Unit II 30%

Promotion of a Venture: Opportunities analysis;

•

external environmental analysis economic, social

•

and technological; competitive factors; legal

requirements of establishment of a new unit and
rising of funds; Venture capital sources and
documentation required.
•

•
What is opportunity analysis ? Brief discuss the opportunity analysis for the
promotion of a venture. VNSGU DEC 2023 Marks (12)

Promotion of a Venture:
The promotion of a venture means introducing and
supporting a new business idea. It is about:
➢ Finding a good business opportunity.
•

➢ Arranging the resources (money, people, materials).

➢ Making people aware of the new venture.
•

➢ Building trust and interest among customers, investors,

and other stakeholders.

➢ Launching a New Fast-Food Restaurant When an

entrepreneur opens a new fast-food restaurant , they need
•

to promote the venture to attract customers and make the

business successful.
•
1. OPPORTUNITY ANALYSIS
Opportunities analysis is the process of finding and
checking good chances for starting or expanding a
business.
Opportunities analysis means carefully studying the market
to:
Identify Gaps: Find what is missing or what customers
need.
Study Trends: Understand new customer preferences,
technology changes, and market demands.
Check Competition: See what competitors are offering
and find ways to offer something better or different.
Measure Profit Potential: Analyze whether the venture
can earn good profits
Steps in Opportunity Analysis :
1. Market Research
➢Market research involves gathering comprehensive information about the
target market to understand its size, growth potential, and characteristics. This
step includes analyzing customer demographics, preferences, and buying
behaviors, as well as studying market trends and seasonal patterns. You'll
examine the competitive landscape to identify existing players, their market
share, and positioning strategies. The research also covers regulatory
requirements, industry standards, and any barriers to entry that might affect
the opportunity.
2. Idea Evaluation
➢This step involves critically assessing the business idea or opportunity against
various criteria. You evaluate the uniqueness of the concept, its potential for
differentiation, and how well it addresses an identified market need or
problem. The evaluation considers the scalability of the idea, its alignment
with current market trends, and whether it offers a sustainable competitive
advantage. You also assess the feasibility of implementation and the potential
for innovation within the concept.
3. Resource Assessment
➢ Resource assessment examines what assets, capabilities, and inputs are required to
pursue the opportunity successfully. This includes evaluating financial
requirements such as startup capital, working capital, and ongoing operational
costs. You analyze human resource needs, including required skills, expertise, and
team size. The assessment also covers physical resources like equipment, facilities,
and technology infrastructure, as well as intangible resources such as intellectual
property, brand recognition, and strategic partnerships.

4. Risk Analysis
➢ Risk analysis involves identifying, evaluating, and prioritizing potential threats and
uncertainties that could impact the opportunity. This includes market risks such as
demand fluctuations, competitive threats, and changing consumer preferences. You
examine operational risks like supply chain disruptions, quality issues, and
regulatory changes. Financial risks including cash flow problems, funding
challenges, and economic downturns are also considered. The analysis includes
developing contingency plans and risk mitigation strategies.
5. Profit Estimation

➢ The final step involves projecting the financial returns and

profitability of the opportunity. This includes creating revenue
forecasts based on market size, pricing strategies, and expected
market share. You develop cost projections covering both fixed
and variable expenses, and calculate key profitability metrics such
as gross margin, net profit margin, and return on investment. The
estimation also includes break-even analysis, cash flow
projections, and sensitivity analysis to understand how changes in
key variables might affect profitability.
Steps in Opportunity Analysis : in short

Step Explanation
1. Market Research Study customers, competitors, and trends.
2. Idea Evaluation Check if the business idea is practical and
profitable.
3. Resource Assessment
• Check if required money, people, and materials are
available.
4. Risk Analysis Identify possible problems and how to manage them.
5. Profit Estimation
•

Predict how much money the venture can earn.

Example:
If you want to start a food delivery app in a small town:
Opportunity: There is no food delivery service in the town.
Analysis: •

➢ People want home delivery.

