure, gross margins, operating expenses, and cash flow. Calculate key metrics like customer acquisition cost (CAC), lifetime value (LTV), and burn rate. Develop a realistic valuation based on comparable companies, your traction, and negotiation. Prepare your cap table showing current ownership.
Step 4: Research and Target Investors
Identify investors who are a good fit based on: investment stage (seed), sector focus (your industry), ticket size (your raise amount), and portfolio (no competing companies). Research their recent investments and investment thesis. Seek warm introductions through your network, mentors, or advisors. Cold outreach has very low conversion rates compared to referrals.
Step 5: Pitch and Build Relationships
Present to interested investors, handle questions confidently, and follow up promptly. Fundraising is a relationship business. Even investors who pass may invest later or refer you to others. Keep a pipeline of conversations going. Expect to pitch to 50-100 investors to close a round. Organize your outreach using a CRM or spreadsheet.
Step 6: Negotiate Term Sheet
When an investor wants to proceed, they will issue a term sheet outlining key terms. Review carefully with legal counsel. Key terms to negotiate include: valuation, liquidation preference (prefer 1x non-participating), board composition, founder vesting, anti-dilution provisions, and protective provisions. Do not sign until you understand every clause.
Step 7: Complete Due Diligence
After term sheet signing, investors conduct detailed due diligence. Have your data room organized with all legal, financial, and business documents. Respond to queries quickly and transparently. Any surprises during due diligence can kill the deal. Be honest about challenges and risks.
Step 8: Close the Round
Work with lawyers to draft and execute the Shareholders Agreement (SHA) and Share Subscription Agreement (SSA). Pass necessary board resolutions, allot shares, and file Form PAS-3 with ROC within 15 days. Receive funds in company account. Update your cap table and issue share certificates. Celebrate, but remember the real work begins now.
Get expert guidance to raise seed funding in 3-6 months!
Government Funding Schemes for Startups in India
The Indian government has launched several initiatives to support early-stage startups with funding. Here are the key schemes:
Scheme
Funding Amount
Eligibility
How to Apply
Startup India Seed Fund Scheme
Up to ₹20 lakhs (grant) or ₹50 lakhs (debt/convertible)
DPIIT recognized startups, incorporated not more than 2 years ago
Apply through empaneled incubators on seedfund.startupindia.gov.in
SIDBI Fund of Funds
₹10,000 crore corpus (invests in AIFs)
Startups funded by SIDBI-backed AIFs
Raise from SEBI-registered AIFs supported by SIDBI
Atal Innovation Mission (AIM)
Up to ₹10 crore for incubators
Startups incubated at Atal Incubation Centers
Apply to AICs across India
BIRAC (Biotech Startups)
Up to ₹50 lakhs
Biotech and life sciences startups
Apply through BIRAC schemes like BIG, SPARSH
State Startup Funds
Varies by state (₹10 lakhs to ₹1 crore)
Startups registered in the respective state
Apply through state startup portals
MUDRA (Micro Units)
Up to ₹10 lakhs
Micro and small enterprises
Apply through banks under PMMY scheme
Want to access government funding? First get DPIIT Startup India Recognition which is mandatory for most government schemes.
Why Choose IncorpX for Seed Funding Assistance?
IncorpX has helped over 500 startups raise ₹100+ crore in funding. Here is what sets us apart:
Professional Pitch Decks: Investor-ready presentations that tell your story compellingly
Financial Modeling: Detailed projections with realistic assumptions and metrics
200+ Investor Network: Direct access to angels, VCs, and family offices
Warm Introductions: Personal connections that open doors faster than cold outreach
Legal Expertise: Experienced lawyers for SHA, SSA, and term sheet negotiation
Government Scheme Access: Startup India Seed Fund and SIDBI application support
₹100+ Crore Raised: Track record of successful fundraises across sectors
End-to-End Support: From first pitch to fund transfer and post-funding compliance
Related Services for Startups
Building a fundable startup requires proper structure and compliance. Explore our related services:
Stay compliant with MCA and tax requirements. Clean compliance attracts investors.
Frequently Asked Questions About Seed Funding for Startups
Raising seed funding is a critical milestone for early-stage startups. Understanding the process, investor expectations, legal documentation, and negotiation strategies can significantly improve your chances of success. Below, we answer the most commonly asked questions about seed funding in India.
These FAQs cover everything from finding investors and creating pitch decks to term sheet negotiation and legal compliance. Whether you are a first-time founder or raising your second round, these answers will guide you through the fundraising journey.
