ESSENTIAL INGREDIENTS FOR BUSINESS

The need for Consultants and Consulting firms in India have increased in the recent years with the country emerging as a Startup hub, especially after having attracted a lot of attention of the Investors both from within and outside the country being more than willing to invest in startups in India. With more and more investors coming forward to take the risk, the startup environment in India is growing throwing up a potential opportunity for a host of service providers, mentors and Consulting firms.

NASSCOM has reported that more than 1,200 startups came up in 2018, including eight unicorns, taking the total number of startups in India to 7,200 with a 108% growth in the funding in 2018 (from about USD 2 billion in 2017 to about USD 4.2 billion in 2018).

With this growth and India emerging as a Startup hub, the requirement of experienced Consultants has been on the rise. This is especially so for Consultants who in addition to being mentors, could also provide services in specific non-core areas for these startups. The startup founders are keen to offload key support functions including Legal, Commercial Contracting, Company Secretarial services, Finance & Accounting, HR, etc. It is essential that some of these key areas are addressed by a Consulting firm with experienced professionals who not only are trained in these disciplines, but also have in-depth experience in diverse industry background and having handled live situations. We are proud to say that, Triangulas, a company founded by the two of us in early May 2017 is one such Consulting firm. From our broad based background across various industry sectors, we feel that there are some key ingredients for a Business to be successful.

  1. Structuring the company and its products/services

One of the most important challenges for any Business has been to evolve a successful structure from the time of its incorporation. At the time of incorporation, the company needs to decide on the shareholding of its promoters, the amount of dilution of shareholding in the company to bring in investors who would not only support in terms of funds, but also provide their expertise to enhance the products/services of the company and help in gaining market share within or outside the country. Equally important is the need to apportion about 10-15% of the shareholding for Employee Stock Option Plan (ESOP) for key and dedicated employees who are early joiners (in most cases) and remain loyal to the company. Another aspect to be considered for existing companies is to assess if there is a need to create new subsidiaries under the company for diversified business (which may not have much in common with their core business). A commonly seen practice in the early stage of startups is the need to bring in technology partners for building the products or platforms. At a boot-strap stage of the company, the challenge would then be to decide if such technology partners should have shareholding in lieu of being paid for their efforts. .

Subsequent to the incorporation and at a stage when revenue starts picking up, the companies have a dilemma on whether to stick and concentrate on the local market for the sale of their products/platform or to expand its reach across multiple markets and seek investment (and associated shareholding dilution) for the associated investments required for such expansion.

Structuring of the organization is like laying foundation of a building – it is always necessary for it to be strong enough to withstand the challenges of the market for a long period of time, but at the same time be nimble to adapt to changing environments and technology enhancements.

Triangulas has successfully structured large number of companies based on their individual stated objectives and depending on the type of product, platform or services they provide, industry domain which is serviced by these products/platforms/services and the regulatory requirements based on the law of the land.

  1. Legal and Regulatory Compliance

While it is understood that the companies in their initial stages focus on the development of their product/services, one of the grave mistakes they make are the fact that they ignore the need to ensure both Legal and Regulatory compliance. Triangulas has come across many start-ups who have a brilliant product, a large pipeline of opportunities and reputed prospective clients, but have failed miserably due to have not complied with the compliance requirements from both a Legal and Regulatory perspective.  In some cases, these start-ups had to even wind up their business and incur heavy losses. This situation can be avoided with very minimal effort by engaging experts in the field of Legal & Regulatory Compliance. Triangulas has had the opportunity to have supported multiple organisations in managing the Legal and Regulatory risks very efficiently and thus ensuring that the Business does not have to struggle at a stage when it is ready to scale up.

  1. Protect the interest of the company by way of signing up contracts

With your business being your livelihood, it is essential that it is protected adequately. Many business owners run the risk and ruin their business by not having the most essential contracts in place to protect them. In the absence of contracts, most companies which seek growth cannot survive for long. It not only maintains the connectivity appropriately strong and operational between the Business and both its Customers and Vendors, but also ensures that even within the organization, it clearly defines the rights and obligations of the stakeholders – be it Promoters, Investors, Board members or employees.

Triangulas has had the fortune to assist a large number of companies in drafting various kinds of contracts – be it for their customer/client orders, vendor or service provider services, employment or consultant contracts, shareholder agreements between promoters and subsequently between promoters and investors. In most cases, especially in the startup ecosystem, the request for support comes in after having had issues with the counter party or between the company and its employees.

There are many more requirements which companies need to have in place for being successful, but the above would in most cases, take this through the right path if addressed as early as in the incorporation stages.

Surekha Rao & Jayakrishnan V E

Co-Founders, Triangulas Business Consulting

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