➢ Competition is low.
➢ Trend is shifting towards online ordering.
•

➢ Resources like restaurants and delivery boys are available.

So, promoting this venture has a good chance of success.
ENVIRONMENTAL ANALYSIS
Environmental Analysis is the process of examining all external and internal elements that can affect
an organization’s performance. It helps businesses understand the market conditions, predict future
trends, identify opportunities and threats, and make informed decisions.

TYPE OF ENVIRONMENTAL ANALYSIS

1. Internal Environmental Analysis

•

This focuses on factors inside the organization that affect its performance.
Examples of Internal Factors :
Employees and management
•

Company culture
Mission and vision
Strengths and weaknesses
Resources (financial, human, etc.)
2. External Environmental Analysis
➢ The Factors that affect a business from outside the organization are known as external factors or the
external environment
Examples of External Factors :
•

Competitors
Economic conditions
Political/legal regulations
•

Technology
Social and cultural trends
Natural environment
EXTERNAL ENVIRONMENT
➢ The organizational environment consists of a general environment and an operating
environment.
1. The general environment (Macro environment) consists of the economic, political,
cultural, technological, natural, demographic and international environments in which a
company operates. PESTLE,
2. The operating environment (Micro Environment) consists of a company's suppliers,
•

customers, market intermediaries who link the company to its customers, competitors and
the public. COSMIC,
•

PURPOSE OF ENVIRONMENTAL ANALYSIS

➢ The main purpose of environmental analysis is to help a business understand its
surroundings so it can make better decisions and succeed in the market.
➢ Successful businesses adapt their internal environment including human and
financial resources, policies, technologies and operations to the external
environment. •

➢ The company performs an environmental analysis to identify the potential

influence of particular aspects of the general and operating environments on
•

business operations.
➢ This analysis identifies the opportunities and threats in a business environment
in terms of a company's strengths and weaknesses.
 MICRO VS MACRO ENVIRONMENT

Basis for Comparison Micro Environment Macro Environment

1. Meaning Micro environment is defined as Macro environment refers to the

the nearby environment, under general environment, that can affect
which the firm operates. the working of all business enterprises.

2. Scope Narrow
, (specific to the business) Broad (affects all industries and

businesses

3. Elements COSMIC, i.e. Competitors, PESTLE, i.e. Population &

Organization itself, Suppliers, Demographic, Economic, Socio-
Market, Intermediaries and Cultural, Technological, Legal &
Customers. Political and Environmental.
4. Impact Immediate and direct impact on Long-term and indirect impact on
day-to-day operations strategy and planning
5. Are these factors Partially controllable by the No
controllable? business
•

6. Influence Directly and Regularly Indirectly and Distantly

•
DEFINITION OF MICRO ENVIRONMENT

➢ Micro environment refers to the environment which is in direct contact with

the business organization and can affect the routine activities of business
straight away.
➢ It is associated with a small area in which the firm functions. It is also
known by the name Internal Environment or Task Environment.
➢ Micro environment is a collection of all the forces that are close to the firm.
Its elements include suppliers,
,
competitors, marketing intermediaries,
customers and the firm itself.

1. Competitors are the rivals, that compete with the firm in the market and
resources as well.
2. Organisation itself, is an aggregate of a number of elements like owners
like shareholders or investors, employees and the board of directors.
3. Suppliers are the ones who provide inputs to the business like raw material,
equipment and so on.
4. Marketing intermediaries may include wholesalers, distributors and
retailers that make a link between the firm and the customers.
•

5. Customers / Consumers are the one who purchases the goods for their own
•

consumption. They are considered as the king of business.

