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Series A Financing

 

What are we aiming at GOLDILOCK Economy for Our Business Startup which will take into account the challenge I would like to UNDERPIN. We want best of everything. Knowledge is always outside our comfort zone. Unicorn business model takes into account economic growth of the country as the startup provide job opportunities, low inflation rate, more employment to the GEN X population who are very intelligent in many ways. The holistic view of the contextual experience is increase in asset price of the intellectual property created by the individual creative mind.

There are peaks and troughs in fund-raising journey of a startup business. Startups go through multiple rounds of financing to raise investment in order to cover business expenses based on escalation of company’s valuation.

HOW to evaluate Business Growth?

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After the business has shown some of a track record, and when company is generating some revenue (though it might not be net profit), Series A funding is a critical stage in optimization of product and services and for the growth in customer base. The ultimate goal of series A round of financing is to cover up the expenses involved in carrying out additional market research and finalization of the product or service that the company is introducing in the market.

The company is still in the product development stage so the risk involved in the series A round of funding is the highest and Series A funding is commonly offered in the form of preferred stock and may have anti-dilution provisions in case more financing is given, in the form of common stock or preferred stock, in the future.

In an increasingly competitive marketplace, many startups are unable to impress investors to get Series-A funding because of multiple reasons like the venture failed to demonstrate their ability to grow; the team failed to build the skill-sets and competitiveness; lack of Intellectual property that can give the company an unfair advantage; lack of market validation or a poor product or service.

Preparation is the key to everything. Startups should align their thoughts and conversations with the investors perspective for getting follow-up meetings after the initial interaction with the investors. The following things should be kept in the mind:

  1. To excel in the game of series A financing, a company should be well-versed with the investment criteria of an investor. Different investors have criteria of investing in a venture.Some may give more weightage to market sentiments while some other may give to the team.  
  2. Have a sound knowledge of the investment scenario of different sectors. This will help you understand the investor’s view of your sector and you will be in a better position to seek investment for your venture.
  3. There should be synergy in your venture and the portfolio companies of the investor. This will help the investor understand the relevance of investment in your venture.
  4. Be clear on what you seek from the investor beyond the money and how they may add value to your venture.
  5. Eight BEST Funding Opportunities

Crowdfunding                                                                                                                       

The digital era has opened your world to more than a market. Through the crowdfunding sites, you can pitch your business to strangers and ask for funding. At the crowdfunding platform, lay out your business idea and give a detailed description of what the business is, your profit making plans, how much money you expect to raise, and why you need to raise funds via the platform.Companies that raise funds via crowdfunding platforms have been able to increase their profitability since the platform benefits entrepreneurs in two ways; through the funds raised and through the marketing that products receive. Since crowdsourcing is a competitive funding option, your business must be rock solid and appealing to customers and investors.

Using venture capitalists

Venture capitalists are professionals who invest in companies with high potential for growth. To get the attention of a venture capitalist, your business model should show potential for rapid growth and the ability to disrupt the market. 

Venture capitalists only invest in startups with extremely high potential for big returns on investments. As a result, venture capitalists evaluate the sustainability and the scalability of any business they consider investing in. To get a venture capitalist interested, you should have a disruptive product as well as a big market that will result in faster and bigger returns on investments.

You should also note that venture capitalists offer mentorship and their expertise once they sign up with you. Therefore, if you believe that your business is competitive and able to attract a venture capitalist’s interest, ask for their funding. You should be willing to give up a percentage of your company.

Angel investors

Did you know that Google, Alibaba, and Yahoo got investments from angel investors? Angel investors are individuals who invest in potentially profitable businesses with their surplus disposable income. Before investing in your company, the angel investors will screen your business to ascertain its worth and the potential for growth.

Just like venture capitalists, angel investors invest in a stake of your company but they offer mentorship. Their propensity for high risk businesses is what determines if your business is taken up or not.

Winning business competitions

While repaying your debt consolidation loan, you should take advantage of your business’ potential by getting into contests. Most of these competitions require business plans and the entrepreneur with the best idea wins a big sum of money. The funds won should be injected into the business for better investment returns.

Most of these competitions are broadcast in the media. Besides winning the reward money, you will benefit from free marketing. People remember the winning business and this gives your business a great head start.

Funding from business incubators and accelerators

There are numerous funding opportunities in the market. However, to know about them and to benefit from them, you should be open-minded and aggressive. Search online or ask around for business incubators and accelerators. Business incubators provide shelter tools, network, and training just as parents do to their children while accelerators help businesses take the giant leap. To benefit, you must be willing to commit time, develop good networks and learn from your mentors, investors, and fellow entrepreneurs.