Seed funding is the initial capital raised by startups to develop their product, validate their business model, and achieve early milestones. It typically ranges from ₹10 lakhs to ₹5 crore in India and is used for product development, market research, hiring key team members, and initial marketing efforts. Seed funding comes from angel investors, seed-stage venture capital funds, incubators, accelerators, or government schemes like Startup India Seed Fund.
In India, seed funding typically ranges from ₹10 lakhs to ₹5 crore depending on the startup's sector, traction, team, and market potential. Tech startups in sectors like SaaS, fintech, healthtech, and edtech often raise higher amounts. The average seed round size has been increasing, with well-positioned startups now raising ₹1 to ₹3 crore in their seed rounds.
Pre-seed funding is the earliest stage of fundraising, typically from friends, family, or angel investors, ranging from ₹5 lakhs to ₹50 lakhs. It helps founders build an MVP and validate the initial idea. Seed funding comes next, with larger amounts from professional investors to scale the validated product, build the team, and achieve product-market fit.
Seed funding in India comes from multiple sources:
Angel Investors: High-net-worth individuals who invest personal capital
Angel Networks: Indian Angel Network, Mumbai Angels, Chennai Angels
Seed-Stage VCs: 100X.VC, Titan Capital, Better Capital, First Cheque
Accelerators: Y Combinator, Techstars, GSF Accelerator
Government Schemes: Startup India Seed Fund, SIDBI Fund of Funds
To raise seed funding, startups typically need:
Company incorporation documents (Certificate of Incorporation, MOA, AOA)
Shareholders Agreement (SHA) and Share Subscription Agreement (SSA)
A pitch deck is a visual presentation (typically 10-15 slides) that tells your startup's story to potential investors. It covers the problem you solve, your solution, market opportunity, business model, traction, team, competition, go-to-market strategy, and funding ask. A compelling pitch deck is crucial because it creates the first impression and determines whether investors will take the next meeting with you.
The typical seed funding process takes 3 to 6 months from initial investor outreach to money in the bank. This includes:
Pitch deck preparation: 2-4 weeks
Investor outreach and meetings: 4-8 weeks
Due diligence: 2-4 weeks
Term sheet negotiation: 1-2 weeks
Legal documentation and closure: 3-4 weeks
Well-prepared startups with strong traction can close faster.
A term sheet is a non-binding document that outlines the key terms and conditions of the investment. It includes: valuation (pre-money and post-money), investment amount, equity stake, liquidation preference, anti-dilution provisions, board composition, founder vesting, and other investor rights. While non-binding, the term sheet sets the framework for final legal agreements.
Startup valuation at the seed stage determines how much the company is worth before investment (pre-money) and after investment (post-money). At the seed stage, valuation is often based on:
Team quality and experience
Market size and potential
Traction (users, revenue, growth rate)
Competitive advantage and IP
Comparable company valuations
Seed-stage valuations in India typically range from ₹2 crore to ₹20 crore.
Seed investors in India typically take 10% to 25% equity stake in exchange for their investment. The exact percentage depends on the investment amount, startup valuation, and negotiation. It is generally advisable for founders to retain at least 70-80% equity after the seed round to have sufficient stake for future funding rounds.
The Startup India Seed Fund Scheme (SISFS) is a government initiative with ₹945 crore corpus to provide financial assistance to startups. It offers:
Up to ₹20 lakhs as grant for proof of concept and prototype development
Up to ₹50 lakhs as debt or convertible debentures for product development and commercialization
Startups must be DPIIT-recognized and not older than 2 years to apply through empaneled incubators.
The SIDBI Fund of Funds is a ₹10,000 crore fund managed by SIDBI under the Startup India initiative. It does not invest directly in startups but invests in SEBI-registered Alternative Investment Funds (AIFs) that in turn fund startups. This has significantly increased the capital available for early-stage startups in India.
An angel investor is a high-net-worth individual who invests their personal capital in early-stage startups in exchange for equity. Angels typically invest ₹10 lakhs to ₹1 crore per deal. Besides capital, they often provide mentorship, industry connections, and strategic guidance. Notable angel investors in India include Rajan Anandan, Kunal Shah, and Ritesh Agarwal.
A Venture Capital fund is a professionally managed fund that pools money from institutional investors (LPs) to invest in high-growth startups. VCs typically invest larger amounts (₹1 crore and above) compared to angels and take board seats. Seed-stage VCs in India include 100X.VC, Titan Capital, Better Capital, and First Cheque.
An incubator is an organization that supports early-stage startups with workspace, mentorship, resources, and often seed funding in exchange for equity (typically 2-10%). Notable incubators in India include:
IIT incubators (IITB-SINE, IIT Delhi, IIT Madras)
T-Hub, Hyderabad
NASSCOM 10,000 Startups
Atal Incubation Centers (AICs)
Being part of a reputed incubator increases credibility with investors.
