How ‘Table by Salt’ will help early stage startups fundraise on autopilot
It is a no-brainer that the processes involved in raising capital can be time-consuming and distressing. However, as a startup founder, you cannot put them off. Realising the struggles that startups face, SALT has launched a new product that integrates banking with compliances and documentation.
For startup founders, starting and growing a business can be an intimidating process requiring a lot of hard work. Finding investors and raising money is yet another harrowing task. Every process, procedure, and system need to be built from the ground up. And, amid all the chaos, many startups tend to lose focus on something as critical as compliance. And when it comes to raising foreign capital, it’s a different ball game altogether.
Picture this: Gaurav is the founder of a SaaS-based startup from Ranchi, Jharkhand. Based out of a Tier II city in India, he decides to upgrade the tech development for his startup for which he needs more capital. After a few rounds of talks, he manages to get a foreign investor who agrees to sign the term sheet. Great, right! However, now starts the real ordeal of paperwork, compliance, and bank formalities which Gaurav has to do in addition to running the company.
To start off, he reaches out to his Chartered Accountant to seek his advice. His CA advises him well on getting the valuation report with a registered valuer, the pre-investment compliance procedures and banking formalities. But he realises that the entire rigmarole is not just time-consuming but also burning a hole in his pocket. From the banks charging opportunistic forex conversion rates, the Bank account not being created on time, the 6-Point Investor KYC not being completed, to the compliances not being adhered to – the list of issues was endless. Time is ticking as Gaurav needs the funds in a month’s time!
Here is where neo-banking platform SALT’s first-of-its-kind solution ‘Table by Salt’ comes to his rescue. SALT simplifies the valuation report, helps him with the creation of the capital account and gets the ROC and RBI compliances in place. Phew! Gaurav is now 100 percent compliant.
Moreover, all it takes is 48 hours to transfer funds to Gaurav’s Capital Bank a/c! The funds are credited to his current capital account at the best available forex rate. SALT credits the exact amount referred in the board resolution, avoiding the requirement of extra compliance in case less or more money was received.
He saves on time, money and energy and the whole process is completed in just 20 days! And Gaurav, in the whole process, kept his focus on his business. The cherry on the top is that SALT just charges a fraction for the entire process than what a CA, CS or merchant banker would charge for their piecemeal approach.
How it works
“We act as an experienced partner for your banking and compliances giving better forex rates, easing compliances at reduced cost and saving time of founders as we automate these processes - particularly RBI and ROC filings for startups raising foreign capital, that can be tough to negotiate. In short, the founder identifies the foreign investors, and once the term sheet is signed and the due diligence is done we take it from there for all banking, compliance and documentation,” explains Udita Pal, Co-founder, Salt. The venture, which is focused on cross-border transactions and compliances, aims to streamline and transform banking processes for startups and SMEs.
The ‘Table by Salt’ solution initiates coordination time with CA, CS and the Registered Valuer. In the past, companies and its promoters and directors have had to cough up hefty penalties (as high as Rs 1.5 crore) for not completing the banking and legal processes duly. The Companies Act, 2013 makes the company, its directors and promoters liable to pay a penalty of INR 2 crores or the amount raised through private placement (whichever is lower) AND return all the monies with 12% interest to the subscribers in case of contravention.
With timelines and costs in getting the compliances and banking processes reduced by more than 50 percent, it helps startup founders focus on more productive functions.
Moreover, with SALT, the integration with banks is much smoother. “The fact is that MSMEs don't get a better banking experience, they are not aware of the services. Since we bring better services at the footsteps of the founders, we end up crediting ‘exact’ funds and at the best rates possible,” she adds.
What’s more, foreign investors and venture capitalists looking to invest in local startups can be assured that all compliances are done in a timely manner in the investee company. “VCs feel the heat when they do exit the startup as there is at times non-compliance by early-stage startups in the form of FIRC, RBI Filings etc. If they choose SALT, they can be well assured that all compliance and documents are not missed at all. They need not remind their investee company to get documentation in time. We have in-built nudges and appropriate safeguards to complete the banking and compliance all in one place,” adds Ankit Parasher, Co-founder, Salt.
SALT provides international payments and compliance solutions to Indian businesses, and has already processed a whopping $10 million worth transactions in Q1 of 2022. And since the BETA launch of its second product, Table is now helping startups raising foreign capital.
Indian startups have already raised $10 billion of capital in this quarter. With the Indian government’s push for a $5 trillion economy, it is prudent to assume that attracting foreign capital will be their topmost priority. “For the next five years, the capital inflow should double to what it is in the current quarter. We see a growth of 20 percent YOY basis,” predicts Udita.