The Challenges and Future of Law | An Interview with Goda Raghavan

If you are building a business, law cannot be an afterthought anymore.

In this conversation, Goda and I speak about how the role of law is changing for startups and businesses today. From being seen as a firefighting function, lawyers are now becoming strategic partners in growth, structure, scale, and risk.

We spoke about what founders need to understand early, how AI is changing and raising the game for lawyers, what a reverse flip could mean for your company, what investors are really looking for in businesses, and why term sheets, co-founder exits, and legal clarity matter far more than most people realise.

This is a conversation for startup founders, business owners, investors, and anyone building something with long-term intent.

Because in business, growth is important. But growing with the right structure is what protects it.

Thank you ! I hope today’s episode brought you closer to seeing yourself and the world around you with a little more clarity, love, and empathy. If something spoke to you today, —share it with someone who might need that same insight. And remember, the journey of self-acceptance and mindful thinking continues. Let’s keep the conversation going—find me on Instagram, Facebook, Threads, or YouTube, and let me know what’s on your mind. Until next time, stay kind to yourself and keep growing

Transcript

SPEAKER_01 0:00

What is the biggest fund you worked on so far? Fund size?

SPEAKER_00 0:03

I would say 1200 crores. For the recent deal that we did last year, early last year, was there 200 crores?

SPEAKER_01 0:10

The negotiation table sees fewer women even today.

SPEAKER_00 0:14

I would say both. If you do not have the support system at home, if you're at a child-bearing age and you have a young child at home, I don't think it's possible to show up. If you're in a workplace that is not supportive of the different stages of your life, you cannot continue working there. Somehow, if a man is aggressive, you come across as I mean, if you're loud and vocal in your negotiation, the man comes across as, you know, standing up for the cause of his client. But somehow in the woman, you know, you're labelled. Oh, she's so catfight.

SPEAKER_01 0:43

Do you feel that lawyers are slowly becoming your friendship partners instead of just uh, you know, research partners, I would say? The bulk of the work is now being done by AI.

SPEAKER_00 0:55

I don't think my time would have been. Yeah, exactly, right?

SPEAKER_01 0:58

Exactly. One of the things that keeps coming about is that, you know, um the co-founder divorce, this is something that uh yeah, you know, it never fails to amuse me that what is that prenup they have to sign on day one, Goda.

SPEAKER_00 1:13

When you say prenup, I would say put a document where you say if anybody wants to leave, what are the terms for? Now, can you tell me what are the legal landmines that you are seeing? Firstly, you need to ask yourself, why do I want to do this right? Actually speaking, it's a very expensive process. Yes. Because you have to pay capital gains tax for money that you're actually not receiving. Okay, now you have to pay capital gains on that, but you didn't actually, you know, you didn't see any money. You can't receive anything. But you have to pay tax. Correct. I would think that phone pay is not a precedent. It is an exception. Right.

SPEAKER_01 2:22

I can't thank you enough because uh when I was trying to put together uh the guests for prime movers, I thought law should be a part of uh the larger narrative of how our country is developing.

SPEAKER_02 2:34

Right.

SPEAKER_01 2:35

And uh law has uh, you know, become more and more important in our growth today. And that's what we'll be talking about uh, you know, in a larger sense. Uh, with that, my first question to you. See, you have uh worked on several investments, uh, and that's your specialty as well today, as I see mergers and acquisitions, and you work on PC funding and so many different kinds of funding. Now, um, how do you see the mindset changing? Because what I feel is that uh, you know, uh a few years ago, speed and scale were so important, but today accountability has become a big part of the deals, right? What are some of the non-negotiables that you know uh investors have on their you know uh sheets saying this is a non-negotiable. What are these things that you're noticing of late?