DEFINITION OF MACRO (EXTERNAL) ENVIRONMENT

➢ The macro environment refers to the big, external forces that

affect all businesses, industries, or countries — things that
companies cannot control directly, but must be aware of to
plan properly.
➢ It constitutes those outside forces that are not under the control
of the firm but have a powerful impact on the firm’s
,

functioning.
❑ It includes the following:
1. Political factors
2. Economic factors
3. Social factors
4. Technological factors
5. Legal factors
6. Environmental factor
•

•
1. P for Political factors
➢ Political factors are the rules, laws, decisions, and stability of a government that
impact how businesses operate in a country.
➢ These are part of the macro environment and fall under the "P" in the PESTLE
analysis.
I. Government policies
II. Taxes laws and tariff
III. Stability of government
IV. Entry mode regulations
,

Example : The Indian government offers subsidies for electric vehicles (positive
political factor).
2. E for Economic factors
➢ Economic factors are the elements that influence the buying, selling, investment,
pricing, and employment activities in a country’s economy.
➢ These factors are part of the macro environment and are the "E" in the PESTLE
analysis.
1. Inflation Rate
2. Interest Rates
3. Economic Growth (GDP)
•

4. Exchange Rates
5. Unemployment Rate
•

6. Income Levels
3. S for Social factors
➢ Social factors are the people-related aspects such as values, beliefs, habits,
education, age, gender, and lifestyle trends that influence how consumers buy and how
companies should behave.
I. The cultural implications
II. The social lifestyles
III. Educational levels
IV. Distribution of Wealth
V. Demographic trends such as birth rates, aging, and migration patterns
,
VI. Attitudes towards healthy lifestyles, organic foods, the environment, and so
forth
4. T for Technological factors

➢ Technological factors are the advances, tools, and innovations that can change the
way businesses work or the products customers expect.
➢ They make up the “T” in the PESTLE analysis of the macro environment.

I. Rate of technological advances

II. Innovative technological platforms
III. Automation & Robotics
•

IV. Internet & Connectivity

•

V. Artificial Intelligence (AI)

5. L for Legal factors
➢ Legal factors are the laws, rules, and regulations that a business must follow. These
laws can affect how a company operates, what it can or cannot do, and the penalties it
might face if it breaks the rules.
➢ They are part of the macro environment and represent the "L" in PESTLE analysis.
I. Product regulations
II. Employment regulations
III. Competitive regulations
IV. Patent infringements
,
V. Health and safety regulations
6. E for Environmental factors
➢ Environmental factors include the climate, weather, environmental laws,
sustainability expectations, and availability of natural resources that can influence
a business’s decisions and performance.
➢ These are part of the macro environment and represent the “E” in PESTLE
analysis.
I. Geographical location
II. The climate and weather
III. Waste disposal laws
IV. Energy consumption regulation
•

V. People’s attitude towards the environment

•
COMPETITIVE ANALYSIS
➢ Competitive analysis is a strategic research process where a business
evaluates its current and potential competitors to understand their strengths,
weaknesses, market position, and strategies.
➢ Porter’s Five Forces is a framework created by Michael E. Porter to analyze
the competition in an industry.
➢ Every market or industry is different. Take any selection of industries and you
should be able to find differences
,
between them in terms of:

1. Size (e.g. sales revenue, volumes, numbers of customers)

2. Structure (e.g. the number of brands and competitors)
3. Distribution channels (how the product gets from producer to final
consumer)
4. Customer needs and wants (the basis of marketing segmentation)
5. Growth (the rate of growth and which businesses are growing faster or
slower than the market)
6. Product life cycle (the stage of the life cycle for the industry as a whole and
•

for products and brands within it)

•

7. Alternatives for the consumer (e.g. substitute products)

Example: Pizza Shops in a Local Area
Imagine you want to start a pizza shop. You analyze 3 local competitors:

Factor Your Shop Pizza Hut Domino’s

Taste Good Very Good Good
Price Low High Medium
Home Delivery Yes Yes Yes
Variety Average High High
Customer Service Friendly Good Average

What You Learn:

•Your price is cheaper → Good for budget customers (strength)
•Your taste is good → Competitive
•You offer home delivery like others → No disadvantage
•But you have less variety → Need to improve
•You offer friendly service → Strength
To compete better, you can:
•Add more pizza variety
•Use your low price and friendly service as your
strength
•Promote your home delivery to attract more
customers
Porter identified five factors that act together
to determine the nature of
competition within an industry. These are
the:
1. Threat of new entry to a market
2. Bargaining power of suppliers
3. Bargaining power of customers ("buyers")
4. Threat of substitute products
5. Degree of competitive rivalry
1. Threat of New Entry
•

➢Can new companies easily enter the

market?
➢ If new businesses can enter easily,
competition increases.
➢The position of existing firms is stronger
if there are barriers to entering the market.
➢If barriers to entry are low then the threat
of new enter will be high, and Vice versa.
➢Example: A small bakery can easily open,
so competition is high.
2. Bargaining Power of Suppliers
❖If a firm's suppliers have bargaining power they will:
a) Sell their products at a higher price
b) Force industry profits
❖ If the supplier forces up the price paid for inputs, profits
•

will be reduced. It follows that the more powerful the

customer (buyer), the lower the price that can be achieved
by buying from them.
➢If suppliers are strong, they can increase your costs.
Suppliers find themselves in a powerful position when:
a) There are only a few large suppliers.
b) The resource they supply is scarce.
c) The cost of switching to an alternative supplier is high.
d) The customer is small and unimportant
e) There are no or few substitute resources available.
3. Bargaining Power of Customers

a) Powerful customers are able to lead pressure to drive down

prices, or increase the required quality for the same price, and
therefore reduce profits in an industry.
b) If buyers are strong, they can reduce your profits.
•

c) Several factors determine the bargaining power of customers,

including:
Customers tend to enjoy strong bargaining power when:
1. There are only a few of them
2. The customer purchases a significant proportion of output of an
industry
3. They can choose from a wide range of supply firms.
4. They find it easy and inexpensive to switch to alternative
suppliers

Example: In online shopping, buyers can compare prices and

choose the cheapest.
4. Threat of Substitute Products
1. A substitute product can be regarded as something
that meets the same need
•

2. Substitute products are produced in a different

industry – but crucially satisfy the same customer
need. If there are many credible substitutes to a
firm’s product, they will limit the price that can be
charged and will reduce industry profits.
3. If substitutes are many, your product demand may
fall.
Example: Tea is a substitute for coffee.
5. Overall Degree of Competitive Rivalry

➢If there is intense rivalry in an industry, it will

encourage businesses to engage in
•

1. Price wars (competitive price reductions),

2. Investment in innovation & new products
3. Intensive promotion (sales promotion and higher
spending on advertising)
➢All these activities are likely to increase costs and
lower profits.
➢If rivalry is high, profits go down.
➢Example: Many toothpaste brands compete with
similar features.
LEGAL REQUIREMENTS OF ESTABLISHING A NEW
ENTREPRISE/ STAGES IN THE FORMATION OF A COMPANY

Here is a clear and structured explanation of:

1. Promotion Stage
2. Incorporation Stage
3. Capital subscription (Capital raising stage)
4. Commencement of business Stage
1. Promotion Stage :
➢ The promotion stage is the first stage in the formation of a company where
the business idea is developed, and all the necessary groundwork is done to set
up the company. It involves identifying a business opportunity, arranging
resources, and preparing legal documents to register the company.
➢ The person or group of persons who carry out this process is called a Promoter.
Key Activities:
• Identify the business opportunity.
• Conduct feasibility studies (technical, financial, legal).
• Arrange for initial capital and resources.
• Prepare necessary documents like Memorandum of Association (MOA) and
Articles of Association (AOA).
• Appoint professionals like lawyers, CAs, consultants.
Incorporation Stage / Legal Requirements of incorporation of
.

a Company :
➢ In this stage, the company comes into legal existence. It
becomes a separate legal entity upon registration with the
Registrar of Companies (ROC) under the Companies Act,
2013.
➢ The following documents are required to be filed with the
Registrar of Companies for the incorporation of a joint stock
company:
1. Memorandum of Association
2. Articles of Associations
3. List of Directors
4. Written consent of Directors
5. Notice of registered office
6. Statutory Declaration
7. Payment of Stamp Duty & Registration Fee
8. Obtaining Certificate of Incorporation
1 (A). Memorandum of Association
➢ It contains the name of the company, place of Registered office,
objects (objectives) of the company, the liability of members, the
amount of its authorized capital etc.
➢ It is foundation on which the structure of the company is built.
1 (B). Articles of Associations
➢ It contains the rules and regulations for the internal management of
the company.

