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6.00 – What is a Startup? ➤
8.50 – When Should I incorporate ➤
12.00 – Types of business entities in Bangladesh ➤
13.00 – Business incorporation process in Bangladesh ➤
18.00 – Bank Account Opening Checklist ➤
20.00 – Company Operation & Board Maintanance ➤
24.00 – Intellectual Property & the Protections ➤
26.14 – Fundraising Mechanics for Startups ➤
30.00 – Difference between SAFE & Convertible Notes ➤
37.00 – Parameter to determine the company valuation ➤
40.00 – Audit & Compliance in Bangladesh ➤
43.30 – Incorporating a company in Delaware, USA ➤
47.00 – Incorporating a company in Singapore ➤
49.25 – Corporate Governance for Startups ➤
57.00 – Exit Policy ➤
63.00 – Fundraising Knowledge Sharing with the CEO of Gaze ➤
96.00 – Question & Answer ➤
Disclaimer: The contents of this page & the live video is for knowledge sharing purpose only. A person is recommended to contact a lawyer, accountant, or a business consultant to apply this information for his individual scenario.

What is a Startup?

➤ In the early stage of its development
➤ Started by 2-5 founders
➤ Developing a profit-generating/viable product, services or platform
➤ Usually, it’s driven by innovation or a business model with a potentiality to scale rapidly
➤ Create an impact on the concerned industry
➤ It may solve a problem or add an extra value to the existing product or services

When should we incorporate?

 Different Stages of the business

1. Research Stage

2. Prototype Stage

3. Testing Stage

4. Revenue Generating Stage

5. Growth Stage

Legal Mechanics for the beginning

1. Founders’ Agreement with vesting share option

2. Vendor/Promoter Agreement

2. IP Assignment Agreement

3. NDA

4. Sole Proprietor/Partnership/Limited Company

Types of business entities in Bangladesh

ParameterSole ProprietorPartnershipLimited Company
OwnershipSingle OwnerMinimum two ownersMore than two Shareholders
TaxationTax Free up to BDT 3 lacsTax Free up to BDT 3 lacsCorporate Tax at 32.5%
Investment PolicyLoan or Profit sharing financingLoan or Profit sharing financingEquity Investment/Loan/Profit sharing financing
LiabilityProprietor shall be liablePartners Shal be liableCompany Shall be liable
NationalityBangladeshiBangladeshiAny national or body corporate

Business incorporation process in Bangladesh

Sole ProprietorPartnershipLimited Company
NID Card & PhotosNID Card, TIN & PhotosNID Card, TIN & Photos
Rent Agreement with LandlordPartnership Deed on BDT 2000 StampMemorandum & Constitution of the company
Declaration as a commercial space from the relevant authority (in some cases)
&/ Electricity Bill copy
Rent Agreement with the Landlord Form IX (Consent letter of the directors)
Authority: City Corporation /Municipality/ Union ParishadAuthority: Registrar of Joint Stock Companies And FirmsAuthority: Registrar of Joint Stock Companies And Firms
Obtain Trade License in the name of the business with above documentsObtain Trade License in the name of the FirmObtain Trade License in the name of the company from relevant authority

Bank Account Opening Checklist 

Sole ProprietorPartnershipLimited Company
Trade License Trade LicenseTrade License
Photos, NIDs & TIN of the ProprietorRJSC Incorporation Certificate/Notarized Partnership AgreementCompany Incorporation Certificate
Rent Agreement in the name of the companyBoard meeting resolution AOA & MOA of the company
Electrify Bill of the rented PlacePhotos, NIDs & TIN of the PartnersBoard Resolution
Declaration as a commercial space from the relevant authority (in some cases)Rent Agreement in the name of the companyPhotos, NIDs & TIN of the Directors
Electrify Bill Copy of the rented PlaceRent Agreement in the name of the company
Partnership Firm TIN NumberElectrify Bill Copy of the rented Place
Company TIN Number

Company Operation & Board Maintanance

Intellectual Property & the Protections

Assets of a Startup Company

  • Software, web contents & web/mobile apps
  • Researched Innovation or Design
  • Customer Leads
  • Hard-earned Brand Name

 Why a company must protect them?

  • The company is publishing things on public domain
  1. Anyone can copy them
  2. Customize them to their own
  3. Claim them as their own assets
  4. Use your brand image for their sales
  • Your Investor will not feel comfortable to invest
  • Those assets must be registered  to tag them in your Company Valuation

Example of Specific IPs

Patentable Items:

Business methods, Computer software, Computer hardware, Computer accessories, Games, Jewelry, Machines, Magic tricks, Musical instruments, Plants, Sporting Goods

Copyrightable  Items:

Literary works, Software works, Musical works, Dramatic works, Choreographic works, Pictorial, graphic, and sculptural works, Motion pictures and other audiovisual works, Sound recordings, Architectural works

Trademarkable Items:
Brand name of the Company, Slogan, Product Name, Service Names, Brand Logo/Symbol

Fundraising Mechanics for Startups

 Instruments

a. Loan/Debenture Agreement

b. Convertible Note

c. Simple Agreement for Future Equity (SAFE)

d. Equity Financing (Share Purchase)

e. Issuing Redeemable Preference Shares

 f. Investment Term Sheet/ Share Subscription Agreement

 