SPEAKER_00 3:26

So I would say two things, right? What has always been there is the standard, you know, you need to indemnify me for non-disclosure, transparency. Uh on the uh commercial side, an exit for an investor, right? Where it is more the money aspect of things, correct? Which is always there because if you're putting in one X, you would expect that one X becomes one plus. Correct, right? So those and to protect that, whatever is the commercial uh uh safeguards are always built in, right? Which is always when you're deploying capital, you want that to grow, right? Money earns money, but what is now changing is it is not enough that your business grows, right? That's not correct everything. Correct. While a business grows, the investors are also conscious of the image of the company that they're associated with. And when I say image, I'm talking about two important things. Okay. One is corporate governance, right? How is your board constructed? Who is on your board? Right. Are you following due process? Are you complying with the law? You are, it's not a reactive compliance, but a proactive. I mean, you are compliant. Correct. You need to do what you have to do and you run the business in a compliant manner. Right. Your employees are looked after well, the necessary social security payments are made, you know, that from a compliance point of view. So it's corporate governance, there's transparency, books of accounts are maintained the way it's supposed to be, your audit is done the right way. So all of this gets captured in the investment document. That's how investors, when they when they come into a transaction, that's one aspect. And I feel that the importance of that has gained a lot of traction over the last many years because we've also seen in the market of what has happened and uh you know where things can go drastically wrong. Again, this is not just the aspect of losing the money that they invested, but it's also the name of the investor. Absolutely. You want to be associated with the right people who are doing the right thing. Absolutely. The other thing that we are now seeing, which is also gaining a lot of traction, is ESG, which is environmental, social, and governance compliances. Right. So one, I'll explain what what ESG is, right? On one side, you have laws and regulations, which you have to comply with. It's a statute and it comes with non-compliance and penalty and its consequences, right? Which is mandatory. The other side is when you say environmental, they don't, it's not about I went and planted a tree. That's not what they're looking for, right? But they expect that if you have a factory, you're disposing your waste in a uh conscious manner. If you are plastic generating, you are also compliant. What are the internal protocols that you have put in place to be compliant and legal diligence, right? Now we're also seeing to a large extent promoter diligence where they want to know who am I investing in, who am I backing? What is this, you know, what does this person bring to the table and what is he or she capable of. So you know, this is a a change in that sense. And also, I think uh ownership, skin in the game, all of these things are things that uh investors are looking at. Wow.

SPEAKER_01 6:58

Yes, that's quite a bit to unpack, I think, uh God. That uh, you know, there are so many aspects of a business we have to start looking at today, right? If you want to scale and grow, because if you're not uh backed by huge funds already, or if you're not backed by assets, I mean we are quite reliant on external funding, and these are things that we have to be very, very diligent about. And it's very nice to see that there are more and more founders actually working towards bettering the way that they function. I think from what you're saying, uh, how's the how's the scene with the founders? I mean, you spoke about the investors and what they're looking at. How about the founders? How are they scaling themselves to reach this uh pedestal that's set up for them? It's extremely difficult.

SPEAKER_00 7:48

Okay, because when we work with uh early stage companies, it is a one-man show, one-woman show. Yes, right? They do everything, right? Starting from finance, marketing, product, quality control, yeah, um, sometimes even legal. They're doing everything. So it's so the initial rounds of fundraising are quite a challenge because you you know it's it's probably the right thing to sign up to, but how do you deliver? You want to deliver. How do you turn around? So let's say the ask is every month give me a report on how you have been compliant on these areas. Right. Report taking takes time, making takes time. Absolutely. I mean, it imagine one person already having so many things on their plate, and now you have this additional compliance. Maybe by day 15, day 30, day, I mean month, whatever, year, whatever, you've reached there. Yeah, you're getting there. So you're at least working towards it to ensure that you know we are able to hold this.