2. Certificate of Incorporation
➢ After successful verification, ROC issues a Certificate of
Incorporation, and the company is legally formed.
3. Capital subscription (Capital raising stage) (Only for Public
Companies)
➢ In this stage, the company raises funds by inviting the public to
subscribe to its shares through a prospectus.
Key Steps:
•Issue of prospectus to the public.
•Receive share applications.
•Allotment of shares.
•Ensure compliance with SEBI Guidelines (for listed companies).
•Minimum subscription must be achieved (usually 90% of issue amount).

Note: Private companies skip this stage as they cannot invite the public to
subscribe to shares.
4. Commencement of Business Stage
Applicable To:
Earlier, this was applicable only to public companies. Under the
Companies (Amendment) Ordinance 2019, even private companies
must now file a declaration before starting business.
Requirements:
File Form INC-20A with a declaration that:
➢ The company has received the subscription money.
➢ The registered office is properly verified.
➢ After Filing:
Once approved, the company can legally commence business
operations.

Key Person /
Stage What Happens
Document
Business idea is created
1. Promotion Promoter, Business Plan
and planned.
Company is legally
MOA, AOA, Certificate
2. Incorporation registered with
of Incorporation
government.
Public is invited to buy
3. Capital Prospectus, Share
shares (only for public
Subscription Applications
companies).
Company gets
4. Commencement of INC-20A Form, Proof
permission to start work
Business of Capital Received
officially.
Legal Requirements for Establishing a New Business Unit
➢ To start any business legally in India, an entrepreneur must
fulfill several regulatory and statutory requirements. These
include:
1. Selection of Business Structure
➢ Choose the appropriate legal structure:
▪ Sole Proprietorship
▪ Partnership Firm (under Indian Partnership Act, 1932)
▪ LLP (under LLP Act, 2008)
▪ Private Limited Company / Public Company (under
Companies Act, 2013)
▪ One Person Company (OPC)
2. Name Reservation and Registration
➢ Register the business name with the Ministry of Corporate
Affairs (MCA).
➢ Ensure the name is unique and not infringing on trademarks.
3. PAN and TAN Registration
➢ Obtain Permanent Account Number (PAN) and Tax
Deduction and Collection Account Number (TAN) from
the Income Tax Department.
4. Goods and Services Tax (GST) Registration
➢ Mandatory if the turnover exceeds the prescribed limit.
Required for inter-state trade.
5. Shops and Establishment License
➢ Required under respective state laws for operating
offices, shops, or commercial establishments.
6. Factory License (if applicable)
➢ Under the Factories Act, 1948, if the unit involves
manufacturing with 10 or more workers using power.
7. Import-Export Code (IEC)
➢ If the unit is engaged in international trade, IEC is
issued by DGFT (Directorate General of Foreign
Trade).
8. Labor Law Compliances
➢ Register under:
•Employees Provident Fund Organization
(EPFO) (if 20+ employees).
•Employees State Insurance Corporation
(ESIC) (if 10+ employees).
•Labor Welfare Acts
9. Other Sector-Specific Licenses
➢ SEBI Registration (for financial services)
➢ Udyam Registration (for MSMEs)
➢ Fire Safety Certificate
Legal Requirements for Raising Funds
1. Preparation of Legal Documents
➢ Draft business plan, project report, memorandum
of association (MOA) and articles of association
(AOA) (for companies).
2. Authorized Capital Requirement (for companies)
➢ Define the authorized capital in the MOA and
increase it if more capital is to be raised.
3. SEBI Compliance (for Public Issues)
➢ If issuing shares or debentures to the public, comply
with SEBI regulations and file a prospectus.
4. Private Placement and Rights Issue
➢ Legal formalities under Companies Act if issuing
securities privately or to existing shareholders.
5. Loan Documentation with Banks/NBFCs
➢ Legal agreement specifying repayment terms, security,
interest, etc.
6. Security Creation and Registration
➢ For secured loans, the security must be legally documented
and often registered with ROC (Registrar of Companies).
7. Angel Investors/Venture Capital Funding
➢ Term sheets, shareholders' agreement, and compliance with
FEMA (if foreign investment involved).
8. Foreign Direct Investment (FDI)
➢ Comply with FEMA regulations and sectoral FDI caps.
➢ File necessary forms with RBI and DPIIT( department of
promotion of industry and internal trade )
Raising Funds for a New Venture
Starting a new venture requires more than just a great idea it needs funding to bring the idea
to life. Funds are essential to cover product development, infrastructure, staffing, marketing,
and day-to-day operations. Entrepreneurs can raise funds from various sources, each with its
own benefits, challenges, and documentation requirements.