An accelerator is a time-bound program (typically 3-6 months) that provides intensive mentorship, training, and often seed funding to startups in exchange for equity. Accelerators like Y Combinator, Techstars, and GSF Accelerator provide capital (₹10-50 lakhs), access to their network, and a demo day to pitch to investors. Completing a top accelerator significantly increases funding chances.
Due diligence is the investigation process where investors verify all aspects of your startup before investing. This includes:
Legal due diligence: Company structure, contracts, IP ownership, compliance
Financial due diligence: Revenue, expenses, bank statements, projections
Technical due diligence: Product architecture, code quality, scalability
Market due diligence: Market size, competition, customer references
Being prepared for due diligence speeds up the funding process.
Key legal agreements in seed funding include:
Term Sheet: Outlines key investment terms (non-binding)
Share Subscription Agreement (SSA): Details of share issuance
Shareholders Agreement (SHA): Rights, obligations, and governance
Articles of Association (AOA): May need amendment for investor rights
Board Resolution: Approving the fundraise and share allotment
Professional legal assistance is crucial for these documents.
A convertible note is a short-term debt instrument that converts into equity at a future funding round, typically at a discount (15-25%) to the next round valuation. It also often includes a valuation cap. Convertible notes are popular in pre-seed and seed rounds because they defer valuation discussions to when the startup has more traction.
SAFE is an investment instrument created by Y Combinator as an alternative to convertible notes. Unlike convertible notes, SAFEs have no interest rate or maturity date. They convert to equity at the next priced round at a discount or valuation cap. SAFEs are simpler and founder-friendly, making them popular for early-stage fundraising.
A cap table (capitalization table) is a spreadsheet showing the equity ownership structure of your company, including founders, employees (ESOP), and investors. It tracks shareholding percentages, share prices, and dilution over funding rounds. A clean, well-maintained cap table is essential for investor due diligence and future fundraising.
Founder vesting is a mechanism where founders earn their equity over time (typically 4 years with 1-year cliff). Investors require vesting to ensure founders stay committed to the company. If a founder leaves early, unvested shares return to the company. Standard vesting is 25% after the first year (cliff) and monthly thereafter for the remaining 3 years.
Anti-dilution protection protects investors if the company raises future funding at a lower valuation (down round). The two types are:
Full Ratchet: Adjusts investor price to the new lower price (founder-unfriendly)
Weighted Average: Adjusts based on how many shares are issued at lower price (more common)
Seed investors often negotiate for anti-dilution clauses.
Liquidation preference determines how proceeds are distributed if the company is sold or liquidated. With 1x non-participating preference (standard), investors get their investment back first before founders. With participating preference, investors get their money back AND their pro-rata share of remaining proceeds. Non-participating preference is more founder-friendly.
Pro-rata rights allow investors to participate in future funding rounds to maintain their ownership percentage. For example, if a seed investor owns 15% and the company raises Series A, pro-rata rights let them invest enough to stay at 15%. This is a standard investor right that helps them protect their stake from dilution.
A lead investor is the main investor in a funding round who sets the terms, conducts primary due diligence, and often takes a board seat. Other investors follow the lead investor's terms. Having a reputable lead investor makes it easier to fill the round and adds credibility. Lead investors typically invest the largest amount in the round.
Ways to find angel investors:
Angel Networks: Apply to Indian Angel Network, Mumbai Angels, Lead Angels
LinkedIn: Connect and build relationships with angels in your sector
Startup Events: Attend TiE events, startup conferences, demo days
Warm Introductions: Get referred by founders, mentors, or advisors
Problem: Real, significant pain point with large market
Solution: Differentiated product with competitive advantage
Market: Large addressable market with growth potential
Traction: Early users, revenue, or strong engagement metrics
Unit Economics: Path to profitability or sustainable growth
Team quality is often the most important factor at seed stage.
To apply for Startup India Seed Fund, startups must:
Be recognized by DPIIT as a startup
Be incorporated not more than 2 years ago at the time of application
Have a business idea with potential for commercialization
Be using technology in core product/service or scalable business model
Not have received more than ₹10 lakhs of monetary support under any other central or state government scheme
Applications are made through empaneled incubators.
Equity dilution occurs when new shares are issued, reducing existing shareholders' percentage ownership. To manage dilution:
Raise only what you need (capital efficiency)
Negotiate fair valuations
Reserve 10-15% for ESOP pool
Plan for multiple funding rounds
Founders typically retain 50-60% after Series A and 30-40% after Series B.