SPEAKER_01 8:52

Yes, absolutely. I think to reach that pedestal is uh not easy, but the right kind of efforts you will definitely get there. As as are many founders themselves, right? Yeah, yeah. Um, so you tell me, Goda, from the way that you're speaking, I feel like you know, while AI is taking a big part of all the clerical work a lawyer would normally do, you'd have many, many juniors doing a lot of research work and all that. Now that that is slowly getting uh, you know, uh uh kind of uh what do you call it, reassigned to AI to do most of that work. Do you feel that lawyers are slowly becoming your strategic partners instead of just uh you know research partners, I would say for sure, 100%.

SPEAKER_00 9:37

I mean, I would definitely say that um the bulk of the work is now being done by AI. Right. But that being said, I think it's we need to up our skills, right? Exactly. If I were to say, no, listen, I'm going to bill you X amount for a draft that AI could give, I don't think my client would appreciate it at all, right? Exactly. They would say, Well, I could have given you this draft. And many times we have seen, I mean, I think this has been a last one-year phenomenon. Right. All the deals we have done in, I think mostly all I could say in 2025, my clients have fed in that term sheet or that document into Chat GPT, you know, one of these AI platforms, which will analyze and give it back to you. But what but that's where my our my role comes in, right? But that's where the lawyers come in. Correct. Because ChatGPT gives you answers in an isolated ideal world situation, right? Correct. Where they will tell you this is not promoter-friendly or this is not protective enough for the investor, right? Right now, yeah, okay, that's fine, but how do I arrive at the middle ground? Yeah, so that's when, and in all of this, there is the human trust, right, human uh balance that you kind of put in, and there's also the give and take. Yeah, that negotiation is not replaceable. The discretion, the human element of discretion is non-negotiable. Absolutely, because for example, um let's say there's a dispute resolution clause, which we were talking about, you know, uh there is a clause which clearly says that there are if there is a dispute between the investor and the founder of the company. Right. In this situation, the investor will appoint one arbitrator, the promo, the investor, the founder, promoter will invest, will appoint one, and between the two of them, they will appoint the third. Another. So there are three. Correct. Right. Seems great, probably from uh, you know, a generic point view. But when you're advising your client, if you're on the investor side, this is great. One is because there's neutrality, quickly this clause is closed. Uh, your financial cushioning is probably better. You would like to believe that a company's financial cushioning is better than an individual, right? So it's done from a company's point of view. But if you were advising the individual, you would say, hey, hold on. If you were to dispute anything in this document or even initiate it, you may be on the right, but you're going to be out of pocket 3x. Right. Straight up because you have three people instead of one. Correct. And who is going to give this point of view? Because all of this, I'm sure if you ask specifically, some engine will give you this response. And then you say, okay, but if I'm negotiating this, I want exclusive jurisdiction. Which court can I go to? Correct. In a place of your convenience. So that give and take is something that uh an AI cannot do. But if you asked AI saying, you know, give me a draft a clause and give it, this is what I want, draft it and give it to me. It will do that. Yeah. So I think, and when I tell my team this, I said, listen, we went through the grind for the last 15 years. Uh maybe I would have advised on some 300 plus transactions, I think. We've gone through the grind of literally keeping a blank document and saying, let's start from this. Right. Over the last decade or so, we've had, we also work from templates. Everybody now works. You know, the first draft is never from a blank document. So, but from there, how do you close the deal for your client? How do you tell your client where are the pitfalls? Correct. Right? If you ideal situation, not have an indemnity clause. Right. From the client's point of view, investor says, no, I want indemnity. How do you arrive at a midweek? How do you cap indemnity? Correct. So for this particular business, what works? Some of it is market data, which again can be given by AI. But if you're sitting across a table and talking to that person, you know the chances of them invoking this clause is high, medium, or low. Right? So that is not something that that human aspect of it is not something they can. And also how certain clauses get interpreted in courts, right? Especially in India, because every word changes how each sentence gets interpreted. You cannot simply say, oh, this is black and white. This is how this is going to work. So every change that you make, you need to advise your client on how this is going to affect them. Is it a you know medium, how that lower is unique, right?