Stages of Funding a New Venture

[Link] Stage:
Funds are needed for research, prototype, feasibility studies.
Usually raised from personal savings, family, or angel investors.
2. Startup Stage:
Funds required to launch the business and begin operations.
Sources: angel investors, early-stage venture capital, incubators.
[Link] Stage:
Business needs capital for expansion, scaling, entering new markets.
Sources: venture capitalists, banks, private equity, retained earnings.
[Link] or Later Stage:
Funding is used to diversify products/services or go international.
Sources: IPOs, strategic investors, mergers, debt instruments.
2. Types of Funding Sources
A. Equity Financing (Ownership-based)
[Link] Investors
[Link] individuals who invest early in high-potential startups.
[Link] not just capital but mentorship and business networks.
[Link]: Early investment in Flipkart and Ola.
[Link] Capital (VC)
[Link] funds that invest in startups with growth potential.
[Link] high returns and may take a share in ownership/control.
[Link]: Sequoia Capital India, Accel, Nexus Venture Partners.
[Link] Equity
[Link] in more mature ventures for larger amounts.
[Link] used in expansion or restructuring stages.
4. Initial Public Offering (IPO)
1. Selling shares to the public through the stock exchange.
2. Suitable for large businesses ready to go public
B. Debt Financing (Loan-based)
[Link] Loans
[Link] method; repayment with interest over time.
[Link] collateral, good credit history, and a strong business plan.
[Link] Loans (Non-Banking Financial Companies)
[Link] to access for small entrepreneurs, though interest may be higher.
[Link] Loan Schemes
[Link] Loan, Stand-Up India, SIDBI assistance for MSMEs.
[Link] subsidized with minimal collateral.
[Link]
[Link] provided to rural and small-scale entrepreneurs.
[Link] for women and low-income business owners.
C. Alternative Funding Options
Crowdfunding
Raising small amounts from a large number of people via online platforms.
Example: Kickstarter, Wishberry.
Grants and Subsidies
Non-repayable funds from the government or NGOs.
Usually tied to social impact, innovation, or sector-specific goals.
Incubators and Accelerators
Provide funding, office space, mentoring, and support.
Often used by early-stage startups.
Venture Capital: Sources and Documentation Required
What is Venture Capital?
➢ Venture Capital (VC) is funding provided by investors to
startups and small businesses with long-term growth potential.
It’s a form of private equity investment, usually provided in
exchange for equity.

