India is often described as “the poster child of emerging markets” for its vast commercial potential for startups. In a country with a population of nearly 1.3 billion people, even niche products can have significant market potential. In the 1990s, economic reforms moved India towards a more market-based economic system. Startups in India as in many other parts of the world, have received increased attention in recent years. Their numbers are on the rise and they are now being widely recognized as important engines for growth and jobs generation. Through innovation and scalable technology, startups can generate impactful solutions, and thereby act as vehicles for socio-economic development and transformation.


The COVID-19 outbreak not only brought the global economy- it exposed the inadequacies of the developed world’s health systems in addressing fast-spreading pandemics. The pandemic has caused what is being called a structural shift for digital healthcare in many countries, including India. The current situation prescribes that it is time for India to reboot healthcare and support healthcare startups for closing the gaps in the traditional healthcare system.


Health-tech is the fastest-growing sector in the healthcare world. Health-tech, the term itself encapsulates this evolution, clearly referring to the intersection between healthcare and technology. The ever-evolving startup culture and faster adoption of new-age technologies like cloud computing and artificial intelligence (AI) have catalyzed the growth of health-tech startups in India. These startups facilitate medical procedures by marrying traditional practices with modern technologies. Such ventures are increasingly becoming popular in India as telemedicine, and online delivery of healthcare facilities help them tap a larger market base.


In India, the health-tech market can be broadly divided into

  • Telemedicine – it is the platform where the medicine is combined with technology to provide healthcare services remotely.
  • E-pharmacy – an online marketplace where the patient can order medicines, health products and can get them deliver at their doorsteps.
  • Healthcare and IT analytics – Healthcare organizations may use SaaS (Software as a Service) and other Cloud solutions to manage and access resources, patient records, data, and healthcare infrastructure.





Indian government plans to fabricate an ecosystem that advances entrepreneurship at the startup level and has taken various activities to guarantee that the entrepreneurs get suitable help.


Digital India is an activity drove by the Indian government to guarantee that government services are made accessible to each resident through online platform. In July 2015, the PM declared the Digital India activity that plans to interface provincial territories by building up their advanced framework. This converts into a great business opportunity for startups. Online based companies in India have been wanting to go into India’s rural region as part of the governments initiative.





We have accepted a lot of terms and conditions on various apps but have we ever read them? Many of us have not, to be honest. In these terms and conditions, they always ask for permission to collect our personal data? Like they ask for our location, contact information, storage access, and so on. Through these permissions, they monitor whatever we do on our devices and collect that data. For example, we search something on Google, Instagram, other social media apps start showing us the ads or promotion pages related to our searches. Likewise, other apps also do this. Across multiple apps and websites, for a smooth, better, and user-friendly experience, this data is used to train AI algorithms.

Even though it is done for the user’s benefit this comes at the cost of data privacy. Sometimes this data is collected only to be sold to third parties by the companies. Moreover, this data is at the risk of getting stolen by exploiting loopholes.





Now the concern is that how to keep your data safe and protected. Apart from data protection rules that binds an application or website, the user must ensure few things for better safety. Such measures include:

  • Staying away from apps not available on Play Store or App Store (iOS).
  • Not entering information without checking the credibility of the app or site.
  • Clearing cache and cookies regularly.
  • Inspecting what permissions, we are giving them to access and process our data.

These are some of the things that a user can do from their end for data protection. But actual data protection lies in the hands of the government and the developers.






It is the primary duty of a government to protect its people and keep their personal or even public data safe. Governments of different nations have different policies regarding data privacy and protection. Like in the USA, each state has its own rules regarding data protection. Apart from abiding by government rules and regulations, the developer also takes measures to protect a user’s data.


With the outbreak of the COVID-19 pandemic, many developing countries including India are on the cusp of a digital revolution. Further, as part of its Digital India Mission, the Indian Government recognizes the issue of cyber security and the need for robust laws to protect digital data. An important step in this direction is the proposed Digital Information Security in Healthcare Act (“DISHA“), which seeks to provide for electronic health data privacy; confidentiality, security and standardization; and establishment of National Digital Health Authority and Health Information Exchanges.


  • Digital Information Security in Healthcare Act (“DISHA”)


DISHA lays down provisions that regulate the generation, collection, access, storage, transmission and use of Digital Health Data (“DHD“) and associated personally identifiable information (“PII“). DISHA states that health data including physical, physiological, mental health condition, sexual orientation, medical records, medical history and biometric data is information that can only be the property of the person it pertains to.


  • DHD is an electronic record of health-related information about an individual and includes information relating to an individual’s physical or mental health; donation by the individual of any body part or any bodily substance, etc.
  • PII is defined as any information that can be used to uniquely identify, contact or locate an individual specifically or along with other sources. This includes information such as name, address, date of birth, vehicle number, financial information etc.
  • The legislation creates a central regulator called the National Electronic Health Authority (NeHA), and various State Electronic Health Authorities (SeHA) to give effect to the provisions of DISHA.
  • It covers within its ambit clinical establishments (which includes hospitals, nursing homes, dispensaries, clinics, sanatoriums and pathology labs) and any other entity that collects DHD.
  • DISHA has proposed stringent penalties for defaulters in the nature of fine and/or imprisonment.


Challenges to implementation of DISHA


The most serious issue with data collection and sharing will be how to obtain informed consent from a data owner. Another concern will be effective enforcement of the provisions of DISHA, given that the costs involved in implementing security solutions may become a drain on resources for clinical establishments.

Electronically stored data is vulnerable to security breaches and therefore comprehensive and technology driven data security measures would need to be adopted. Sensitization and protection of people’s right to privacy and security of their data will be the bedrock of DISHA.


  • Personal Data Protection Bill 2019


The Government of India had introduced the Personal Data Protection Bill 2019 (PDP Bill) in the Lok Sabha on 11 December 2019.


The “PDP Bill 2019” which defines both Personal and Non-personal Data, is a substantive framework which introduces a specialized regulatory approach for the Protection and Privacy of Data in any form (digital or non-digital) in India. The proposed legal framework would be applicable to processing, storage and transfer of any form of personal data across sectors of the economy, academia, industry and the society. The Bill has also limited provisions relating to Non­Personal Data (NPD).


The key recommendations made by the Joint Parliamentary Committee in their report:


  • The “Bill” will apply only to data collected, stored and processed in digital form.
  • The JPC has recommended that all the data has to be dealt with by one Data Protection Authority (DPA). JPC have proposed to change the name of Bill to “Data Protection Bill”.
  • JPC has recommended that all social media platforms, which do not act as intermediaries, should be treated as publishers and be held accountable for the content they host.




  • The Information Technology Act, 2000, and the Information Technology Rules, 2011


Digital health involves a constant exchange of information between the patient and the service provider. This information is termed Sensitive Personal Data or Information (SPDI).Before a doctor or an institution does anything with the data, the patient’s written permission needs to be obtained.


The IT Act, 2000 does not apply to digital health services in such circumstances, the service provider would be classified as an intermediary under the Intermediary guidelines and IT Act . An intermediary is not liable for third-party content hosted by the intermediary if the intermediary’s role is limited to providing access to a communication system over which information is hosted or stored, and the intermediary has followed the due diligence requirements outlined in the IT Act.


The constitutionality of the Intermediary Guidelines and Section 79 of the IT Act was challenged before the Supreme Court in the case of Shreya Singhal v. Union of India (2015), stating that these provisions were vague, broad. The Supreme Court interpreted Section 79 of the  Act and the Intermediary Guidelines to indicate that the intermediary must receive a court order or communication from a government agency ordering it to remove the particular content. The court further noted that any such court order or notice must fit within the scope of Article 19(2)’s reasonable limitations, implying that any removal must be legal.




Data analytics and predictive healthcare will become more accurate as healthcare data becomes more extensive. While both the bills that is DISHA and the PDP Bill have not been passed by the Parliament and await enactment, it shall be interesting to see the shape and form in which they are both enacted. These bills will change the shape of data protection (personal or health data) in India making it more in tune with global standards. While the present law in terms of protection of health or personal data is more generic in nature, the bills bring out additional responsibilities on the data collector with stringent fines and penalties for non-compliance of such responsibilities which need to be properly assessed once these bills become law.



  1. Pradhan Mantri Gramin Digital Saksharta Abhiyaan”, accessed September 4, 2019.
  2. NASSCOM, “Indian Tech Start-up Ecosystem, Approaching Escape Velocity,” 2018.



The standards for the global start-up community have been raised by the Indian start-up ecosystem. By providing financial backing to businesses and guiding and supporting them as they expand into the market, angel investors have had a significant impact. Although the process of angel investing for start-ups appears to be straightforward, it actually entails a number of difficult stages and formalities that both the fledgling company and the investor must fulfil. India today has more than 26,500 active angel investors, including private investors and successful entrepreneurs, up from just a few individuals more than ten years ago. Angel investment is a long-term endeavour, but it is currently becoming more and more popular in India, in large part due to a developing ecosystem and in part because firms have been successfully listed on the capital market. But the question which revolves around it is very simple that whether the legal process behind it is known to everyone and also is the process easy and speed. Legal process of angel investing is a long process which involves many steps to be taken and also people are less aware of it.


