Fundraising
Short answer
A typical Indian venture diligence covers six areas: corporate records (incorporation documents, statutory registers, board and shareholder minutes), the cap table and all share issuances, financial statements and tax filings, material contracts, employment and ESOP documents, and regulatory compliance including FEMA where a foreign investor is involved. The items that most often stall a round are an unreconciled cap table, missing ROC filings and unsupported valuations.
What a data room contains
Diligence is not one review but several running in parallel — legal, financial, tax and secretarial — usually by different people who do not talk to each other. Your job is to make the same facts findable from every direction.
- Corporate: certificate of incorporation, MOA and AOA, all board and shareholder minutes, statutory registers.
- Cap table: every allotment and transfer since incorporation, with the corresponding PAS-3 filings and share certificates.
- Financial: audited financial statements, management accounts, the current-year MIS, and the underlying schedules.
- Tax: income-tax returns, GST returns and reconciliations, TDS returns, and any open notices or assessments.
- Contracts: customer and vendor agreements above a threshold, leases, loans, and anything with a change-of-control clause.
- People: employment agreements for key staff, the ESOP scheme and grant letters, and the fully-diluted cap table.
- Regulatory: FEMA filings where applicable, sector licences, and IP assignments.
The five things that actually stall rounds
In practice, deals slow down in the same places again and again:
- A cap table that does not reconcile to the statutory register — usually because an early allotment was never properly filed.
- Missing or late ROC filings, especially PAS-3 on historic allotments.
- A valuation that cannot be supported, or several valuations that disagree with each other.
- FEMA reporting gaps where an earlier foreign investor was never reported.
- IP that sits with a founder or a contractor personally rather than with the company.
Fix the file before you open it
Everything above is discoverable in advance. A pre-diligence review — running the same checks an investor's advisers will run, before the term sheet — converts a list of findings into a list of completed remediations.
The commercial argument for doing this is straightforward: findings during diligence are leverage for the other side. Findings you have already closed are not.
This article is general information, current at the date shown, and is not advice on your specific facts. Tax and corporate law change, and thresholds and deadlines are amended regularly — check the position before you act on it, or ask us.
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