Key Features of Venture Capital

•High Risk, High Return: VC is usually invested in
startups with high uncertainty, but potential for exponential
growth.
•Equity Investment: Venture capitalists invest in return for
an ownership stake (equity) in the business
•Exit-Oriented: VCs plan to exit the venture after a few
years through IPOs, mergers, or acquisitions to earn
returns.
Sources of Venture Capital

1. Government-backed Venture Funds

➢ Government agencies provide venture support, especially for sectors like
agriculture, tech, and manufacturing.
➢ Examples:
• SIDBI Venture Capital Limited
• IFCI Venture Capital Funds
• Department for Promotion of Industry and Internal Trade (DPIIT)
schemes
• Startup India Seed Fund Scheme
2. Corporate Venture Capital
➢ Corporate Venture Capital is when a big company invests in a small
company (startup) not just to earn profit, but to also learn, grow, and
stay ahead in the market.
➢ usually in exchange for some ownership (equity) in that startup.
➢ Examples:
Google Ventures AI
Intel Capital Invested in Flipkart, Paytm
Mahindra Partners Invested in e-mobility startups
3. International Venture Capitalists
➢ Foreign VCs invest in Indian startups, especially in fintech, health
tech, and e-commerce.
➢ International Venture Capitalists are VC firms based outside
India (usually in countries like the US, China, Japan, etc.) that
invest money in startups around the world, including India.
➢ Examples:
VC Firm Country Investments in India
SoftBank Vision Fund Paytm, Ola, Swiggy
Japan

Lightspeed Ventures USA OYO, ShareChat

Tiger Global USA Flipkart, Razorpay,

ShareChat

[Link] Investors
➢ Angel investors are individuals who invest early in a
startup, usually at the idea stage.
They take big risks, but if the startup succeeds, they can earn
big rewards
➢ Angel Investor = Individual Person
➢ Examples:
•Indian Angel Network
•Mumbai Angels
•Chennai Angels

5. Venture Capital Firms

➢ A Venture Capital (VC) Firm is a company that
invests money in startups and small businesses that
have the potential for high growth.
➢ Unlike banks, VC firms do not give loans.
Instead, they invest money in exchange for equity
(ownership) in the business.
Examples:
Matrix Partners
Nexus Venture Partners
Documentation Required for Venture Capital Funding
a) Pitch Deck / Business Plan
➢ Overview of idea, market size, financial projections, revenue
model, and founder’s background.
➢ A visual presentation to pitch your business during meetings.
➢ Gives a quick overview. like Problem + Solution, Business
model ,Product demo ,Market opportunity ,Financials etc.
b) Due Diligence Documents
➢ Due Diligence Documents are the official papers and records
that help someone understand the real condition of a company
before making a big decision involving money or ownership.
➢ To allow VCs to verify your company’s legal, financial, and
operational status.
• Certificate of Incorporation and bylaws.
• Financial statements
• Tax returns
• IP rights or patents
• Legal ownership of assets
• Company registration documents
• Contracts and agreements
C ) Term Sheet
➢ A term sheet is like a handshake agreement on paper. the main points of how
much money the investor will give, what they get in return (like shares or equity),
and other important rules for the deal.
➢ A non-binding summary (This is not the final contract) of the key terms of
investment:
• Amount of investment
• Valuation of the company
• Equity to be offered
• Liquidation preference
• Rights of investors
• Exit options
d) Shareholders’ Agreement (SHA)
➢ A Shareholders’ Agreement is a private agreement between the owners
(shareholders) of a company to manage how the company operates, how shares are
handled, and how disputes will be resolved.
➢ Binding agreement between founders and investors covering:
• Voting rights
• Board representation
• Rights of first refusal
• Profit sharing rules
• Shareholding details
e) Subscription Agreement /Share Subscription Agreement (SSA)
➢ A Subscription Agreement is a legal contract between a
company and an investor.
➢ Legal document that confirms the investor's intention to subscribe
to a certain number of shares.
➢ These are the final legal contracts that seal the deal.

f) Confidentiality & Non-Disclosure Agreements (NDA)

➢ Protects sensitive business information during discussions and due
diligence.
➢ “Confidential Information” means any non-public information
shared by the Disclosing Party, like business plans, customer data,
financial information, and product designs.