Startup 101: Can You Start A Company While Working For Another In India?

How often have you wondered whether you can start up that venture that has been tugging at your heart — and mind — for a while now, even as you remain ensconced in the financial security of being employed for another company? Well, you’re not alone.

Many a wannabe entrepreneur has mulled that all-important question: Can I start a company while working for another in India?

India is now a startup nation. The startup buzz, conducive atmosphere for startups — thanks to government support, investor interest and a robust ecosystem — combined with the fact that India is a hotbed of problems just waiting to be solved by technology is driving many a young, innovative mind to start up.

Many of these young innovative minds (or old minds, for that matter) are simply done with working for others. Many feel a disconnect with their jobs and want to do something that’s closer to their heart. And many others are just being caught up in the startup wave that’s sweeping through India.

The ideas are simmering in their heads, ready to be poured into the big, melting cauldron of the Indian startup ecosystem. However, many of these innovative minds are hesitant to lose the financial security of their jobs while they figure out their ideas. They’re stuck on the threshold on taking the leap into the journey from being an employee to an entrepreneur.

If you are one such wannabe entrepreneur, working on your startup idea on the side while you are gainfully employed and navigating the tricky fine print in your employment contract as you debate whether you should resign and start up or start up and then resign, here’s help at hand.

In this week’s Startup 101 series, we bring you insights on the above dilemma from Sharda Balaji, founder of NovoJuris Legal. Balaji will help you understand whether you can register your company while working as a full-time employee for another company.

NovoJuris Legal is an innovative corporate, technology, and IP focused legal advisory firm, and Balaji is a lawyer and a company secretary who holds a degree from the Institute of Chartered Secretaries in the UK.

She is also the Governing Council Member at The Indus Entrepreneurs Bengaluru chapter, commonly known as TiE, which is a not-for-profit global network of entrepreneurs.

Balaji emphasises that entrepreneurs who want to launch their own startup while working with another employer need to check their internal employment guidelines.

“Some companies do have zero tolerance, which means that an employee cannot take directorship or invest in another company or work on another project. And they would claim all Intellectual Property to belong to themselves, the employer,” Balaji explains.

She adds that the bid at entrepreneurship while working for another company also gives rise to the bigger question of ownership of intellectual property developed during the course of employment. So, entrepreneurs should exercise caution while taking a call on how they will create that IP and ensure that they own the IP when they start up.

Balaji also advises that before exploring entrepreneurship, one should check the legality of such a step both in their employment agreement and the employment policies of the employer.