There is more to add to the good luck charm for the Indian start-ups. The Securities and Exchange Board of India (SEBI) has a new proclamation: Start-ups and SMEs can register on stock exchange without going through the vicious cycle of initial public offerings (IPO) and new exit policy for angel investors and VCs have been inked, enabling them to get easy funds from institutional sources.
According to SEBI, “Therefore the listing can be done without an IPO and the expenses associated with it. While such companies are listed on the ITP they will not be permitted to raise capital, though they can continue to make private placements”.
Some firsthand information for the new clause:
1. The ones who can rush in for this:
Startups enrolling on stock exchange must not be older than a decade. It’s paid up capital and revenue must not exceed an amount Rs.25 crore and Rs. 100 crore respectively.
2. Things to buckle up:
Atleast one year’s audited financial documents, documents for the preceding year, one alternative investment fund, venture capital fund or angel investor (who is a member of an angel network) or an institutional investor who has invested at least Rs 50 lakh in the firm. Some other clauses clipped in are raising loan from a scheduled bank for financing or working capital requirements and a three years has elapsed from the date of issue of such loan and the funds have been fully utilized, or it has been funded by an international multilateral agency or domestic agency or public financial institution.