Is it necessary that startup should be registered (LLP, Pvt Ltd) before approaching investors?

Is it necessary that startup should be registered (LLP, Pvt Ltd) before approaching investors?

A venture, seed or an angel fund will ONLY fund a Private Limited Company.

If you are an LLP, it is impossible to raise venture capital.

Yes, it is absolutely necessary to be Incorporated / Registered before approaching investors for the following reasons:-

  • It provides with a Legal Framework, i.e. a Separate Legal Entity that is distinct from its Shareholders and Directors. It can buy and sell property, Enter Into Contracts, sue or be sued upon in its own name.
  • Credibility factor.
  • To provide equity shares.

On a side note, starting a business for the sole purpose of receiving funding is an inappropriate thing to do. You do not Incorporate your business for the sake of receiving funding but to carry out the smooth functioning of your business.


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