The decision depends on your business model and goals:
Raise funding if: You need capital to grow fast, your market is competitive, you need to invest heavily in product or team
Bootstrap if: Your business generates revenue early, you want to retain full control, you are building a lifestyle business
Many successful companies have done both. Consider your specific situation.
A data room is a secure online repository where you organize all documents investors need for due diligence. It typically includes: incorporation documents, financial statements, pitch deck, business plan, contracts, IP documentation, team information, and product demos. Having a well-organized data room speeds up due diligence and shows professionalism.
Common fundraising mistakes to avoid:
Raising too early without traction or validated idea
Pitch Deck Creation: Professional investor-ready presentations
Financial Modeling: Projections and valuation support
Investor Outreach: Warm introductions to angel networks and VCs
Due Diligence Preparation: Legal and financial documentation
Term Sheet Review: Negotiation support
Legal Documentation: SHA, SSA, and compliance
Our team has helped startups raise over ₹100 crore in funding.
The seed funding process typically follows these steps:
1. Pitch deck and executive summary creation
2. Investor research and outreach
3. Initial meetings and pitch presentations
4. Follow-up meetings and deeper discussions
5. Term sheet negotiation and signing
6. Due diligence process
7. Legal documentation (SHA, SSA)
8. Board approval and share allotment
9. Fund transfer and closure
Sectors attracting significant seed funding in India include:
SaaS and Enterprise Tech: B2B software solutions
Fintech: Payments, lending, insurtech
Healthtech: Telemedicine, diagnostics, wellness
Edtech: Online learning, skill development
D2C Brands: Consumer products with digital-first approach
Agritech: Farm-to-fork solutions
Climate Tech: Sustainability and clean energy
An executive summary is a 1-2 page document that provides a quick overview of your startup for investors. It includes: company name and tagline, problem and solution, market opportunity, business model, traction and milestones, team highlights, and funding ask. Investors often request an executive summary before agreeing to a meeting.
To prepare for investor meetings:
Research the investor's portfolio and investment thesis
Practice your pitch until it flows naturally
Prepare for tough questions about market, competition, and risks
Know your numbers (metrics, projections, valuation)
Prepare a product demo if applicable
Have your ask ready (amount, use of funds, timeline)
Practice with mentors or through mock pitch sessions.
Bridge funding is a short-term financing round between major funding rounds. It helps startups cover operational expenses while preparing for their next significant round. Bridge rounds are often raised from existing investors using convertible notes or SAFEs. They are typically smaller than the main round and meant to extend runway.
Yes, many startups raise seed funding before generating revenue. At the seed stage, investors often invest based on:
Team strength and experience
Market opportunity size
Product or prototype quality
User traction (even if not monetized)
Unique insights or technology
However, having some revenue or clear path to monetization strengthens your position.
Runway is how long your startup can survive with current cash before running out of money. Burn rate is how much money you spend per month. Runway = Cash Balance / Monthly Burn Rate. For example, with ₹60 lakhs and ₹5 lakh monthly burn, you have 12 months runway. Seed funding should ideally provide 12-18 months runway.
An MVP is the simplest version of your product that solves the core problem and can be used by early customers. For seed funding, having an MVP demonstrates:
You can build and ship product
Users are willing to try your solution
You can gather feedback and iterate
An MVP with early traction significantly improves fundraising chances.
Tax implications of seed funding in India:
Shares issued at premium may attract Section 56(2)(viib) angel tax, but DPIIT-recognized startups are exempt
Capital gains tax applies when investors exit
The company may need to file Form 2 with ROC for share allotment
Proper valuation report from a merchant banker or CA is required
DPIIT recognition provides significant tax benefits for seed funding.
DPIIT (Startup India) recognition provides several benefits for seed funding:
Exemption from angel tax under Section 56(2)(viib)
Eligibility for Startup India Seed Fund
Access to SIDBI Fund of Funds investments
Self-certification for labor and environmental laws
Tax exemption under Section 80-IAC
We recommend getting DPIIT recognition before raising seed funding.
A SEBI-registered Alternative Investment Fund (AIF) is a pooled investment vehicle for sophisticated investors. Category I AIFs include Venture Capital Funds that invest in startups. Many seed-stage VCs like 100X.VC operate as SEBI-registered AIFs. Being funded by a SEBI-registered AIF provides regulatory oversight and legitimacy to the investment.
Valuation negotiation tips:
Research comparable company valuations in your sector
Have data to support your valuation (traction, market, team)
Consider what equity you are comfortable giving up
Focus on partnership quality, not just valuation
Be realistic to avoid down rounds later
A fair valuation balances founder retention with investor returns.
A down round occurs when a company raises funding at a lower valuation than its previous round. It signals company struggles and triggers anti-dilution clauses. To avoid down rounds:
