Before investors will fund any money to a new venture, it has to be structured, reputable, and secure. Knowing how to register a startup in India is the very first hurdle to overcome in acquiring both funding and the investor's trust.

How Startup Registration Instills Confidence in Investors?

Investors want more than mere profits; they want transparency and assurance that their money is safe. Registration helps in several ways:

• Authenticity: Being lawful evidence that it is a startup and not simply an idea that someone wrote down on a piece of paper.
• Legal protection: Protects the startup founders and investors from unlimited liabilities.
• Credibility: Show professionalism, service, and commitment for long-term relationships.
• Clear Ownership - Registration defines shareholding, liabilities, and responsibilities. There is no ambiguity.
• Government Recognition - Startups that receive recognition by DPIIT as part of the Startup India initiative are able to receive a tax incentive and compliance relaxation. This passes a positive message to investors.
• Exit Options - One thing a registered company provides is a way to exit through a sale, a transfer of equity, or an acquisition, which an investor might feel more comfortable with.

At the end of the day, registration is a big signal that this startup is organized, compliant, and ready for others to get behind!

Why Funding Depends on Registration?

When banks and venture capitalists put their money up to lend or invest, the first major requirement is registration. Here are the reasons funding becomes virtually impossible without it:

• Business Loans - without valid incorporation documents, banks will not move forward on loan applications.
• Government Grants & Subsidies - Government grants and subsidies are available at the official level for registered startups.
• Reduces Investor Risk - registration reduces the risk of fraud and makes contracts legally enforceable.

If you think about it, registration is the key that opens the financial door. Without registration, the majority of such doors are hard to open.

Exploring Startup Registration Options

When considering how to register a startup in India, the business structure you opt for will influence how investors understand your business. There are various options, such as:

• Private Limited Company – It is the most favoured by investors as it allows for scalability, has limited liability, and defines ownership in equity.
• Limited Liability Partnership (LLP) - A good option for service-oriented startups that want flexibility and limited liability
• One Person Company (OPC) – For a single founder who is looking for protection of ownership and limited liability.
• Partnership Firm – The easiest to establish, but a partnership may not be great for raising large sums of money because partners have unlimited liability.

If you are a startup looking to raise initial funds, a Private Limited Company is usually the most preferred structure.

Steps to Register a Startup in India

Once you have selected the business structure, the next step is to get a legal identity for your start-up business through a formal registration process. Here are the steps:

• Apply for DSC & DIN - You need a Digital Signature Certificate (DSC) for signing statutory documents online. All company directors need a Director Identification Number (DIN) to complete the incorporation process.
• Name Approval Request- You must apply to the Ministry of Corporate Affairs (MCA) for approval of a proposed name for your company.
• Draft and File Documents - You must file the Memorandum of Association (MOA) and the Articles of Association (AOA) or a Partnership Agreement as required.