‘Ease of doing business for startups’ is one big overarching reform India needs today, says AI firm Nimble Edge founder Neeraj Poddar, who shared how he lost more than $100,000 due to ‘poor processes/laws in India.’

‘Life is hell if you’re in this situation’

Describing that his firm, NimbleEdge, was incorporated in the US with an Indian subsidiary, he noted that this was not uncommon among startups. It is done for the ease of seeking funding from global investors, which includes a provision to set up an R&D team in India. Poddar added, “However, with new laws introduced with the [Overseas Direct Investment] ODI process, life is hell if you’re in this situation,” describing the tiresome process to raise funds from Indian investors or onboard advisors.

Comparing Western conduits, like Silicon Valley Bank (SVB) and Reserve Bank of India (RBI) in contrast, Poddar claimed the US is much smoother when it comes to raising funds or onboarding advisors. Describing his situation further, Poddar noted that if a founder wanted to “raise money from Indian angels who don’t have a US entity,” one would have to go through the ODI process. Terming it as “horrible,” Poddar revealed that in his case, it took more than 7 months, as we was stuck in the middle of Kotak Bank and RBI.

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He claimed that the officials responsible were unaware of the process. Referring to the stereotypical “sarkari” image, he said one was left going “back and forth for new documents they make up on the fly.” Calling the process a painful one, he claimed that it was one of the major factors hindering the free flow of investments in Indian startups.

‘Hassle’ to onboard Indian advisors

Similarly, Poddar added that under the laws to welcome Indian advisors to US-incorporated startups was a “hassle”. As per the existing rules, it is “impossible for a US entity to give shares to individuals who are not full-time employees.” Questioning these “insane regulations”, Poddar exclaimed that it led to a loss of more than $100,000 of funding as multiple advisors backed out off the deal due to unfinished “paperwork and process”.

Tagging Piyush Goyal in the post, Poddar claimed, “we cannot be the innovation hub, IT capital or have a thriving startup ecosystem when I can get money faster into my bank from foreign nationals/banks as compared to Indians who are willing to help us out and build startups here.”

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‘SLA should be in days and not months’

After this post gained the right audience, Poddar revealed that several founders reached out to him and shared similar experiences. Collating them into one, Poddar narrowed down to two key points of contention. Reiterating his previous claims, he affirmed that the “ODI process is overtly complex and messy to navigate,” and repeated the “sarkari” treatment they received.

Adding to the steep claims, Poddar added that “GST creation itself is a challenge,” saying that many even have to resort to bribery. After several other founders lost their money in the process of seeking funding and advisors in India, Poddar called spending money on the process a waste. Ending his post, he urged the Government to make the process easier and said, “SLA should be in days and not months or quarters here.”