FAQs for start-ups

Draavi offers education content that is sector and growth-stage specific, which enables start-up founders to learn more about the process of fund raise.

We also provide business specific templates of documents needed during the process of a fund-raise, so that start-ups can start preparing for outreach.

Preparation, in practice, is four things being true before anyone outside the company looks:

• Your numbers reconcile — what the deck claims matches what the accounts say.
• The business explains itself in one paragraph, without a demo.
• The cap table is current, including every safe, note, ESOP pool and handshake.
• The data room exists before the first investor asks for it.

The last one decides more rounds than founders expect. A three-week scramble to assemble documents is read, fairly or not, as a signal about how the company is run. What goes into a data room sets out the checklist.

In addition to our educational content on ‘how to raise capital’, we provide sector and growth-stage specific templates for documents such as:

• Pitch decks and financial models.
• Legal documents, right from basic Non-Disclosure Agreements (NDAs) to term sheets and Shareholder Agreements (SHAs).

Please refer to our Prepare section for more details.

Yes, you can. Most of our content is free to access and read, and you can go ahead and download the files that you wish to use. Some of our content is read only, and some of the content is only available to businesses using our subscription plans.

Yes, you can. You can upload files that you have prepared to the Virtual Data Room section, and give access to investors that you may be speaking with.

The Virtual Data Room, and the file storage and share feature, are only available to businesses using our subscription plans.

The templates and documents shared by Draavi are prepared by professional lawyers with utmost care and due diligence. However, the documents are neither offered as legal advice, nor should they be considered so.

The platform will not be privy to the nuances of your 1:1 conversation with different investors. Hence, we would strongly recommend having a professional lawyer or law firm, to offer you advice on the different agreements.

What your own lawyer is for, specifically:

• Reading the term sheet before you sign it — particularly liquidation preference, anti‑dilution, board composition and anything headed exclusivity.
• The definitive agreements that follow, usually a share subscription agreement and a shareholders' agreement, which are far longer and bind for far longer than the term sheet.
• The conditions precedent — the list of things you must fix before the money moves.

Remember: neither your advisor nor the investor’s lawyer represents you — have your own counsel.

Once you have Matched with an investor, you can start talking about fund raising. You can use the ‘Virtual Data Room’ feature to share files, and the Raising Capital section to track all on-going conversations.

A useful readiness test: you can answer three questions without going to look them up — how much you are raising, what it is for, and what the last twelve months of numbers were. If any of the three needs a week's work, the conversation is early, and an early conversation is hard to restart later at the right price.

Please visit the ‘Raising Capital’ section. You can use the Add New Deal / Add New Log feature to add details for every transaction with the investor, by each stage of the conversation.

If for any reason, an ongoing conversation with a particular investor has been paused or closed, you can visit that particular conversation’s details and use the ‘Put on Hold’ feature.

This conversation is then moved to a different page — On Hold — under the Raising Capital section.

Yes, when you put a conversation on hold, you can choose to set yourself a reminder for a time, at which point you may wish to revisit the conversation with that particular investor.

Yes, you can. The tabular summary on the On-Going page helps give you an overview of all the ongoing investor conversations. The table has the most updated values, from the last recorded conversation on that thread.

Plan for three to six months from the first serious conversation to money actually in the bank, and longer if it is your first priced round or you are still looking for a lead. It usually breaks down as four to eight weeks of conversations, two to four weeks negotiating a term sheet, and another four to eight weeks of diligence, definitive documents and conditions precedent before funds move.

The clock that matters is not the calendar, it is your runway. Start when you have nine to twelve months left, not four. A founder raising with one quarter of cash remaining is negotiating from a position every experienced investor can see.

Work backwards from a milestone, not from a valuation. The right number is what it costs to reach the next point at which the business is demonstrably worth more — a margin that holds at scale, a second channel working, a unit that is profitable — plus a buffer for the raise itself taking longer than planned. Eighteen to twenty-four months of runway is the usual answer that falls out of that.

Both errors are expensive. Raise too little and you are back in market before the milestone lands, with nothing new to show. Raise too much at an early price and you have sold a part of the company you cannot buy back.

A term sheet is a short summary of the deal an investor is proposing. Most of it is deliberately non-binding — it is an agreement to try to agree. A few clauses usually are binding even if nothing else proceeds: confidentiality, who bears costs, and any exclusivity or no‑shop period.

Read it in this order, because this is the order in which the clauses cost you money:

• Valuation — pre-money or post-money, and exactly what is counted inside the pre.
• Liquidation preference — the multiple, and whether it participates.
• Anti-dilution — broad-based weighted average is ordinary; a full ratchet is not.
• Board composition and the list of reserved matters that need investor consent.
• The ESOP pool, and whose shareholding it is created out of.
• Exclusivity — how long you are barred from talking to anyone else.

What a term sheet actually says takes each of these in turn. Read it with your own lawyer, not only with your advisor.

Broadly seven groups: incorporation and statutory records; the cap table together with every instrument that can turn into shares; financials, both audited and management; customer and supplier contracts; intellectual property and its assignments; employment records and the ESOP; and anything live in litigation or compliance.

Build it before the first investor asks. The single commonest cause of a slow diligence at this size is missing paperwork from the company’s first two years — unsigned founder agreements, contractor work with no IP assignment, a share transfer that was agreed over email and never papered. What goes into a data room is the full checklist.

Arithmetically it is just the round divided by the post-money valuation. Raise ₹5 Crore at a ₹25 Crore post-money and you have sold twenty per cent. Ten to twenty-five per cent is the usual band for an early priced round; much above that in a single round starts to affect whether the founders are still motivated enough for the next one, which a good investor cares about too.

The part founders most often miss is the ESOP pool. If the term sheet creates or tops up a pool within the pre-money, the existing shareholders pay for all of it and the real dilution is meaningfully larger than the headline. How a round is priced works the numbers through.

Lighter than a growth-stage process, but not light. Expect three strands running together: business diligence (customer references, pipeline, concentration), financial diligence (bank statements reconciled against the books, GST and statutory filings, revenue recognition), and legal diligence (cap table history, material contracts, IP ownership, employment, any dispute).

Almost nothing fails here on the strength of the business. What causes delay, and occasionally a re-priced round, is paperwork that was never done properly the first time.

It is common and it is usually not terminal. The routes out, roughly in order of how often they are taken: a bridge from investors already on the cap table; cutting burn to buy another two or three quarters; debt, where revenue genuinely supports servicing it; or re-scoping to a smaller round at the same price rather than the same round at a worse one.

The outcome to avoid is running the cash to zero while still in process, because every term available to you at that point is worse. Debt against equity and the case for not raising at all are both worth reading before you need them.

In India, a priced round is most often compulsorily convertible preference shares (CCPS), which is what lets an investor hold a liquidation preference and protective rights alongside ordinary equity. Small or simple rounds are sometimes plain equity; compulsorily convertible debentures appear occasionally. The SAFE that is standard in the United States is much less common here, because the regulatory treatment of a genuinely open-ended convertible is awkward.

If any part of the money is coming from outside India, the pricing guidelines apply and a valuation report from a registered valuer is generally required before the shares can be issued. That is a question for your counsel early, not a detail to discover at closing.