Source of Funding

1. Bootstrapping (Friends & Family)

2. Crowdfunding

3. Angel Investors (Individual Person)

4. Business Incubators & Accelerators

5. Bank Loans

6. Micro Finance

7. Government Subsidies

8. Venture Capital

Difference between SAFE & Convertible Notes

Parameter SAFEConvertible Notes
InterestNo interestSet an interest rate
Qualified Financing/Trigger EventAt a fixed Valuation
At any equity financing event
Any equity financing event
At a valuation
MaturityNo Maturity PeriodSet A maturity period
Company ValuationNot RequiredNot required
Discount OptionCan set Discount OptionCan set Discount Option

Common parameter to determine the company valuation

An investor is willing to pay more for your company if:

1. The company represents a HOT Sector

2. The company has a Team with industry expertise

3. The company has a Functioning product

4. The company has Proven tractions

5. The company is First Mover of that industry

An investor is less likely to pay a high premium over the average for your company if:

1. The company represents a Poorly performed sector

2. The company is Highly commoditized, with little profit margins

3. The company has a Large Set of Competitors

4. The company management team has no working experience and/or maybe missing key people

5.  The company product is not working and/or the company no customer validation.

6. The company is  shortly going  run out of cash

Audit & Compliance in Bangladesh

Annual Filing for Sole Proprietorship/Partnership/Limited Company:

1City Corporation (Business Trade License)

2. Company House (RJSC)

a. Financial Audit Report

b. Annual Company Report Fillings

c. Filling Regular Corporate Amendments

3. Tax Office (NBR)

  • Company Tax Return
  • Employee Tax Return
  • VAT Return Submission

4. Other Business Licenses/Approvals

a. Export/Import

b. BSTI, Environment, Fire, Bond, Travel etc

Other Required Audit as per the nature of company

  • Company Law Audit
  • Labour Law Audit
  • Tax Law Audit
  • Annual Due Diligence
  • Technical Audit
  • IP Audit
  • Industrial Audit

For the Startups & High Growth Companies

1. Financial Projection Preparation
2. Monthly Performance Report for the Investors
4. Monthly & Quarterly Financial Statement
5. Annual Financial Audited Report

Incorporating a company in Delaware, USA

Requirements:

1. Minimum One Shareholder
2. Minimum 1 share
3. Registered Agent

Incorporation Benefits

Less Yearly Maintenance Cost
Issuing SAFE & Convertible Note Facility
Vesting Share Issuance Facility
Common & Preferred Stock Facility
Shareholders details are protected
No restriction on Foreign Investment

Tax Benefits

  • Corporate Tax Rate: 8.7% Delaware
  • Personal income tax rate: 0%-6.6%
  • LLCs, limited partnerships, General Partnerships = $300 (Annually fee) 
  • Corporation Franchise Tax: $400 (minimum) 
  • Profit from Holding company (no double taxation burden)
  • Corporate Tax Exemption facilities for out of shore operating companies

Incorporating a company in Singapore

Requirements:

1. Minimum One Shareholder

2. Minimum 1 share

3. One local director

4. One Local Registered Address

5. One Company Secretary

Incorporation Benefits

1 day incorporation facility
Global payment gateway in the name of your company
Issuing SAFE & Convertible Note Facility
Vesting Share Issuance Facility
Common & Preferred Stock Facility
No restriction on Foreign Investment

Corporate Tax Rate: 17%

Tax Exemption on

  • Foreign-sourced dividends
  • Foreign branch profits
  • Foreign-sourced service income

Tax exemption for new startups

1. 75% tax exemption on the first S$100,000 of taxable income and

2. 50% exemption on the next S$100,000 of taxable income

Corporate Governance for Startups

 Why Corporate Governance for Startups

 

  • To ensure that the proper controls & processes are in place to adopt rapid growth.
  • Governance practices should be in-line with investor expectations throughout the life-cycle of a company
  • To mitigate the communication gap among the Investors, founders & employees of the company.
  • Governance improves transparency, particularly if there are strong founders in the business
  • To align the vision of the company with customer satisfaction
  • To figure out the weakness & strength of the management.
  • To Ensure board diversity and independence implementing check & balance mechanism.

Key Corporate Governance Practices

 

  • Board members must show up being prepared and must engage with the work
  • Understand that early-stage company boards are different from mature company boards.
  • The expectation of the board members should be clear from the beginning.
  • Having an organized board committee too early is not recommended.
  • Having the right kind of experience on the board is the key.
  • Board members should have a passion for impact and be aligned with the company values.
  • Succession Plan for the several departments
  • Add independent board members as the company grows
  • Forming Financial Projection & Risk Analysis committee

Exit Policy

Startups looking for angel investors or venture capital (VC) absolutely need an exit strategy because investors require it. The exit is what gives them a return.

Exit strategies related to startup funding are quite often misunderstood: The “exit” in exit strategy is for the money, not the startup founders or small business owners. The company brings in money and the investors get money out.

The founders can also take an exit in the long run through several processes. 

Several Exit Mechanism for the Founders & the Investors

1. Selling Equity
2. Merger & Acquisition (M&A)
3. Acqui-hires (The Startup is closed and the talent remain under contract)
4. IPO (Initial Public Offering)
5. Selling intellectual Property or giving license to the IP (Intellectual Property)
6. Bootstrapping the Company (Startups give Dividend)

3% Discount to any Project till 30th November