Startup
Private Markets Intelligence
How to Model a Startup Exit Waterfall: A Step-by-Step Guide for Indian Founders
An exit waterfall is a calculation that distributes the proceeds from a company's sale or acquisition among its shareholders, in the order determined by each shareholder's rights and preferences. For Indian startups that have raised institutional funding through CCPS, the waterfall involves multiple layers: preference payouts, participation distributions, conversion decisions, and common equity allocations. Modelling the waterfall before a funding round, rather than after, gives founders an acc
Anti-Dilution Provisions in Indian Startups: Full Ratchet vs Broad-Based Weighted Average
Anti-dilution provisions are a standard feature of CCPS terms in Indian institutional funding rounds. They protect investors when a company raises a future round at a lower price per share than the investor originally paid. When triggered, they adjust the conversion ratio of the investor's CCPS, giving the investor more equity shares at conversion than originally agreed. This post explains how anti-dilution provisions work, the two main mechanisms used in Indian VC, how each one affects the cap
Stacked vs Pari-Passu Liquidation Preferences in Indian Startups: How Seniority Affects Your Exit
When a startup raises multiple rounds of institutional funding, each new round typically introduces a new series of CCPS with its own preference terms. The relationship between those series, specifically the question of whether they rank equally or whether later-round investors take priority over earlier ones, is called the seniority structure. Seniority structure determines the order of the preference payout in the exit waterfall. It is a term that founders rarely negotiate explicitly in early
CCPS vs Equity Shares in Indian Startups: How Investor Share Structure Affects Your Exit
When Indian startups raise institutional funding, investors almost never take ordinary equity shares. They take Compulsorily Convertible Preference Shares, commonly known as CCPS. Understanding why investors use CCPS, what rights the instrument carries, and how those rights affect the distribution of exit proceeds is foundational knowledge for any founder negotiating a funding round. This post explains how CCPS works under Indian corporate law, how it differs from equity shares, what rights it
What Is a Liquidation Event? How Indian Startups Define It in Their SHA
In Indian startup financing, the liquidation preference clause determines how exit proceeds are distributed among shareholders. But the liquidation preference clause only activates when a liquidation event occurs. The definition of that term, embedded in the shareholders' agreement (SHA), controls everything downstream: when the waterfall runs, which investor rights are triggered, and whether founders and employees receive any proceeds at all. This post explains what a liquidation event is unde
Can You Set-off Capital Loss in Unlisted Shares? Complete 2026 Guide
How To Set-off Capital Losses in Unlisted Shares? Capital losses from unlisted share sales can only be set off against capital gains, not against salary, business, or other income types. Unutilized losses can be carried forward for 8 assessment years, but only if you file your Income Tax Return on time (before the July 31 deadline). Strategic loss harvesting i.e., deliberately selling loss-making investments to offset gains, can reduce your tax liability by 12.5% to 30% on the offset amount.
How to Report Foreign Company ESOPs in ITR Schedule FA (Complete Guide)
When Must You Report Foreign ESOPs in Schedule FA of ITR? For Indian resident employees, Schedule FA (Foreign Assets) in ITR-2 or ITR-3 must include any equity shares, stock options, or RSUs (Restricted Stock Units) in a company incorporated outside India, regardless of whether you sold them during the financial year. Indian employees working for companies like Google, Microsoft, Amazon, Meta, or any multinational with a foreign parent company must report their parent company stock grants in Sc
Advance Tax on Unlisted Share Sales: Complete Calculation Guide
When Must You Pay Advance Tax on Unlisted Share Sales? Advance tax is mandatory when your total tax liability for the financial year exceeds ₹10,000, including tax on capital gains from unlisted share sales. The tax must be paid in four quarterly installments: 15% by June 15, 45% cumulative by September 15, 75% cumulative by December 15, and 100% by March 15. If you sell shares mid-year (especially in Q4: January-March), all prior installment deadlines have passed, requiring immediate full pay
ITR-2 vs ITR-3 - Which Income Tax Form Should You Use for Unlisted Shares?
Difference Between ITR-2 and ITR-3? ITR-2 is for individuals and HUFs with capital gains but no business or professional income, making it the correct form for salaried employees, retirees, and investors who sold unlisted shares. ITR-3 is mandatory for individuals with profits and gains from business or profession (including freelancers, consultants, partners in firms, and directors receiving remuneration classified as business income) who also have capital gains. If you have even ₹1 of busines
What is Authorised Capital?
What is Authorised Capital in a private company? Authorised capital (also called authorized share capital or nominal capital) is the maximum amount of share capital that a company is legally authorized to issue to shareholders, as stated in its Memorandum of Association (MOA). For example, if a company has an authorised capital of ₹10 lakh divided into 1 lakh shares of ₹10 each, it cannot issue more than 1 lakh shares without first increasing its authorised capital through a formal amendment pr
What is Paid-Up Capital?
Paid-up capital is the actual amount of money that shareholders have paid to the company in exchange for shares, representing real cash (or assets) received by the company. For example, if a company issues 1 lakh shares at ₹10 face value and shareholders pay the full ₹10 lakh, the paid-up capital is ₹10 lakh. This amount appears on the balance sheet under "Shareholders' Equity." Paid-up capital can be less than issued capital if shares are issued but not fully paid (partly paid shares), though
Differences between Authorised Capital vs Paid-Up Capital
Authorised Capital is the maximum amount of share capital a company can issue (legal ceiling specified in MOA), while Paid-Up Capital is the actual money shareholders have paid to the company for issued shares (real cash received). Think of authorised capital as your credit limit and paid-up capital as what you've actually spent. A company with ₹1 crore authorised capital may have only ₹10 lakh paid-up capital, meaning it has issued shares worth ₹10 lakh (face value) and can still issue ₹90 lak