High-net-worth individuals who support tiny companies or entrepreneurs financially are referred to as angel investors or angel investors network (also known as private investors, seed investors, or angel funding). These individuals often do so in exchange for ownership stock in the start-up or entrepreneur’s business. Angel investors are frequently found among an entrepreneur’s friends and family. Angel investors may contribute one-time capital to help a firm get off the ground or continuing funding to help the business get through its challenging early phases.


Angel investing requires following a long legal process in India which includes the following steps-

NDA: NON DISCLOSURE AGREEMENT: In order to protect against idea theft and misuse under all circumstances, the investor and start-up both should sign a nondisclosure agreement. This agreement will guarantee the parties’ rights and safeguard their mutual exclusivity during the meeting and pitch. An NDA must be signed in order for an angel investor to have access to company information to analyse potential start-ups and invest in strong start-ups. The parameters of the investment and the amount of the investment that the start-up and the investor are discussing are also covered by the non-disclosure agreement.

COMPANY VALUATION BY CHARTERED ACCOUNTANT: To go to the next step of investing in the business, one must ensure that the firm’s valuation has been assessed by a certified Chartered Accountant in order to determine the genuine equity value of the company. The price per share for the company will either be issued at par, a discount, or a premium once the company’s valuation has been established. This will help both the start-up and the investor to know the value of their investment and the mindset will be clear from the beginning.

DUE DILIGENCE: Before moving forward with the funding process, the investor does what is basically an investigation by reviewing all the documentation related to the favoured start-up and assessing its future market potential. An investor must make sure he follows the due diligence procedure, which includes cross-questioning to confirm important hypotheses and identify avoidable errors.

SUBSCRIPTION OR LOAN AGREEMENT: By signing the subscription agreement or loan agreement, an investor must describe how he is willing to put his angel investment into a firm. An angel investor can finance a firm by either purchasing stock in it through a Subscription Agreement or by lending it money through a Loan Agreement.

1. A subscription agreement: A subscription agreement outlines a shareholder’s intent to purchase shares as well as his eligibility to do so. It stipulates that in order for the subscriber to become a shareholder, the start-up must consent to selling a set number of shares at a specific time and price. In exchange, the subscriber consents to purchase the shares at a given time and price.

2. A loan agreement: A loan agreement is a legal document that outlines the pledges that the investment party and the start-up have made to one another in the form of debentures or other financial instruments. The investor obtains his investment returns by funding the money as a loan for a defined interest to be paid after a specified time period by signing a loan agreement.

SHAREHOLDER’S AGREEMENT: The shareholder’s agreement and the subscription agreement are sometimes confused, but they have different purposes. A shareholder’s agreement outlines each shareholder’s rights in the corporation and establishes their relationship to one another. Along with other terms, the contract outlines the investor’s shareholder transfer rights.

INVESTMENT TERMS AND NEGOTIATIONS IN TERMSHEET: at this stage of agreement the investor negotiates on the terms and conditions of the start-ups. Some main points are taken care of in the term sheet such as:

A) Liquidation Preferences: By requesting a specific liquidation preference that ensures his investment security, an investor can protect his investment when a start-up is looking to wind up or rearrange specific components of a company. A participating or non-participating liquidation preference is up to him.

B) Warrants coverage: In accordance with the terms of the agreement between the firm and the shareholder or investor, a warrant equal to a predetermined portion of the investment is issued by the company. It enables the investor to purchase shares at a specified cost.

C) Conversion Rights: A shareholder’s right to convert Series A preferred shares into shares of common stock at a predetermined conversion rate is outlined by the conversion rights.

D) Automatic Conversion: This provision permits the automatic conversion of the Investor’s Stock into Common Stock at the Applicable Conversion Rate at: closure of a publicly offered security with strong underwriting Rather, the majority of the holders of the outstanding preferred stock must agree in writing.

E) Anti-Dilution Rights: An anti-dilution clause in an option, security, or merger agreement allows the investor the right to keep his proportional ownership in the startup company by purchasing an equivalent number of shares of any subsequent issuance of the security.

F) Redemption Rights: A startup that issues preferred stock to angel investors may be required to buy back their shares from the company after a set amount of time.

G) Voting Rights: A shareholder’s rights on business policy are determined by their ability to vote. There are instances where the voting majority is necessary to conduct corporate action, and voting rights vary across different instruments.

H) Dividends: For an investor, dividends act as a return guarantee. In the early stages, dividend payments are frequently irregular. Investors frequently allow companies to develop to the preferred size over time in order to accumulate dividends. The preferred dividend would increase after the investment period, i.e., during the startup sale or IPO, benefiting the investor from the fixed return.

I) Board Participation: Through board participation, an individual investor or group of investors has the option of running for election to the company’s board of directors.

J) D&O Insurance: The directors and officers of the company are covered by this liability insurance. If an insured person experiences a loss as a result of legal action brought for alleged wrongdoing committed in their role as directors or officers, it is reimbursed as reimbursement for losses or an advance on defence costs.

K) Pro-rata/pre-emptive rights: These rights give investors the world best business opportunity, but not the obligation, to keep their current level of ownership during succeeding funding rounds.
L) Information Rights: As required by the information rights, the corporation must provide the following information to investors: 90 days after the conclusion of every fiscal year, the yearly financial accounts must be audited. Unaudited quarterly financial reports must be provided no later than 45 days after the end of each quarter, along with a comparison of the results to those forecasted in the company’s annual budget.

M) Letter Expiration: A letter’s expiration date specifies how long it is still valid. If the business fails to return the original copy or fax the signed copy to the investor before the deadline, the form is deemed void.

After-investment assistance: You officially become an angel investor or a stakeholder of the company once the aforementioned processes are finished. Following that, the business is required to give the investor quarterly reports. As an investor, you must provide operating and management methods for the company to make it more viable.


For any said process of investment there’s a lot of process to follow as the investor has to see whether the company in which he/she is investing is worth it or not. It has the future market or not which is very important for any start-up to grow as a full-fledged business. The angel investing process might seem very lengthy and time taking but it has helped a lot of start-ups to grow and to become efficient with the funds and expertise given by the investors. It is crucial that the system functions within the goals of the legal domain for any industry to develop to the point where it benefits the economy and many other people’s lives. The aforementioned rights have been established to protect the investor and enable them to support start-ups and build a robust start-up ecosystem that will inevitably benefit start-ups, jobs, and the national economy.





Seed funding or seed-stage funding is a very initial investment. Generally, investors often get an equity stake in exchange for the capital invested. In case the founders use their savings to start up a business, it is called bootstrapping. On the 16th of January 2016, the Government of India introduced the Start-up India Seed Fund Scheme in order to create possibilities for entrepreneurs to grow their businesses. Our esteemed Prime Minister, Mr. Narendra Modi, made the announcement to establish this scheme. Financial help of up to Rs 50 lakh would be provided to entrepreneurs at an early stage through incubators under this scheme. This scheme has a budget of Rs 945 crore set aside by the government. Proof of concept, prototype development, product trial, market entry, and commercialization will all be covered by this fund. The government will offer funding to incubators via this programme. The incubator will be in charge of constantly giving these funds to the company. 3600 entrepreneurs through 300 incubators will benefit from the start-up India seed fund scheme in the next 4 years. The government will award a grant to 300 incubators under the Start-up India Seed Fund Scheme 2022. This scheme would provide up to Rs 50 lakh in funding to the start-up. Through the official webpage, incubators can apply for funding under the Start-up India seed fund scheme. The government would provide them with a seed fund after confirming their application. Start ups can also apply for this plan directly through the portal, where they can choose from a list of incubators based on their preferences.



The Start-up India Seed Fund’s major goal is to provide cash to entrepreneurs for their firms so that they can build their businesses. Entrepreneurs no longer need to resort to banks or financial organisations to receive cash for their business ideas thanks to this scheme. They can apply for cash directly from the government by using this scheme. The Start-up India seed fund concept will meet early funding needs at the right moment. So that product development, trials, market introduction, and other activities can occur at the appropriate time. This programme will also create a lot of jobs and validate start-up business concepts.


  • In the next four years, it expects to support 3,600 entrepreneurs through 300 incubators.
  • DPIIT will appoint an Experts Advisory Committee (EAC) to oversee the Scheme’s overall implementation and monitoring.
  • Grants of up to Rs.5 crore would be given to the committee’s chosen suitable incubators.
  • Start-ups will receive subsidies of up to Rs.20 lakh from the selected incubators for validation of proof of concept, prototype development, or product trials.
  • Start-ups will be given up to Rs.50 lakh in convertible debentures or debt-linked instruments to help them enter the market, commercialise their products, or scale up.



  • DPIIT should recognise the start-up.
  • The start-up must have been founded within the last two years at the time of application.
  • The start-up must have business ideas in order to build a product or service that is marketable, scalable, and commercially sustainable.
  • According to the businesses act of 2013 and SEBI regulation 2018, the Indian promoter’s equity in the company must be at least 51 percent or more at the time of application to the incubator for the scheme.
  • No support of rupees ten lakh or more should have been given to the company under any Central or government scheme.
  • Start-ups developing new solutions in areas such as water management, waste management, education, agriculture, food processing, and so on will be given priority.
  • In order to solve the problem that is being targeted, the firm should include technology into its primary product or service.


