Compliance frameworks for startups in Bangalore.
1.Corporate Structure and Registration
For investor-ready startups, the private limited company structure is virtually mandatory.
- Limited liability protection for founders and shareholders
- Clear separation between personal and business assets
- Investor-friendly structure that facilitates funding rounds
- Professional governance framework that scales with growth
2. Clean Cap Table Management
Think of a cap table as your company’s ownership scorecard. It shows who owns what percentage of your company.
What you need from day one:
- Clear founder ownership: Document exactly how much each founder owns
- Employee stock pool: Set aside 8-20% of company shares for future employees
- Advisor shares: Small portions (usually 0.1-2%) for people who help your business
- Shareholders’ Agreement: The rulebook that governs how all these shares work
Why this matters: A messy cap table is a red flag for investors. They want to see a well-organized ownership structure without complications.
3. Board Governance
Your board of directors makes big company decisions. Keeping it organized with meticulous record-keeping is a hallmark of an investor-ready company.
Due diligence, investors will ask to see everything. Being able to produce well-organized, properly executed documents immediately builds immense confidence.
This includes:
- Founder Agreements: A clear agreement between the founders outlining roles, responsibilities, equity, and what happens if a founder leaves.
- Contracts: Signed agreements with all employees, vendors, customers, and partners.
- Board Meeting Minutes: A formal record of all board discussions and decisions, which serves as legal proof of proper governance.
Disorganized or missing paperwork is a major red flag that can significantly delay or even terminate a funding round.
4.Intellectual Property (IP) Protection
The rule: Everything your company creates must legally belong to the company, not individual founders.
What needs to be transferred:
- Company branding and logos
Why it’s critical: Investors won’t fund a company that doesn’t own its own intellectual property. This must be done before raising money.
5.Data Room Preparation
A data room is like a well-organized filing cabinet that investors can access during due diligence (when they’re checking your company before investing).
What goes in your data room
- Government registration documents
- Key contracts with customers/suppliers
- Non-disclosure agreements (NDAs)
- All the documents mentioned above
Pro tip: Start organizing this from day one. Tag and organize everything so it’s easy to find.
6.Labor Law and Statutory filings
Maintain compliance and records of Employment contracts, clear role definitions, and adherence to labor laws (wages, statutory benefits, and POSH policy) and legal filings (GST, PT, EPF/ESI, TDS compliance, annual returns) show confidence to investors.
Key takeaways of building Investor trust.
VC Expectation | Why It Matters | Typical Red Flag Example |
Professional, diverse board | Ensures impartiality and accountability | Founder-only board, no independent directors |
Transparent, audited financials | Confirms fiscal health and operational integrity | Late filings, frequent auditor changes |
Clear, documented IP ownership | Protects core business asset and prevents disputes | No IP assignments/contracts, confused ownership |
Labor/employment law compliance | Prevents future legal action and reputational risks | Missing contracts, vague law violations |
Strong data protection | Avoids regulatory fines, reputational and legal risk | No policies/NDA, data leak/disclosure incidents |
Up-to-date statutory filings | Demonstrates process discipline and reliability | Missing registers, unfiled returns |