Government funding programs

The government supports local entrepreneurs. To reduce unemployment and to encourage self-dependency, the government has instituted departments to aid in sharing funds to the most innovative businesses. Businesses ideas that promise societal growth besides high profits always get a higher priority.

Online peer to peer lenders

Besides angel investors, there are groups or individuals online who often provide affordable loans to persons in search of affordable and unsecured loans. Though you will be servicing the debt consolidation loan, the loans from peer to peer lenders are affordable and if you are confident that you can repay the two loans comfortably, then you should take it up.

Bootstrapping

This is also called self-funding. It is an effective funding option when you are starting out and when you have savings. Besides personal savings, you can also ask your friends and family for funding. Though resources are stretched under bootstrapping, your business will be attractive to investors later on. Knowing that you build a business by yourself inspires confidence.

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Indian Funding Grants for Innovative Clean & Renewable Energy

Cleantech patent brand renewable energy, green materials, solar and other green power, transportation and cleantech industries

THERE ARE VARIOUS GRANTS FOR CLEAN AND RENEWABLE ENERGY IN INDIA

Energy Alternatives India (EAI): It  is India’s largest research and consulting firm for the Renewable Energy and Cleantech industry. They deal with the World Bank, Bill & Melinda Gates Foundation, Reliance, Exxon Mobil, Mitsubishi, and IITs, to name just a few. They organised REaction 2012, India’s largest Renewable Energy and Clean Technology meet, and extensively work with government agencies and industry bodies on other Renewable Energy events.

The future is green energy, sustainability, renewable energy.

Arnold Schwarzenegger

They assist companies raise equity or debt funding for their renewable energy projects in India.

Assistance for financial closure – $5 million-$ 1 billion

They provide assistance which is strictly for projects in the Renewable Energy and Clean Technology domains, typically

  • Solar PV, Thermal, or CSP

  • Wind

  • Biomass Power

  • Waste to Energy

  • Energy Efficiency

  • Water Management and Treatment

 

Process — A questionnaire found on the website is to be filled found and email it to consult@eai.in.

Government of India Initiatives:

Regulatory / Policy level initiatives:

1.1. GOI set up the Ministry of New and Renewable Energy (MNRE) as a nodal agency for all matters relating to new and renewable energy. The aim of the Ministry is to develop and deploy new and renewable energy for supplementing the energy requirements of the country. IREDA was established under the administrative control of MNRE to promote, develop and extend financial assistance for renewable projects. Recently, MNRE’s budget was enhanced by 65% to INR 2519 crore to ensure that adequate funds are available for financing renewable energy projects.

1.2. Feed in Tariffs – Feed-in tariff policies offer guaranteed price for fixed periods of time for electricity produced from RE sources. By offering assured prices for a fixed period, this policy helps in reducing the revenue risks of investing in renewable energy technologies significantly, and also contributes towards developing a favorable environment for rapid development of renewable energy sources.

1.3. RPOs – DISCOMs and some large power consumers are obliged to purchase minimum ratio of their total power from renewable sources, referred to as Renewable purchase obligation (RPO). The long-term objective for India is RPO to reach 15% by FY2020. There are however substantial problems with the compliance as the entities in the majority of the states continue to remain below the RPO trajectory. One of the reasons for the lack of demand in renewable energy is the financial difficulties (high debt) of the state-owned distribution companies. Under the RPO framework, non-compliance of RPO attracts penalties on such entities.

1.4. REC: In November 2010, the Government launched Renewable Energy Certificate (REC) mechanism which enables the obligated entities to meet their RPO. The RECs are used for interstate trading of renewable power. The purpose of RECs is to facilitate states with low renewable potential / capacity to comply respective stipulated RPOs. They are used as a proof of the generation of 1MW renewable energy. The certificates can be traded through a power exchange platform within price range set by CERS and are differentiated into solar and non-solar renewable sources.

1.5. GOI introduced the payment security mechanism to enable financial closure of projects under the National solar mission by extending Gross Budgetary Support amounting to INR 486 crore to the MNRE. Under the scheme, in the event of defaults in payment by the state utilities to NTPC Vidyut Vyapar Nigam (NVVN), the Central Agency which will purchase solar power from the developers and sell it to the utilities bundled with unallocated thermal power available from NTPC utilities. The core component of the Payment Security Scheme is to ensure availability of adequate funds to address all possible payment related risks in case of defaults.