  • It is necessary for the incubator to be a legal entity.
  • The central or state government must aid the incubator.
  • At the time of application, the incubator must have been operating for at least two years.
  • The incubator must be able to accommodate at least 25 people.
  • At the time of application, the incubator should have at least 5 businesses undertaking physical incubation.
  • In the incubator, a full-time chief executive officer with experience in business growth and entrepreneurship should be provided, as well as a skilled staff.
  • The incubator is ineligible if it receives funds from a third-party private entity for the incubates.
  • If the incubator is not supported by the central or state governments, it must have been in operation for at least ten years, have submitted audited yearly reports for at least two years, and have at least ten unique companies undertaking physical incubation at the time of application.




  • Go to the official website and the home page will be seen before you.
  • The company will have to click apply now and under that choose incubators.
  • The company then needs to create an account by providing basic details such as contact info, id proofs, company name, country, etc.
  • Now after creating an account you have to apply for the seed fund scheme and by clicking on that your application form will appear.
  • The company has to enter all the required details in this application form like general detail, incubator team detail, incubator support detail, fund requirement details, etc.
  • Upload necessary documents and submit it and by this you can apply under SISFS.



  • Go to the official website and the home page will be seen before you.
  • The company will have to click apply now and under that choose start-up.
  • After that application form will appear before you.
  • In this application form have to enter all the required details like your name, email address, mobile number, etc.
  • After that, you have to upload all the required documents.
  • Now you have to click on submit.
  • By following this procedure you can apply as a startup under the startup India seed fund scheme.


  • Start-up Innovation Challenges: This is an excellent opportunity for any start-up to expand their network and raise funds.
  • The National Start-up Awards: aims to recognise and reward excellent entrepreneurs and ecosystem enablers who are fostering innovation and introducing competition into the economy.
  • SCO start-up forum: The first-ever Shanghai Cooperation Organisation (SCO) Start-up Forum was inaugurated in October 2020 with the goal of cooperatively developing and improving start-up ecosystems.
  • The ‘Prarambh’ Summit intends to create a venue for start-ups and young minds from all over the world to come up with new ideas, innovations, and inventions.


SISFS led by government of India is a great way for start-ups to get funds they need for their business development. Earlier there was no scheme for start-ups but as time moved and there was a wave of start-up companies coming up which had good ideas and models but no money to fund it, the government took the charge and is trying to fund as much start-ups it can.




Debts are usually a scary thing. Some debts, however, are beneficial. These favourable debts are utilised to fund a startup’s early years. A venture debt, also known as venture lending, is a sort of debt financing received by early-stage enterprises such as startups to raise operating capital or short-term finance. Unlike other types of debt financing, venture debt does not necessitate collateral.

Startups are relying heavily on venture debt financing these days. Despite the global economic lockdown caused by the COVID-19 epidemic, venture debt investment grew dramatically in the first half of 2021, according to data provided by Venture Intelligence (an Indian unicorn).More than $170 million in venture debt transactions have been completed, compared to $55 million in the first half of 2020 and $64 million in the second half of 2020.


What is venture debt fund?

There are two common ways for a company to get capital: equity funding and debt financing. A third option might be a combination of stock and debt financing.


Various modes of rising share capital:



Equity capital is the primary source of funding for a company, and it is obtained through venture finance, which is a subset of private equity. It is raised by the startup through investors who see great potential in the company’s growth in exchange for common or preferred stock in the company.

Along with equity capital, investors contribute to debt financing, which serves as an extra source of working capital for the firm. As a result, a business will typically raise venture debt in addition to equity money. Both are raised during the startup’s early stages.

Unlike stock capital, debt financing functions in the same way as loans do. As a result, the investor anticipates that the sum will be repaid with interest in the future.The distinction between the two is that equity money is still the primary source of funding for a company, whilst venture debt funds are used to get working cash.

The hybrid funding strategy is thought to be more appropriate for raising finances. However, during the COVID-19 pandemic, where investors have become hesitant to raise equity money, loan finance has been more desired.


What is debt financing?


Debt financing is a means of raising funds to run a business and cover operational costs during the early stages of a startup. It is as early as the stage at which a startup’s idea is born. Depending on the requirements and circumstances, the financing might be either short-term or long-term. Short-term debt financing can be used to support the startup’s day-to-day operations, whilst long-term debt financing can be used to purchase assets such as machinery and equipment.

However, the investors are at risk in both circumstances. The risk is higher in equity capital since investors may not receive anything if the company goes bankrupt. However, investors still prefer to raise equity capital since it allows them to be involved in the company’s management and so preserve their influence.

Thus, venture capitalists and other venture debt funds provide funding to raise venture debt during the startup’s early and growing stages. Investors may be returned for this type of investment because the amount is usually not large, and they may charge pre-determined interest on it.


How to secure venture debt funds for start-ups? 



To obtain venture debt funding, first attempt to obtain venture capital from an institution or individual. If you are able to get venture funding, the same place may also be able to provide you with venture debt. A comprehensive business strategy is required to obtain loan financing.


What to include in a solid business plan executive summary contain?


To get started, you’ll need a business plan that includes sections on business description, product and market analysis, prospective market competitors and their analysis, sales and marketing strategy, ownership and management plan, operating plan, financial plan, and executive summary.


Business description 

The part on the business description should come first in the plan. It must include information about your idea and how it evolved into a business, as well as what the pain point of the market you are targeting is and how likely you are to be able to address it. You should not include everything in an overview because it will be included in the executive summary.

However, you can provide an overview of the industry, what the current market trends are, where your product will stand in relation to the current market trends, significant competitors, and expected sales.


Product and market analysis 

The product should be thoroughly defined in the second section, along with how it might respond in the market/industry you are targeting. This should reflect your thorough awareness of the market in which you intend to sell your product, therefore you must be certain of your major goals as well as market response estimations.


Competition analysis

This section is vital for funding purposes since it includes a thorough research of your possible competitors and assists you in presenting a standard image of yourself to the investor. Because you may face both direct and indirect rivalry in the market, you should write about every possible scenario. It will determine your market leverage over your competition. Make a point of analysing the weaknesses and merits of your product as well as those of your competitors, as this will be used to persuade possible funding sources.


Sales and marketing strategy 

This area should include the sales and marketing strategy you want to use for your product, pricing tabs, and how you intend to advertise/promote your product. You must have come up with a unique technique to offer your goods (unique selling proposition), therefore write it down here. Include all of the advantages that your product has that will persuade buyers to buy it.


Ownership and management plan  

The management team is critical in obtaining investors for various sorts of investment in every startup. As a result, this section is essential for any investor considering investing in your firm. Mention your internal and external management teams, their resources, and the overall availability of human resources. Because investors base their choice on how effectively your management team performs, make sure you mention their qualifications and how they will benefit the startup’s operations.

As a result, this part should explain your ownership structure (your company’s legal structure), internal and external management team structure, and human resources. There are numerous proposals for what this section should include. One solution is to form an advisory board to serve as a management resource.


Operational cost and financing plan

This is the most critical section for any type of funding. This section is split into two parts: the running costs plan and the financing plan. The operating cost describes how your firm will operate, including information about your employees, assets (if any), how your product is manufactured, how many people you will need if sales expand, and so on. It must include every area of your company’s day-to-day operations in order for the investor to gain a deeper understanding of it.

In addition, the financing strategy should include three items: your existing financing, your anticipated funding needs, and your forecasted income. Your project income will provide the investor a sense of your financing needs, therefore include all of these details by adding your income statement, balance sheet, and cash flow statement. These are the three most significant documents.


Executive summary  

An executive summary is a summary of the entire business plan in which the major aspects of the business plan are highlighted with keywords. Furthermore, the appendix can provide any additional information about the company.


About the underwriting process 

The consideration for venture debt includes interest payments, fees, and warrants. There are venture debt lenders who are already prepared to finance venture loans after a rigorous underwriting process. Underwriting is performed by an individual or organisation seeking to estimate the risk of an investment, loan, or borrowing.

Underwriting is the process of assessing the risks connected with a certain loan. Underwriters are responsible for evaluating each loan, determining the collateral security available (if any), and determining whether or not the borrower will be able to repay in the case of default.

As a result, it is analogous to a screening procedure that allows investors to make an informed decision.


Source of debt financing 

This can be divided into two categories: private and public. Individual lenders who are willing to provide debt financing in exchange for a personal guarantee are examples of private sources. Public venture debt finance, on the other hand, can be obtained through bank loans or bonds. This is referred to as financial leverage. Microloans, business loans, credit cards, peer-to-peer loans (personal loans), and trade credits are examples of other sorts of loans. Because venture debt funding is an alternative to traditional bank finance, it can be provided via a variety of debt funds established by various venture capitalist institutions/firms/individuals.


Lender  repayment methods

The lender must determine if the firm will be able to secure equity rounds in the near future to repay the venture debt. This is due to the fact that debt can also be repaid using a warrant, which allows the debt to be converted to equity at a later date. However, the equity invested in this transaction is less than that earned in a venture capital investment.


Taxes on debt interest costs 

The lender must determine if the firm will be able to secure equity rounds in the near future to repay the venture debt. This is due to the fact that debt can also be repaid using a warrant, which allows the debt to be converted to equity at a later date. However, the equity invested in this transaction is less than that earned in a venture capital ( vc ) investment.


