By | Krishnakumar Natarajan | Co Founder Mela Ventures and earlier Co-Founder at Mindtree
Why, when, the pros and cons of flipping
Startups, at some time in their growth path, contemplate flipping their structure to overseas jurisdictions. In many cases it is an after thought and is done with haste due to customer or Investor pressure. The implications of such a move are not well understood by many Founders. It is important that flipping entity is done with a well-thought framework and executed considering all the pros and cons.
Why do startups evaluate such an option? Some common theses are as follows:
– Favorable Tax norms in Overseas markets.
– Easier and less taxing Listing norms.
– Ability to attract Overseas Investors.
– Possible ease of attracting Overseas customers.
As per our recent survey of startup entrepreneurs, 47% of the respondents said that they think of flipping to get more investment avenues. Here are the survey results for the question “Why are Indian startups flipping entity?”
When should flipping be considered as a potential option? What should be some key considerations?