1.6. The renewable energy industry is exempted from obtaining several industrial clearances that are mandatorily required for setting-up an industry in India.

Fiscal initiatives :

2.1. MNRE capital subsidy schemes– The scheme provides partial subsidy and interest bearing loan to the project developer. The entire funding under this scheme is based on project basis. A detailed project report including client details, technical & financial details, O&M and monitoring arrangements has to be submitted to the ministry.

2.2. National Clean Energy Fund– It was created to support entrepreneurial ventures and research in the field of clean energy technologies. NCEF is collected by the central board of excise and customs via a levy of INR 100 per ton on coal. GOI provides low interest bearing funds from the NCEF to IREDA for lending to renewable energy projects at concessional rate of interest.

2.3. Soft loans from IREDA-The funds secured by IREDA from the NCEF are provided as loans to banks at 2 per cent for funding renewable energy projects at cost not exceeding 5%. Recently, the GOI increased the authorized share capital of IREDA to INR 6000 crore from INR 1000 crore. This move will enable IREDA to mobilize financial resources to the tune of INR 14000 crore and finance capacity of 4800 MW from RE projects during the 12th five year plan. This is discussed in more detail in the subsequent section.

2.4. Accelerated Depreciation – Accelerated depreciation, a fiscal mechanism has been was one of the most significant drivers of additions to renewable energy capacity. Under this, GOI allowed the producers of renewable-energy-based power to claim accelerated depreciation (AD) up to 80% in the first year on a written-down value (WDV) basis under Section 32, Rule 5, of the Income Tax Act.

2.5. Generation based incentives – To attract foreign investors, the government has taken several initiatives such as introducing GBI schemes to promote projects under Independent Power Producers (IPP) mode for wind and solar power

2.6. Viability gap funding (VGF) was introduced as a financing mechanism to fund the solar projects. VGF is a capital subsidy that bridges the gap between the project cost dictated by the prevailing electricity rate and the price quoted by a developer. The advantage of this scheme is that with upfront availability of part of capital, the cost of financing is lower.

2.7. A 10-year tax holiday for RE projects. – Income tax exemption applicable to RE projects. Union Budget 2013-14 has extended the sunset clause for eligibility for tax holiday u/s 80IA from March 31, 2013 to March 31, 2014, i.e. undertaking which begins generation of power by March 31, 2017 will be eligible for tax holiday. MAT @ 20% is applicable to RE projects.

 

2.8. The Central Government has given various incentives on setting up the renewable energy power project which includes concessions and exemption from customs and excise duties on specific goods required for setting up the renewable energy projects.

 

2.9. Some state governments have provided the incentives in the form of a VAT at a reduced rate (5 percent) whereas the other states levy a VAT of 15 percent. An exemption of sales tax in certain states

 

2.10.In the 2014 Budget, the GOI announced a onetime Investment allowance of 15% to manufacturers investing above INR 25 crore on new plant and machinery.

2.11.Loans at concessional rates for off-grid applications.

Public financing initiatives

3.1. FDI policy on investment in RE sector

– GOI has formulated a policy to encourage transfer of foreign technologies in the renewable energy sector. FDI up to 100 percent in the sector under the automatic route in Renewable Energy Generation and Distribution projects that are subject to the provisions of the Electricity Act of 2003. Under the Act, no prior approval of regulatory authorities is required.

3.2. As per the RBI directives, all scheduled commercial banks can treat loans sanctioned to individuals for setting up off-grid solar and RE solutions for household purpose as a part of Priority Sector Lending. This will encourage more funding; and greater adoption of renewable technology among households.

3.3. The Government has advised all banks to encourage home loan/home improvement loan seekers to install roof top solar PVs and include the cost of equipment in their home loan proposals.

3.4. The tax free bonds issued by IREDA have been able to attract significant interest from the investors due to the tax benefits they offers as compared with other investment options. Giving a fillip to the country’s renewable energy programme, the new government has taken a slew of measures in a short span of time to revitalize the country’s clean energy ambitions.

In april 2016, 40 NBFCs sanctioned Rs. 71,200 crore to finance Renewable Energy projects. 40 Banks & Non-Banking Financial Companies (NBFCs) have sanctioned an amount of Rs. 71,201.54 crore to finance the various renewable energy projects and disbursed Rs. 29,529.57 crore against the sanctioned amount since February 2015 till 21 March, 2016. This a part of commitment made by them during RE-INVEST 2015.

