From an investment of Rs 44,000 to revenues of Rs 5 Cr: how this Pune-based startup helps entrepreneurs with Business Setup
The Indian startup ecosystem might rank third globally, but why do only a handful of startups make it big? A study by Forbes says that 90 percent of these startups fail, mainly due to lack of innovation.
Moreover, starting up in India includes 10 registrations and more than seven tax and labour laws to comply with every month. The process is tedious and expensive. It is also very difficult for an entrepreneur to focus on innovation, while ensuring 100 percent compliance.
Enter the Chief Financial Officer (CFO). While it is necessary to have a CFO, not all startups have the resources to afford one. Pune-based Business Setup aims to ease this process for early-stage startups. With an in-house team of experienced professionals, Business Setup has joined hands with IIM-Ahmedabad, Hyderabad's T Hub, and Startup India as their legal advisors and partners.
Also read: [RESEARCH] YourStory and Vakilsearch present an overview of India’s incorporation landscape in Q1
Responding to pain points
Rohit Lohade, 31, was working with Deloitte as Manager, Audit and Assurance, when he began helping an entrepreneur friend to raise funds.
“We worked 60 hours straight only coordinating with lawyers, CAs and tax consultants,” Rohit says. “I realised that while not all startups can afford a CFO, everyone deserves one,” he adds.
Not long after, in March 2015, Rohit along with his friends, Khushboo Bhattad, Parinit Thated, and Ritesh Jain, created an online platform for CA, CS, and legal services. Business Setup provides services for company establishment strategy, fund raising and mergers & acquisitions guidance, business model formulation, financial reporting and projections, accounting and managing financial books, managing payroll, tax and regulatory compliance an coordinating audits and valuations.
Recently, the startup has also launched an India Entry Services vertical for foreign companies looking to set up operations in India.
Backed by a team of experts
The founders are all CAs with combined experience of over 10 years in consulting and taxation.
Khushboo, 30, leads the taxation team and is the in-house GST expert. Pranit, 31, leads the India Entry services and advises NRIs and foreign companies on establishment of business in India, offshoring operations, and managing compliance. He assists listed companies, including Bajaj Finance.
Ritesh, 30, leads the financial management vertical. He has been the virtual CFO to more than 20 foreign subsidiaries, and has been active in the Indo-German Chamberof Commerce.
Rohit is responsible for fund raising, M&A guidance, and business development. He is the director to overview compliance at many companies, including Domino’s Pizza.
A young organisation
Business Setup is now a 45-member team working across offices in Pune, Mumbai, and Bengaluru. The average age in the organisation is 28 years, which often makes client acquisition a challenge.
“There have been so many times when the client asked us where our boss was!” Rohit says.
It took Business Setup several rounds of meetings, calls, and convincing to get their first 10 clients. At present, it manages more than 1,000 clients, and claims to have helped more than 1,500 clients to register their business. Its client list includes startups like Turms, Northmist, Schoolay, Rapawalk, and Heelium.
The startup has been bootstrapped since the beginning, with the co-founders investing only Rs 11,000 each. “We even cut a deal with the landlord to pay rent in kind!” Rohit adds.
Saving operational costs, the co-founders worked clerical jobs the first year, later hiring interns and training them. “Our philosophy has always been to be bootstrapped and grow from within,” Rohit adds.
From advisor to partner
How does Business Setup help businesses set up? They begin by understanding the needs of the entrepreneur when a client approaches them. “Based on future growth and funding strategy, we provide structuring solutions to establish the business,” Rohit says.
After incorporation, Business Setup assigns a project manager, the point of contact for all services, to each client. This manager is further supervised by senior partners or co-founders.
"Based on client size and needs, we design packages, including tax filing, book keeping, audits, and RoC compliance services," he adds.
Clients also receive regular updates on government schemes and changes. Having closely known HNIs and angel investors, Business Setup has helped more than 25 clients to raise funds.
Business Setup has also developed in-house Artificial Intelligence (AI) tools. “One of the tools used for determining price strategy can calculate taxes required on a particular product,” Rohit says.
“We are also planning packages under the 'Pay as you Grow' model, where clients will pay for services they need as they grow,” Rohit adds.
For initial incorporation, Business Setup does not charge any service fee. “This allows startups to save almost Rs 15,000,” Rohit says.
Business Setup earns revenue on conversion of the client – when they seek accounting, operational, and compliance services. According to Rohit, they have a “90 percent conversion rate”.
For a partner company with turnover of up to Rs 20 lakh, Business Setup charges Rs 4,000 per month (for Rs 50 lakh turnover, it charges Rs 6,000 per month, and so on). This charge is levied for compliances like TDS returns, GST returns, ROC compliances, and other financial services.
The company has been cash positive since day one, and claims to have generated Rs 5 crore in the last financial year.
Competition and future plans
Business Setup competes with the likes of Vakilsearch, Indiafillings, LawRato, and NearLaw. While all these players work on an aggregator model, providing external entities, what sets Business Setup apart is their in-house team of experienced professionals.
The company expects to cater to more than 2,000 startups by the end of this year, through StartupIndia.gov.in.
“We are developing a platform that will be driven by AI tools to make processes faster and leaner, and to cater to the large volumes of transactions," Rohit says.
Business Setup, which already has an associate in Dubai, plans to start operations in Singapore by next year.