Advantages and disadvantages of venture debt 

The first impression of venture loan funding is that it is easy to get because no collateral property is required. That, however, should be viewed as a disadvantage. It is because, in the absence of collateral, it may not be a more secure method of borrowing. Because this is similar to borrowing money via a loan, the lender may request personal guarantees. Personal assets such as your home, car, or any other type of investment can be used as a personal guarantee.

When you have a high-growth firm, you should consider debt financing because you will need continual funding to grow it. You can, however, choose debt finance for short-term objectives if you can readily repay it within a year or two of its maturity. However, companies should be wary of the impact these sources of financing have on their credit rating.


Venture debt financing during COVID-19  

Many funds have been founded for venture debt financing during the COVID-19 epidemic, as there has been an increase in venture debt financing. For example, in India, numerous funds such as Alteria Capital, Trifecta Capital, and Innoven Capital provide this form of funding. To mention a few, these funds have provided venture debt to startups such as Bigbasket, Dunzo, and Curefit. Ankur Capital and Unicorn India Venture plan to form additional capital venture funds to provide loan financing. Venture loan investment began in India 15 years ago, and it has since enriched the ecosystem of Indian businesses that have been unable to raise funds at the early stage. Even startups aim to go through the valley of death stages of a startup, where 90% of them fail. This is where venture loan financing comes in handy.



Debt financing is a faster way to receive money for startups, but it involves a number of factors that must be carefully considered before embarking on this path. The same law applies to investors and individual lenders in the business of providing venture finance funding. Before making a choice, both parties should evaluate the risks involved. Finally, because venture debt financing is derived from the venture equity market, one must closely monitor the same in order to understand the correct moment and the proper manner to obtain debt funding.




Introduction to startups

A startup is a basic, recently formed organisation that might take the shape of a small firm, a partnership, or a small enterprise with the goal of rapidly expanding a new business model. In other terms, a startup is a fresh, young firm that tries to establish a revenue-generating business model through a dynamic strategy. A startup usually starts with the production of a Minimum Viable Product (MVP), also known as a prototype, to evaluate and create a new endeavour or business technique.


Entrepreneurs also do research and testing in order to have a better understanding of innovations, developments, ideas, market concepts, and commercial possibilities. A shareholder’s agreement (SHA) is therefore required as a first step to validate the ownership, dedication, and contributions of the founders and investors. India is the world’s third-largest business centre, having a flourishing market for a diverse range of goods. However, India’s startup failure rate is exceedingly high. Moreover, 90 percent of startups in India are compelled to close their doors owing to a number of circumstances. The number of startups in India is expanding as individuals become more engaged in business and increased government programmes and working conditions are creating a great climate for enterprises to develop and prosper.


The Startup Ecosystem

Many Indian startups have emerged, particularly in the last couple of years, building optimised businesses (considerably innovation) to overcome a variety of problems we face in everyday life, especially now that India is taking centre stage in global markets due to its high productivity and restructure requirements, capturing value, and large market.


The main characteristics of a start-up company are that it will have no previous history, that its functions have not yet reached a stage of commercial operations, that it will have marginal profits with relatively high losses, that it will have limited promoter capital infused with a high reliance on external sources of funds, and that its investment decisions will be volatile. Investors are worried about when and if enterprises will become lucrative, thus startup funding has dried up.


Characteristics of Millennial Businesses:

Young organisations, as we discussed in the previous part, are various, but they share a few traits. In this part, we’ll focus on those shared qualities and take a deeper look at the valuation difficulties they raise.

●       Functional losses, negligible or no profits: The scant history offered for fledgling enterprises is rendered even less useful by credible indicators that they may have a marginal running factor. For start-up enterprises, revenues are often minimal or non-existent, and expenditures are frequently linked with keeping the business up and operating rather than generating sales. When used together, they result in severe productivity losses.


  • Reliance on private equity: In certain cases, emerging businesses rely on non-public equity resources rather than public markets. The progenitor generates practically all of the equity in the early phases (friends and circle of relatives). The demand for extra cash develops as the potential of future success grows, and venture capitalists become a source of equity capital in exchange for a stake of the corporate entity.


  • Statements with multiple values: The recurring strikes made by young companies to build value expose value to possible investors, who are always first, to the risk that deals given to succeeding value financiers would erode their confidence. In order to protect their assets, value financial specialists in young companies frequently seek and obtain protection from this outcome as the first demands on monetary standards from investments and in liquidation, as well as ownership or control privileges allowing them to have a say in the company’s activities. As a result, unique value commitments in a young firm will differ depending on a range of circumstances that influence their value.


  • Investments have a liquidity problem: In non-institutionalized systems, ownership assets in nascent enterprises are frequently significantly more volatile than investments in their free-market counterparts.


  • There are no financial records available: If the option of vocally communicating the clear moral exists, younger businesses have a more muted setting. Many of them only have one or two years’ worth of operational and financial data, and just a tiny percentage have financials for a single year’s worth of time.


Methods to value startups

The three most frequent ways to valuing mature organizations are the Asset Approach, Income Approach, and Market Approach. These methodologies, on the other hand, are not very effective for evaluating start-ups since they frequently have insignificant sales or EBITDA indicators, limited history, no meaningful comparables (at their stage), and long-term income/cash flow predictions are difficult to calculate.

The Venture Capitalist Method, the First Chicago Method, and the Adjusted Discounted Cash Flow Method are three methods for valuing companies.


●       Venture Capital Method: Venture capitalists who are looking to invest in start-up enterprises frequently adopt the Venture Capitalist Method. The key question is how much stock the VC should be obliged to get in return for its investment.

Consider the case below: For a five-year period, a venture capitalist (VC) is ready to invest $1 million in a nascent technology company. The business is reported to be worth $2 million each year. Year 5 net profits and the company equivalent are worth a 10x price earning (PE) amount, and the venture capitalist is aiming for a 20% return on its investment.

●       First Chicago Method: The value of a startup is estimated utilising comparable firms’ substantial quantities in this method (based on existing or exit year financial metrics). The first Chicago approach evaluates three business scenarios: Performance, Loss, and Sustainability, and assigns likelihood to each event based on the company’s stage and statistical factors to arrive at the weighted average value.

To summarise, judgement and qualitative elements such as the founders’ and co-founders’ experience, competence, and passion, the business strategy, the scaling potential of the firm (with or without technology), the competitive landscape, and current traction all affect start-up value. Startup enterprises sometimes operate in the pits of hell, which necessitates assessing the odds of success and failure. Startup valuation is more complicated than traditional valuations in various respects since it frequently requires the validation of the business model. The valuer’s experience is critical in establishing the value because everything in a company is motivated by the future.

●       Method of Adjusted Discounted Cash Flow: DCF (discounted cash flow) is a method of calculating an investment’s profitability based on projected future revenues. The goal of a DCF analysis is to evaluate the current value of an investment based on possible predictions of how much money it will generate.

This includes budgetary control and operational expense actions taken by company owners, such as developing a major factory or buying or renting new equipment, as well as investment choices made by investors in businesses or shares, such as purchasing the company, investing in a technology startup, or purchasing a stock.

The goal of DCF study is to determine how much profit an investor will make after taking into account the time value of money. The temporal value of money states that a dollar now is worth more than a dollar tomorrow because capital may be allocated. As a result, a DCF test is appropriate in any situation where a person is paying money now with the expectation of receiving more money later.


Investors Point of View

The following are the most often asked questions that every investor has on their mind:

1.   How much should I be willing to pay for this kind of income?

2.   Is a substantial return on investment (ROI) attainable to justify the risk I’m taking?


Until 2015, the values of Indian virtual shops and e-Commerce businesses were inextricably linked to the soaring valuations of US digital start-ups, and shareholders were concerned about missing out. For appraising their company, online shopping companies adopted a standard measure. The net sales value of items sold by a marketplace for a certain period is referred to as “GMV.” GMV, on the other hand, is not reported on their financial statements, and genuine sales account for just a percentage of GMV. The GMV or revenue (as stated on the financial statement) is multiplied by a multiple to arrive at the entity’s valuation (x times).


The law of decreasing returns applies

Regulatory Changes

Market value has long been considered as an activity or a method in India, and it accounts for a substantial share of the cases in Mergers & Acquisitions (M&A) since it involves an element of subjectivity that is frequently questioned. In many circumstances, values lack standardisation and generally acknowledged worldwide valuation procedures, particularly in India, where there are no defined criteria for company valuation for unlisted and private enterprises. In India, there is also a wealth of judicial information on the subject. Furthermore, the lack of a definite plan of operation, as well as any regulation under any legislation, is producing several narrative points.


The Companies Bill of 2011, which defined the concept of a Qualified Valuer, also acted as a means of allowing fair valuation in businesses, highlighting the necessity for trained valuers to standardise valuation methods in India, resulting in increased efficiency and accountability.


The Institute of Chartered Accountants of India (ICAI) has proposed Business Valuation Practice Standards (BVPS) to define uniform principles, methods, and protocols for valuers delivering valuation services in India.