It may be recalled that during RE-INVEST 2015, 40 major Banks and Non-Banking Financial Companies (NBFCs) [Public, Private Sector Banks &NBFCs and Foreign Banks operating in India] committed to provide debt funding to Renewable Energy Projects aggregating to over 78.75 GW during the span of next five years. Loans sanctioned by these Banks & FIs for RE projects are 18.63% of commitments made.

The commitments made by country’s Banks & NBFCs to finance RE projects and agreements with Foreign Banks& FIs to provide low cost and on long term funding are expected to boost the growth of the Indian renewable energy sector.

Ministry of New and Renewable Energy had organized First Renewable Energy Global Investor Meet and Expo (RE-INVEST 2015) from 15-17 February, 2015 in New Delhi. RE-INVEST 2015 saw RE capacity commitments of over 283 GW from stakeholders. Further, there was commitment of over 62 GW of manufacturing of RE equipment in India.

Ministry of New and Renewable Energy have been getting monthly status reports on achievements made so far by the Banks & NBFCs who have given commitments to finance RE bankable projects.

The Government has set an ambitious target of 175 GW of Renewable Energy capacities by 2022. Achieving this target require capital outlay of US $ 160 billion including equity of US $ 40 billion. In addition, huge investment is required for transmission; up-gradation of infrastructure in order to utilize power generated though Renewable Energy sources. As such Banks & NBFCs have to play a major role to provide low cost and long term financing for these projects.

Over the last few years some private banks in India have signed deals with development banks to provide loans at concessional rates. The Indian Renewable Energy Development Agency (IREDA) is also providing loans at low rates following its recent agreements with banks like KfW, AFD, Nordic Investment Bank, World Bank, Asian Development Bank, the European Investment Bank, and Japan International Cooperation Agency.

  • The government is in the process of setting up a $1.25 billion fund, backed by state-owned and private institutions, to finance renewable energy projects.
  • The move will help in the scaling up of clean energy generation from 37 gigawatts (GW) at present to 175GW by 2022, according to a senior government official.
  • State-owned institutions such as Power Finance Corp. Ltd and Rural Electrification Corp. Ltd have already committed a total of $300 million to the fund, Varsha Joshi, joint secretary in the ministry of new and renewable energy, told a gathering of power industry executives and bankers at the India Investment Summit organized by the finance ministry on Thursday.

“This fund will make equity and mezzanine investments in renewable energy projects and will be modelled like the National Infrastructure Investment Fund (NIIF),” Joshi said.

  • The government wants to make renewable power projects, including solar energy, more attractive, she said.
  • The NIIF is being set up with a corpus of about Rs.40,000 crore, partly funded by private investors, to finance infrastructure projects, including stalled ones.
  • To scale up renewable energy output as planned, India will need an investment of $140 billion over the next six years.
  • According to official estimates, financial institutions have already committed about $57 billion to support nearly 78GW of renewable energy, slightly less than half of the target.
  • At present, about 70% of India’s 284GW power capacity is fired by fossil fuels such as coal, gas and oil. Large hydroelectric projects account for 15%, while other renewable sources account for about 13% and nuclear power about 2%.
  • The proposed target of 175GW of renewable energy output assumes at least 100GW from solar, 60GW from wind, 10GW from bio-power and 5GW from small hydro-power.
  • Industry executives said that the central government’s commitment to cut carbon emissions and the recent revision in the power tariff policy gives confidence to investors in renewable energy.
  • The 175GW renewable energy target is further complemented by India’s commitment at the latest Paris climate conference to reduce carbon emissions by 30-35% and increase renewables to 40% of the energy mix by 2030,” said Tulsi Tanti, chairman of wind turbine producer Suzlon Group, which recently ventured into the solar power segment.

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Wind and other clean, renewable energy will help end our reliance on fossil fuels and combat the severe threat that climate change poses to humans and wildlife alike.           – Frances Beinecke

Innovation can happen in any field. Seeing the current scenario WHAT is needed is a portfolio of renewable energy patents in cleantech and energy development sector in India. Innovation can occur in any technological field and often involves multi-disciplinary innovation. Our FOCUS is to provide sector-focused patent and brand litigation representation before DELHI HIGH COURT and Supreme Court of India. Our experienced  techno-legal counsel provide strategic holistic legal advice, business and scientific depth to clients across the globe.

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