Young India is turning entrepreneurial and with dozens of
success stories of start-ups making it big, the age of
entrepreneurship seems to have finally arrived. However, even a
great and innovative idea, without adequate capital backing is not
enough to set up a successful venture. Fund raising is a highly
challenging task for any enterprise, especially a startup. With
little to offer the traditional lenders in terms of hard assets,
past performance and market value, most startups turn to private
and professional investors for investments.
These investors provide capital for an agreed return and to
secure the same generally acquire a stake in the company. They also
insist upon having certain rights as a stakeholder in the decision
making of the company to protect their interest. The agreed
mechanism of investment, rights and obligations of the parties
(both promoters and investors) are all formalized and captured in a
set of transaction documents. These documents