Though valuation methodologies may be used to assess a company’s worth analytically, this value is still subjective, dependent on buyer and seller preferences and future negotiations, and expert opinion is an essential dimension of evaluating value. Valuation becomes more of a practise based on the valuer’s industry experience rather than a procedure based on analytical research and frameworks when there are no enterprise valuation criteria. The National Association of Certified Valuation Analysts (NACVA), the Canadian Institute of Chartered Business Valuators (CICBV), the American Society of Appraisers (ASA), the Institute of Business Appraisers (IBA), the valuation standards of the American Institute of CPAs (AICPA), and the ICAI valuation standard all regulate business valuations on a global scale. Nonetheless, due to financial market requirements, the developing world economy, and the shifting structure of financial statements, the creation of valuation practise as a discipline and practise has become a requirement in the current framework due to the increasing importance of valuation in financing and industry decisions, as well as in compliance requirements procedures.



It is not for the faint of heart to start a business. However, if you are ready to transform your idea into a reality, entrepreneurship is a thrilling journey that will alter your life for the better. From overcoming obstacles to finding your first client and actively managing risk, we’ve got you covered. Starting a business and being an entrepreneur are both exhilarating and terrifying experiences. After you leave your full-time job, you will confront some typical challenges that all entrepreneurs face, the most prominent of which are insecurity, stress, and isolation. The capacity to handle risk is one of the most critical lessons a successful entrepreneur has learnt. The capacity to handle risk is what distinguishes an entrepreneur with an idea from one who really turns it into a business.The greatest danger that each company faces is running out of funds or available financing. Entrepreneurs must persistently focus on cost control and risk management.

There is one more barrier before the money is in the bank for the best start-ups and entrepreneurs who manage to lure the investor of their dreams and survive the term sheet negotiation. This is the enigmatic and dreaded due diligence procedure, which has the potential to derail the entire transaction. In reality, it is nothing more than a last integrity check on the entire organisation and team.


What is due diligence?

The term “due diligence” simply refers to the study process that is carried out before to making an investment. It usually entails looking into a person or persons, a company, or a market.

Some entrepreneurs prepare very little for due diligence, assuming that all of the talking has already been done and that the company plan and results to date tell the correct storey. Others plan intensive training sessions for the squad. The investment process will most likely be stopped if there are conflicts within the team, differing perspectives on the plan, or indications of lacking processes and tools. Full disclosure and no surprises before or after the commitment are the main themes for a successful due diligence.

Startup equity investments suggest a long-term commercial engagement that typically lasts five years. Because there is no public market for the shares at that time, it is extremely difficult for either party to get out of the arrangement, and company divorces almost always result in bankruptcy. It’s worth your time to put in a little more effort here to make this phase a win-win situation for both parties.


Why due diligence is done?


As an investor, you want to know that the money you put into a business will be used to carry out the plan outlined in the company’s business plan, investor presentation, and so on. Some start-up, early-stage, and even existing businesses fail for causes beyond the control of the business owners. These terrible events are frequently the result of a sector crash or a broader economic downturn.

This is why due diligence is performed. So that you, the investor, can obtain all of the facts and information you need to assess whether or not the product, service, or endeavour in which you are investing is a good investment before you part with your money.

Although investing online through an equity crowdfunding platform is still a relatively new procedure, investors of all types, from new business angels to experienced angels, as well as those in networks, have discovered methods to use the web to do their own due diligence.


The guide to online due diligence investigations:

There are several ways to do this. Due diligence, like financing, is crowdsourced on an equity crowdfunding platform.

The director double-checks Prior to listing, the proprietors of a business seeking equity financing must undergo a director check. This is a background check on the individuals rather than the company. The main reason for this is that in many situations, the company isn’t up and running yet, or if it is, it hasn’t been active for very long.

Then you can get a business overview: meet the team and download documents like their business strategy, investor presentation, and financial outlook.

Do it in person. Contact the business owner, or organise a Skype or phone call, or send an email to the business owner. If you’re making a substantial investment, you might want to set up a face-to-face meeting.

Due Diligence Process :



  • Description: For your convenience, here is a concise description of the major factors that most investors consider during the due diligence process
  • Competitive landscape: They compile a list of local and worldwide firms in the same or similar industry and gather as much information as feasible.
  • Exit potential: There is also a list of potential acquirers and a description of why they might buy a company like this.
  • Founder’s pre-nuptial: The parameters of co-working arrangements should be documented by the founders. Verbal agreements or improper drafting of these arrangements can cause a great deal of disruption for the firm. If at all possible, ask the founders to sign non-disclosure and non-compete agreements in the event of a break-up.
  • Employee contracts: Employment, non-disclosure, and non-compete agreements must be signed by all part-time and full-time employees. If there are any non-local employees, their legal employment status must be signed.
  • Existing obligations: Founders must identify all existing liabilities, including options granted and/or notes issued to third parties. Get them to sign a contract.
  • Licensing contracts: If the entire technology or a portion of the technology is licenced from a third party, the terms and restrictions of use should be adequately recorded.

Checklists for due diligence:


  • The Memorandum and Articles of Association should be kept up to date to reflect all modifications made during previous investment rounds.
  • All previous board and shareholder meetings’ minutes should be current.
  • All existing/previous/threatened legal issues, litigation, arbitration, or judgment/s should be listed (certified copy). A declaration/guarantee from the founders that the information presented is correct to the best of their knowledge is also useful.
  • Information on all patent, trademark, and copyright applications (pending and/or granted).


What does due diligence mean in financial performance?




  • The Memorandum and Articles of Association should be kept up to date to reflect all modifications made during previous investment rounds.
  • All previous board and shareholder meetings’ minutes should be current.
  • All existing/previous/threatened legal issues, litigation, arbitration, or judgment/s should be listed (certified copy). A declaration/guarantee from the founders that the information presented is correct to the best of their knowledge is also useful.
  • Information on all patent, trademark, and copyright applications (pending and/or granted). Ensure that the company has filed all its tax and annual returns with relevant authorities. Get copies of tax assessment notices.
  • Carefully look for related party transactions and ensure that they were conducted at arms.
  • Go through the list of fixed assets and verify material items. If there are huge intangible assets capitalized in the balance sheet, make sure that they are valued realistically.




This article defines an evaluation agreement and explains why it is critical for start-ups. However, the significance of evaluation agreements is not limited to start-ups; it also extends to the start-ups’ potential clients. The article outlines the many provisions that make up an Evaluation Agreement and demonstrates them using a sample clause.


What is an Evaluation Agreement?


It is a pact reached by two or more parties. The parties agree to test and assess a new product or service offered by one of the he terms of the agreement. The agreement’s objective is to evaluate the product or service in question, and if the findings of the evaluation are positive, further talks are held to parties under expedite the product’s sale or subscription. Time and scope constraints apply to such agreements. Time, because the review will be completed in a short period of time, usually a couple of months. Scope, because throughout the evaluation phase, the product given for review is empty of certain of its capabilities.



Why does start-up need Evaluation Agreements?


There are two main reasons for the same:


Getting new customers and pushing the sales numbers:


It is difficult for start-ups to promote their products to potential clients because they have little to no market recognition. The majority of potential customers are hesitant to use new software, especially if it has only been lab-tested. Customers can see and feel their degree of comfort and compatibility with the product given through the Evaluation Agreement, which provides a trial run for such software. If the trial run goes well, both parties will find it much easier to negotiate and facilitate the final transaction.




Testing of the waters

As previously said, most software is developed and tested in a lab environment, and its interaction with real-world conditions is typically unpredictable. A trail run given by the Evaluation Agreement is a critical feedback tool for any new software start-up. This ensures that the start-up has enough room to solve any defects in their product as well as make necessary revisions in response to a potential customer’s specific needs.



Why are companies interested in such agreements?


1. To check whether the product offered is a good fit

Every company faces its own set of problems and challenges. Companies need inventive products to combat them. These items are typically created by new start-ups that have yet to establish themselves. Furthermore, the organisation is unsure whether the product being offered is the right fit for the challenge it is facing. By signing an Evaluation Agreement, the firm is able to evaluate the product and determine how much faith it can have in both the product and the start-up that is providing it.


2. Pursuit of potential avenues for investment

Businesses are seeking for new and unexplored business opportunities in addition to tackling difficulties they are currently facing. A start-up firm usually has the potential to grow exponentially. A corporation will invest in a start-up if it discovers that it has the right idea, the proper execution of that idea, and the right personnel to execute that idea. The Evaluation Agreement assists the organisation in making such a determination.


Types of Evaluation Agreements


Broadly, Evaluation Agreements are of two types:


 1. Short evaluation

There is no purchase/license clause in these agreements. This means that once the evaluation period has ended, the other party will not be able to purchase the software. The parties can choose between two choices. Either the two parties go their separate ways, or they come together to discuss the terms of the start up’s software purchase.


2.Long evaluation

These agreements do include a purchase/license clause that allows the other party to keep using the product after the evaluation period has expired. The purchase and licence clause are the most important portion of the contract. As a result, even before the evaluation time begins, the entire agreement, including the terms of software acquisition, has been fully negotiated. As opposed to Short Evaluation, there is no compelling need to renegotiate the terms at the end of the evaluation period.


Important clauses in an Evaluation Agreement


Some of the most important clauses under an evaluation agreement:


1. Purpose of the evaluation

This is usually found as part of the agreement’s recitals or as a separate section immediately following the Recitals. It specifies the evaluation’s goal, the items and services that are being evaluated, and the goals that the given products and services are attempting to achieve. It also limits the agreement’s scope by limiting how the product can be used by the intended customer.


