Startup Funding Readiness Index™
Answer 10 signals across Legal, Financial, IP, Governance and Compliance — your investor-readiness score updates live and shows exactly what to fix before your next raise.
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Disclaimer: Indicative self-assessment for Indian startups. Investor due-diligence requirements vary by stage, sector and fund. Scores are directional, not a guarantee of funding.
What investors actually check in due diligence
Before a term sheet converts to money in the bank, investors run legal, financial and compliance diligence. These are the five dimensions that decide whether a deal closes fast, gets re-priced, or falls apart.
⚖️ Legal & cap table
Proper Private Limited incorporation, a signed Shareholders’ Agreement and founder vesting. A messy cap table or missing SHA is the fastest way to kill a round.
📊 Financial hygiene
CA-certified audited financials and a valuation report from a SEBI-registered merchant banker. No fund releases capital without clean, audited books.
🛡️ IP ownership
Registered trademark and core technology / patents vesting in the company — not in a founder personally. Contestable brand or IP scares investors off.
🏛️ Governance
Documented board meetings with signed minutes, an ESOP policy and signed employment agreements. Governance records prove the company is well-run.
✅ Compliance
Current GST, ROC (MCA), Income Tax and TDS filings, plus DPIIT Startup Recognition for tax benefits and credibility. Pending filings stall diligence.
📈 The score itself
Each of the 10 signals is worth 20 points (200 total). 80%+ means you’re Series A/B ready; below 40% means fix the basics before you pitch.
Pre-fundraise readiness checklist
Work through these before you open a data room. Closing these gaps upfront protects your valuation and shortens diligence from months to weeks.
Incorporate as Pvt Ltd
Investors fund companies, not proprietorships. Get a clean Private Limited structure in place first.
Sign the SHA + vesting
Shareholders’ Agreement with 4-year founder vesting and a 1-year cliff, drafted by a lawyer.
Audit your financials
Statutory audit and CA-certified statements for the last 2 years, with clean books of accounts.
Get a valuation report
From a SEBI-registered merchant banker — legally required to issue shares at a premium.
Protect brand & IP
File your trademark and secure core technology / patents in the company’s name.
Clear all filings + DPIIT
Bring GST, ROC, ITR and TDS current, run board meetings with minutes, and get DPIIT recognition.
What documents does a startup need before approaching investors?
Key documents include: incorporation certificate, MOA/AOA or LLP agreement, DPIIT recognition certificate, shareholding structure and cap table, audited financial statements (if available), pitch deck, business plan or teaser, term sheet template, and a data room with contracts, IP ownership, and compliance records.
What is a term sheet and what are its key clauses?
A term sheet is a non-binding document outlining the key terms of an investment. Important clauses include: pre/post-money valuation, investment amount, anti-dilution provisions (broad-based weighted average is common), liquidation preferences, board composition, voting rights, drag-along/tag-along rights, and vesting schedules for founders.
What is ESOP and why is it important for startup funding?
ESOP (Employee Stock Option Plan) is a pool of shares reserved for employees, typically 10-15% of the fully diluted equity. Investors often require an ESOP pool to be created pre-investment. ESOPs help attract talent and align employee incentives without immediate cash outflow for the startup.
What are SEBI's regulations for angel investments in Indian startups?
Angel funds under SEBI AIF Category I regulations can invest a minimum of Rs 25 lakh per startup. Angel investors investing directly are not regulated by SEBI but must comply with FEMA rules for foreign investment and the Companies Act for share issuance. Startups must comply with pricing guidelines under FEMA for foreign investment rounds.
How is startup valuation done for seed and Series A rounds in India?
Early-stage valuation is typically based on revenue multiples (for revenue-generating startups), comparable transactions, or pre-agreed valuation based on market potential and team quality. Seed rounds in India commonly value startups between Rs 2-10 crore post-money. Series A valuations typically range from Rs 20-100 crore for startups with product-market fit.
Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.