2. Intellectual property (IP)

  • Define what “intellectual property” means in the context of the agreement;
  • Define what “intellectual property” means in the framework of the agreement;
  • Define what “intellectual property” means in the context of the agreement;
  • Define what “intellectual property” means in the
  • Make the preceding definition as inclusive as feasible;
  • Clearly identify who owns the Intellectual Property.
  • Make it clear that the other party does not own the Intellectual Property in question and will have no rights to it after the evaluation time ends.

This is also the clause where the start-up can inculcate all feedback, results, and any other relevant data to be part of the IP. This way the other party becomes duty-bound to revert back such important information to the start-up. Another addition can be an explicit statement declining any share in profits to the other party which has accrued as a result of the above-stated feedback. Most importantly, this section protects the IP of the start-up. The other party gets barred from using or copying the software in any unauthorized fashion.


Return of IP and confidential information

The IP must be returned and all private information must be destroyed following the examination, according to this rule. It’s important to remember that the Confidentiality Clause will remain in effect even if the agreement is resolved. Rather, it will bind all of the parties to the agreement long after it is terminated.


Term of evaluation

This is a straightforward clause. It specifies the start and end dates of the evaluation period. In common language, such a period begins on the agreement’s effective date and ends on a date set forth in the agreement.



Who is responsible for any expenses incurred during the evaluation? What will be the method of payment for these costs? When will these bills be paid? This clause provides answers to all of these questions.


Evaluation and review of the process

This clause specifies who will conduct the evaluation and if the review will be supervised by a representative of the start-up. It can also specify the forms and data that must be kept in connection with the evaluation. Such forms and files are critical for a start-up since they provide crucial feedback.


Disclaimer and limitation of liability

These contracts feature a purchase/license clause that allows the other party to continue using the product after the evaluation term has ended. The most significant part of the contract is the buy and licence clause. As a result, even before the review period begins, the complete agreement has been thoroughly negotiated, including the terms of software acquisition. There is no pressing need to renegotiate the terms at the end of the review period, as there is with Short Evaluation.



Evaluation Agreements are a boon to start-up businesses. They are a safety net for start-ups in that they allow them to share their intellectual property without the fear of their IP getting stolen. Start-ups also get invaluable feedback from potential customers. Yet, as indispensable as these contracts seem to be, they are in no way easily negotiated. Small start-ups might face a great deal of resistance from companies in terms of the restrictions on use. Still, the Evaluation Agreement will inevitably play a larger and greater role in the coming years for software start-ups.





Can we say that pandemic has shown how prepared we are if we have to face some catastrophic event? Do India and its people have the potential to fight something big and unnamed? I think we do, let’s take an example of EdTech start-ups, we were in the habit of a conventional mode of teaching but now we are learning through e-platforms, another example of attendance of court proceedings through online platforms, and another big example is health tech start-ups. Because of the pandemic now we can rely on health tech, in terms of goods and services offered by them. But as we are growing we also need some regulation by legislation to match that growth. We have a few old and some new legislations like the Drugs and Cosmetics Act 1940, the Drug Rules, 1945, the Consumer Protection Act, 2019, the Consumer Protection (E-Commerce) Rules, 2020, Telemedicine Practice Guidelines of India, 2020, etc.


We are lacking DISHA in the regulatory framework, this is a draft bill, called the Digital Information Security in Healthcare Act 2018, which has not become law yet if this law is passed it will provide a legal framework to protect privacy and protection of information provided by the patient and patients will have more control over their information. There is another bill called the Personal Data Protection (PDP) Bill, 2019, this bill has been finalized by the Joint Committee of Parliament on 22-11-2021 after two years, but it is yet to become law.

Covid-19 has put health tech in spotlight


It will be correct to say that as much as pandemic has been a noose around the necks, it has also given a spotlight to telemedicine and health tech, it is not like we didn’t have health techs in India, but we can say that health techs have been allowed to grow in a conservative environment. It has provided us a clear way to provide health care, do series of innovations and it has spurred investment in the health tech sector. So, now what start-ups need to do is to adapt to the new ecosystem, operate according to what is ahead of us, avoid pitfalls like non-compliance of the legal framework and try to work around the emerging trends and opportunities.

As we have studied that health tech or telemedicine is not new to India, we have been aware of this since the 1990s, it is only pandemic that has given enough fuel to the small spark and that’s why we are now noticing the widespread adoption of this new model or a new way of providing medical care. It is not only a pandemic that is keeping this concept alive, but also the publishing of Telemedicine Practice Guidelines made sure that this concept now only stays alive but also grows with time, and these guidelines have regulated and legalized text or audio or video-based medical care.


Unpreparedness in regulatory compliances could be a drawback


There are many regulations a health tech company or start-ups need to complete like compliance to IT Act, 2000 and IT rules, Drugs and Cosmetics Act and Rules and MCI Act and Rules and Code, Telemedicine Practice guidelines, etc. It means that the more diverse the services of a telemedicine company are, the more they need to comply with the regulatory compliances. For example, if a new health tech start-up is starting its services in telemedicine, then it will have to handle data on its own, but it could happen that it is not regulatorily prepared which could be a drawback in its success and growth.


Necessary legal and regulatory compliances: Some of the most important regulations are given below:


The Information and Technology Act, 2000, and The Information and Technology Rules, 2011

We are well aware that when we avail the services of digital health, we may need to provide some necessary information like your full name, your mobile number, your email, your medical history, etc, so there is a constant exchange of information between the service provider and patients and this information is called Sensitive Personal Data or Information, (SPDI). It is a requirement that before using any data or information provided by the patient his/her written consent is mandatory and prior notice needs to be given to the patient in case of use of information.

Suitable security measures must be used while processing the information. The established health tech or body corporate need to comply with international standard IT – Security Techniques- Information Security Management System or some other equivalent standards sanctioned by the Central Government.

It is necessary that contact information of the Grievance Officer, must be provided on the internet and a choice must be given to users allowing them to change or withdraw their Sensitive Information.

The Information Technology Act doesn’t apply to digital health services, so they are governed under the Intermediary Guidelines and the IT Act, as an intermediary, and these intermediaries are provided certain exemptions like they are not liable for third-party data or communication. If the intermediary role is narrowed or bounded only to granting access to a communication system where information is hosted or stored and all the conditions outlined for due diligence have been religiously followed by the intermediary then he would not be liable for the third-party content hosted by the intermediary.


Telecom Policy, 1999 (Other Service Providers)

Those who provide Application Services, such as telemedicine are known as Service Providers, use telecom resources furnished by the telecom service provider, must register themselves as an “Other Service Provider” with the Department of Telecommunications.


The Indian Medical Council Act, 1956 (MCI) and the Indian Medical Council Regulations, 2002 (MCI Code)

The Medical Council of India is regulated and implemented by the MCI Act, 1956 and this Medical Council of India controls the medical education and profession in India. This act specifies that only those persons who have a recognized medical degree and are registered with the state medical council will be allowed to practice medicine in India.

The MCI Code, 2002 has provided that during the interactions with patients, colleagues, and pharmaceutical firms, the doctors need to conform to the professional and ethical guidelines. It also specifies that to retrieve the medical records quickly it is need of the hour to computerized the records and regarding this, a declaration will be signed by the doctors.


Telemedicine Practice Guidelines

To supervise the medical education and profession in India, a Board of Governors set up by the Central Government, issued Telemedicine Practice Guidelines with the collaboration of NITI Aayog. This idea has been included in the MCI Code and therefore is mandatory for allopathic medical practitioners. The benefit of these guidelines is that with the help of Telemedicine Practice Guidelines, medical practitioners would be able to practice from any part of the country and the advice, what kind or type of treatment can be provided and how they should be furnished. These guidelines have divided medications into four lists, describing which medicine can be given under which circumstances, like List A, List O, List B, and Prohibited List.


Telecom Commercial Communication Customer Preference Regulations, 2018 (TCCP Regulations)

According to the TCCP Regulations, if any unrequested or unsolicited commercial communication has been sent through voice or SMS, is prohibited. Only those customers who have voluntarily agreed to accept promotional messages after registering with the access provider may get the messages. If messages or phone calls are transactional in nature then it is not prohibited by law. Now we need to understand what is a transactional message? If information is communicated for OTP or purchase of goods and services, like shipping notifications, account alerts, and identity validation, these messages are regarded as transactional messages and the message must be delivered within 30 minutes. A format that has been registered with the access provider must be used for all other messages and ensure that receiver’s approval has been received.


Digital Information Security in Healthcare Act (DISHA)

We all are well aware that DISHA has not been passed yet, but contains many compliance requirements which are necessary for health tech companies and start-ups. Section 3(e), defines that when health-related information about an individual is stored electronically it is called digital health data and it will include the following:

  • Information or data related to the physical and mental health of a person;
  • Any information related to health services given to a person;
  • It contains information of donation of a body part, like eyes or bodily substances, like blood donation, by an individual;
  • If the test has been done on the body part or bodily substances, like blood or urine test, the information contained in that test report, etc.

Commercialization or use of digital health data for commercial purposes has been prohibited by the DISHA. It provides guidelines for which purposes health data can be used and on what uses bars have been put. It is also mentioned that for using permitted data, clear consent or legislation requiring such use must exist.

It has been further provided that full liberty is given to an individual, whose consent has been obtained for use of information, that at any point of time they can withdraw their consent. DISHA made sure that if any person wants to restrict the use of their information they should not be refused.

Other than State or private health insurance companies, like health and fitness apps, e-pharmacies, etc are governed by DISHA. For these entities permitted purposes of collecting, processing, and storing information are related to making medical decisions based on the provided data, to improve coordination between care and information, etc.


Personal Data Protection Bill, 2019 (PDP)

Personal Data Protection (PDP) Bill, 2019, this bill has been finalized by the Joint Committee of Parliament on 22-11-2021 after two years, but it is yet to become a law. This bill prepares a structure for general data protection for personal data as well as sensitive personal information. Chapter 2, 6, and 7 of the bill provides important and necessary data protection principles. For example section 4 of this bill says that you are not allowed to process personal data, section 5 says that if information or data is collected for purposes A, B, and C, this information will not for used for any other purpose like D to Z, what kind or nature of consent is required is given in section 11. Security safeguards like matters are dealt with in chapter 6 of the bill. For example, section 26 says that if there is any data breach, then it is mandatory to report those breaches, section 27 provides provision for conducting data protection impact assessment, section 27 for grievance redressal. The most important chapter is the chapter 7 which provides provisions for sensitive personal data.

There are some other regulations like The Clinical Establishment Act, 2010, The Drugs and Magic Remedies Act 1954 and Drugs and Magic Remedies Rules, 1955 and The Drugs and Cosmetic Act, 1940 and Drugs and Cosmetics Rules, 1945, which should be followed by the health tech start-ups.



You would be happy to hear that India’s healthcare sector is thriving and is one of the rapidly growing sectors in India. With the joining of healthcare and technology, and the opportunity to grow it would be a turning point for India. We have seen some other sectors of the economy like education, finance, which have grown by mixing both with technology and it is enough proof that technology has the potential to make a positive impact on the healthcare sector effectively.

There is some data given by the investors which says that it is anticipated that by 2022 healthcare market might have a value of $370 billion and will provide a favorable yield of up to 35-40 percent. We are well aware that the concept of health tech and telemedicine is not new but its growth was slow and pandemic and telemedicine guidelines gave it the necessary push, which is a game-changer but still using technology in India for healthcare services and even extending those services in India’s conservative environment has a long way ahead of it. Another problem is data protection and we are only reliable on IT act and rules, we need other specific statutes working only for healthcare, and because of the legislation that is not possible shortly. If data protection laws are absent then health tech start-ups or industries would be vulnerable to spam, extortion, blackmail, or misappropriation of valuable personal data. If we want people to trust health tech start-ups, legislation must assure them that in case of difficulty they will have a solution to the problem.





As we all know Covid has created a lot of uncertainty in India, like losses of jobs, health risk, etc, and this year’s budget has proven a ray of hope amid the dark clouds of Covid. This year’s budget has focused on four pillars, productivity, financing investments, climate action, and PM Gati Shakti Plan.

Yes, by looking at the data we can see that the fiscal deficit is higher that is 6.9% for 2021-2022 and 6.4% for 2022-2023, and capital expenditure has increased by 35%, but instead of grieving on the increasing deficit, it is necessary that more efforts are being put on digitalization of education, currency, passports, growth of start-ups and small businesses, infrastructure, etc. Can we say that this budget will be ideal, no nothing can be ideal, because the budget for the year 2019-20 has also been made for increasing the growth and economy of the country, but then we got hit by Covid, which was not expected by anyone, so no we can’t say this year or the coming year’s budget will go as planned, as we can say what will happen in future, all we can do is to make efforts and by looking at some highlights given below, we can see that Government is doing a good job at making efforts.


Highlights for Start-ups, Small businesses, and Manufacturing Companies


  1. India will not ban digital assets; last year it was in reports that Govt could ban all forms of Cryptocurrency, NFT, non-refundable tokens, assets like bitcoin or Ethereum. India doesn’t have a law to regulate them yet, Digital Assets will be taxed at the rate of 30%. Any income from the transfer of any virtual digital asset shall be taxed at the rate of 30%. If you make profits by investing in crypto or if you transfer these assets to another person you will pay a tax of 30%. Any loss incurred from such transfers cannot be set off against any other income or carried forward to subsequent years. This move of the government will be good and will be bad, good that these assets will not be banned and bad for investors that they will pay 30% tax. A gift of virtual digital assets is also taxable and from the 1st July 2022, on payment of consideration to a resident when the transfer is made for the virtual digital asset, this transfer will be subject to 1% TDS.
  2. India is getting its Digital currency; the Reserve Bank of India will issue it in the new financial year that is 2022 to 2023. Introduction of Central Bank Digital Currency will give a boost to the digital economy. It will lead to a more efficient and cheaper currency management system.
  3. No change in Income tax rates. You will be paying the same income tax as last year. A small change brought is how you file those tax returns, you can now file the updated return within 2 years of the assessment year, but they will have to pay a 25% penalty on tax and interest due if it is filed in the year after the assessment year, and a 50% penalty in the second year.
  4. Tax Incentive to start-ups extended for a year, it is said by Finance Minister that Start-ups have emerged as drivers of growth for the economy. The budget has announced that eligible start-ups established before 31st March 2023 will be given tax incentives for three consecutive years out of 10 years from incorporation, earlier a three-year tax incentive was available to the start-ups established before 21st March 2021. It is said that the extension of tax benefits will further strengthen the business ecosystem of the country.
  5. This year’s budget has also extended the last date or period of starting of manufacturing and production by eligible new manufacturing domestic companies, to 31st March 2024, earlier the date was 31st March 2023, this will give them another year to have an option to pay tax at 15% (without claiming any deductions).
  6. Room for Startup India Seed Fund Scheme in Budget, The government has allotted Rs 283.5 crore for the Startup India Seed Fund Scheme in the Budget 2022-23, which is greater than the Revised Estimate of about Rs 100 crore. The government has set up a Fund of Funds for Startups (FFS) with a corpus of Rs 10,000 crore. The budgetary allocations for the Fund of Funds for Startups stood at Rs 1,000 crore. The Small Industries Development Bank of India (SIDBI) is the operating agency for the FFS. According to the Budget documents, the allocation for the Startup India program has been increased to Rs 50 crore for 2022-23 from the Revised Estimate of Rs 32.83 crore in 2021-22.
  7. Push for Promotion of drones through start-ups, in the Budget 2022, Finance Minister announced that with the help of start-ups several steps will be taken to promote the drones, the mission is called ‘Drone Shakti’ using different applications and Drone-as-a-Service (DrAAS) and this mission’s goal is to make India a drone hub by 2030. There is something called Kisan Drones, they will be encouraged for crop assessment, spraying of insecticides and nutrients on fields, and land records will be put into digital records that is the digitization of land records. And there will be a requirement of skill for using these drones, and for this, courses on drone skills will be given in selected Industrial Training Institutes in various states. For providing digital and hi-tech services to farmers, a scheme will be launched through the Public-Private Partnership mode.
  8. The Emergency credit line for MSME has been extended till March 2023, in total 5 lakh crore is available for such firms. The emergency Credit Line Guarantee Scheme had earlier provided additional credit to more than 130 lakh MSMEs. The Govt has extended the scheme by 50,000 crores and now this scheme will provide a total cover of 5 lakh crore. Centre said that Credit Guarantee Fund Trust will be improved by infusion of funds for MSMEs; this will provide additional credit of 2 lakh crore and will result in more job opportunities.
  9. Major connectivity push, India wants to spend big on infrastructure, 20,000 crore rupees, it is Prime Minister’s Gati Shakti Plan, to facilitate faster transfer of goods, speed up cargo movement and to improve logistics network. This money will be spent on roads, railways, airports, ports, mass transport, waterways, and logistics infrastructure. The biggest spending will be on national highways. In the next 3 years, India wants to build 400 new trains and 100 carbo terminals. India plans to spend a whopping 100 billion dollars on infrastructure and it is 35% more than 2021 and double what India had spent before the pandemic. And this a direct spending, it means govt will foot the bill for all these projects.
  10. Boost for Make In India in Defence, there is a marginal increase in the defense budget, the allocation this year is 5.25 lakh crore rupees, which is more than 60 billion dollars, which is an increase of almost 5% from last year. The bulk of the budget will go to Indian Manufacturers, 68% of the procurement will happen from domestic players, 25% has been set aside for research and development.
  11. Up-gradation of Indian Passports, Starting this year, Indians will be issued E-passports. There was the first announcement in 2019. So far the 20,000 officials and diplomats have been issued e-passports and now we will be able to get one. How will this passport be different? These passports come with a chip, a small silicon chip embedded on the back of the passports and this chip will contain all the necessary information, like your name, address, passport number, and data of your last 30 visits. More than 100 countries have such passports.
  12. Upgrading India’s Mobile Network, 5G is coming in 2023. Spectrum will be auctioned this year. India also wants to become a hub for 5G manufacturing. Incentives have been announced for equipment makers and there is also a proposal to bring internet to Indian villages. The Govt. is also going to award contracts to lay optical fiber cables around the country.
  13. Digital Education, this topic is getting a major push in this budget. India plans to develop a Digital University, the Finance Minister said it will provide students with world-class education. There is another proposal called E-Vidya, under this, the Govt of India had earlier set up 12 TV channels to teach students and now this will be expanded to 200 channels. The idea is to provide supplementary education in different regional languages.



As from the above-mentioned highlights from the Union Budget, you can see that from the first two points that even though there is no law to regularize digital assets, efforts have been made to legalize them in India and soon India will issue its digital currency, digital university, E-Vidya, another year given to start-ups and new manufacturing companies for tax incentive all these shows signs of growth and skill enhancements.

Some people will argue that no direct relief has been given to the salaried and middle-class people in the form of tax so that they can survive inflation, the impact of Covid on income and jobs, our finance minister well said in this aspect that “There are times when you can give relief and there are times when you have to wait a big longer”. There will be many people in the country who will criticize these points in the budget, but they should remember that we are a developing country and all the sectors are like bars in the bar graph, some bars will go up and some bars will look the same as earlier, but it doesn’t mean the growth is stagnant. For the year 2022, India’s GDP is projected at 9.2 percent, if all pieces fall in the expected places, then I think India can achieve its goal.





According to the report given by BARC India (Broadcast Audience Research Council) and Nielsen (this firm measures the information, data, and market), it has been disclosed that since the lockdown due to the pandemic there has been a 30% rise in the time spent by the students on the education apps.


It is the education sector that has been rising continuously and it is still growing despite the unfortunate circumstances caused by the pandemic. You must have seen that before the outbreak, caused by the Covid, children used to go to school, colleges, and coaching centers and because of the calamity it was being impossible to manage the health of the children and provide uninterrupted education but due to the certain application and online educations platforms, the condition is now improving, people are learning a new way of getting an education. In the present time, India’s Edtech Industry is the world’s second-biggest industry and the speculation is that the industry, in the year 2022, is set to touch $3.2 billion.


By the end of March 2020, orders were given for the lockdown of cities and closing of schools, and an enormous number of students that is 1.5 billion were grounded almost overnight and this situation lead to astonishing adoption and exponential growth of online education and e-learning platforms

What are Edtech Start-ups?


Before we move forward with what factors are affecting the growth of Edtech start-ups, it is necessary to understand what we perceive from the term Edtech. As we can see the term or acronym Edtech is made up of two words, Education and technology and it means providing education with the help of technology, technology here refers to hardware or software. What we can perceive here is that efforts are made with technology to amplify the educational outcome.

Today, we see that to make education easier, approachable, and engaging, various start-ups are using software like virtual reality (a three-dimensional image or environment, with the help of some equipment like a helmet with the screen over the eyes), videos, automation, etc. Online classes, MOOCs (Massive Open Online Course), interactive screens are some instances of Edtech start-ups.


Growth of Edtech Start-up during Pandemic


  • Size of the Market: Because of the unexpected surge towards online education, as schools were closed and face-to-face conventional mode of studying was not possible, the prognostication of the market size of the Edtech industry in India by 2022 has seen a considerable increase. A recent report on the Edtech in India has predicted that its market will rise to $3.5 billion by 2022 and the same report earlier predicted the market to rise in the range of $2.8-$3.2 billion. Before the pandemic that is in 2019, the Edtech market size had reached $735 million. With both the data you can see there is a large sum of difference and that pandemic has largely affected the market size of the Edtech industry.


  • Change in Funding Level: To determine the growth of Edtech it is necessary to calculate the funding before the pandemic and after the pandemic, to see how Covid brought a change in the education sector of India. It has been ascertained that funding in the first half of 2020 has been increased five times from what has been observed in the first half of 2019. You would be astonished to see the numbers, it is calculated that till August 2020, the total funding was $847 million and it was already two times the total funding collected in the year 2019 and a major portion of the 2020’s funding was raised by Byju’s and Unacademy which collective stood at $300 million. Any many new start-ups naming, Lido, Masai, iNurture, Campk12, Pedagogy, and many more Edtech start-ups have also raised funding during the pandemic period.



  • Shifting of Students: Another factor to study is the shifting of students in the pandemic period towards MOOC (Massive Open Online Courses), it was like opening a door to something big, there has been seen a large number of students joining online courses with some famous and developed start-ups like Unacademy, Byju’s, Doubtnut, Coursera and the number of students joining the courses on data science and digital marketing, is continuously increasing every month. The MOOC has been a substantial augmentation post lockdown.



  • Fascination of Students: It has been seen that students both from the K12 segment and post K12 are spending more time on the e-learning platforms during the Covid lockdown, and it has observed a 50% in the time spent on these applications. A survey or data has been collected from LinkedIn, which shows that a 63% of the professionals are spending more time on e-learning platforms for enhancing their skills and knowledge.


According to the report given by BARC India (Broadcast Audience Research Council) and Nielsen (this firm measures the information, data, and market), it has been disclosed that since the lockdown due to the pandemic there has been a 30% rise in the time spent by the students on the education apps and this resulted in 120% growth in digital ads given by the Edtech applications. It is also been recorded that there has been an 88% increase in the number of people, who have downloaded the Edtech applications.


  • Becoming a Member (Subscription): There is another factor to determine the growth in the Edtech is subscriber base, it means paying some amount of money for availing the services or we can say for using the online courses provided or made available on the Edtech application of a start-up or company. It has been noticed that there has been a notable rise in the subscriber base of the Edtech firms; the users for the K12 division have significantly increased from 45 million to 90 million. Let us study the data of some grown and developed start-ups like Byju’s and Toppr, Byju’s has added 7.5 million new users during the pandemic and Toppr has enjoyed 100% growth in the paid subscribers.


Hockey stick Growth

As shown in the image, there has been a linear growth for a long period and there is sudden and extremely rapid growth, it is called Hockey stick growth. The term is usually used in those conditions when a start-up has been growing but its growth was too slow, then suddenly conditions changes and start-up finds its much-needed market.

The growth of Edtech start-ups in the pandemic shows the same conditions as this curve. Before the pandemic Edtech start-ups were there, they were growing but too slow, but during Covid, there has been an exponential growth in the Edtech start-ups which is unimaginable.


Start-ups that managed the Hockey-stick Growth


Research shows that after the 12 months of a pandemic it has been seen that e-learning platforms or Edtech firms have not only surpassed the market, funding, subscriber base, and time spent by the students on the Edtech applications but also topped Twitter trends and Google searches.

It has also been realized that the number of Edtech searches on Google has also increased by 60% the reason could be that students are desperate, they need some type of education to fill the gap which has been created due to the lockdown, and another reason being the creativity and different modern trends that are being used by the e-learning platforms, which attract the students. For some companies like Byju’s, Vedantu, Toppr, and others, the number of searches of these companies has increased even further.

There are more than 3,500 edtech start-ups today and it has been projected by the HRD Ministry that, expenditure for India’s edtech industry would reach $10 trillion by 2030.


Despite the Growth, Challenges faced by the Edtech start-ups today


  • Unwillingness towards Change: Traditional mode of providing education, that is face to face, is ancient, in an early period some Gurus provided Shiksha of Indian religions, Indian mathematics, in the Lord Rama’s and Krishna’s time and at the ancient Takshshila, from that time to this day, we preferred the conventional mode of teaching. Where on one hand our teaching method required innovation and up-gradation so that learning can become comfortable for both teachers and students, but on the other hand, both the administration and teachers are reluctant to adopt e-learning, for them using e-learning methods is a means to an end in the corona period, they are still waiting to start their old preferred method of teaching after the pandemic.


  • Poor accessibility and inadequate digital infrastructure: Though we are growing and developing, here the keyword is developing, not developed, there still is a gap between the growth and users who can avail the benefit of this growth. Yes, it is true that in the pandemic period, there has been an unseen growth in the Edtech industry and many Edtech start-ups are surfacing but there are still many students residing in villages and those who are below the poverty line and the economically weaker section of India, still facing the problems of low network, unavailability of smartphones and high internet charges, which hinders the growth of students because of coronavirus, as they can go to school and colleges.


  • High Customer acquisition cost: The early-stage Edtech start-ups face the challenge of providing their content at low cost because in the market there are many developed Edtech start-ups, like Byjus, Unacademy, who are 7-10 years old, and to stand in that market is difficult for the early-stage start-ups and they have to spend excessively on the marketing or advertising and this results in making customer acquisition costlier.




There is no denying that there has been a boom in the growth of Edtech start-ups as due to the pandemic and the rising number of ideas for Edtech start-ups, it has managed to attract the interest of the investors. Even in the beginning of 2020, Edtech surfaced as the hot sector evidence being that in a round led by Facebook, Byju and Unacademy had managed to raise $400 million and $ 100 million respectively. For Edtech start-ups, the coronavirus has been proved a blessing reason being is that out of the 14 start-ups, at least 9 have managed to raise seed funding as investors believe that these early-stage ventures can prove their worth in the pandemic.

Yes, it is true that due to the pandemic there has been a spurt in the growth of Edtech start-ups, but due to poor accessibility and inadequate digital infrastructure, the money needed for subscription, different mentalities of online students, acceptance issues, and lack of trust because of some false and misleading Edtech company, Edtech start-ups and sector face many problems and it is necessary that for the better development of the Edtech, the gap caused because of lack of infrastructure need to be filled.