SPEAKER_01 14:28

For sure. In each business, it is unique.

SPEAKER_00 14:30

Yeah, yeah. Each business it's unique. Exactly. Because you're at a different uh positioning, your risk appetite is different. Very different. So the plain vanilla drafting today, at least at today's uh capacity of AI, is great, right? And I think as lawyers, we should adopt it. And we've seen large companies also in-house adopting it, right? We no longer have them coming to us saying, I want a franchise agreement, can you give it to me? They will give me the franchise agreement and say, Does this look okay? So when you say, has your role changed? Oh, definitely it has changed, but uh are you replaced? Definitely no. No, because that that value add, that discretion is not replaceable. Correct. There is money on the table, both sides need to be protected. So we're going to see how to reduce it. Correct. And you know, you give practical advice. Now, that being said, I think AI, which you're addressing your second question. Yeah. When you talk about uh, I mean, AI is as prevalent as it can be, right? You from every small little thing to larger uh thing, there's AI for everything. So there's specialized AI like legal tech. There's so much AI just for lawyers, which is available to us. But I would, I mean, maybe I'm a bit old school in that sense, but I would tread with a little bit of caution because AI hallucination is very prevalent. Yeah. Yeah. It just makes up random sections. Like at one point, it made up something saying Supreme Court of Karnataka. Oh my god. So there's, I mean, and if you don't know, yeah, you will never be able to spot it. Correct. Right? And you need to be very careful. It's okay to have it as your starting point, right? Even if it gave you an output, I would say take it, but check on your own, right? Check whether this statute is saying this, check whether. But all of this being said, I don't think India is far behind. I would say it's actually on par with the rest of the world. Correct. When I deal with companies who are domicile outside India, and I see them adopting AI, or when I work with law firms outside of India, it's on par. We're all uh there. Uh maybe I would like more research to happen in India because when we look at say deep tech, when we talk about research research, we see funding to be a little, you know, cautious. It's not like FMCD that people are more willing to put money. Deep tech, they're a little more cautious. Yeah. So research-based uh work in India always has that little bit of uh running around for funds in that sense, right? So uh AI being used, I would say it's on par. AI being developed, I would like to see more.

SPEAKER_01 17:31

That's fantastic, and I think uh you know, you answer the question very well. Um, Guda, you were just speaking about how uh you know you know companies that are domicile abroad. I want to go to that point. See, many uh, you know, this reverse flip is happening. You know, this is something that uh a lot of discussions have happened on. For instance, phone pay, right? As a company, they they wanted to domicile in India again. They they came back and they paid a huge amount of money as tax. Now, this is not about phone pay. My question to you is when they want to return back, right? Is there a legal landmine? Because smaller companies or medium-sized companies, when they want to come back, is there a legal landmine they have to be careful about? Because uh, you know, there's so much, so much developing on a day-to-day basis, right? Yeah, could you highlight uh, you know, because India is becoming more and more a place for uh, you know, incubation, for growth. And that's what we've we are starting to show the entire world, which I'm very, very proud of. You know, Prime Movers is a segment for that. Now, can you tell me what are the legal landmines that you are seeing? I'm sure you must have worked with many companies.

SPEAKER_00 18:48

So, if you can speak about that, it'll be very useful for the uh listeners to uh firstly you need to ask yourself, why do I want to do this first flip? Because actually speaking, it's a very expensive process. Yes, because you have to pay capital gains tax for money that you're actually not receiving. Okay. I'll while tax is not my forte, I'm just going to you know generally try and explain to your audience on uh why and how does this capital gains issue arise, right? What happens is when you are a shareholder in the uh in a company, non-resident company, and you want to reverse flip, they give you shares in the Indian company as consideration. Right. Right. But these shares are valued as on the day when the reverse flip happens, which means that when you invested, maybe you were an early investor at a certain valuation, now the valuation has gone up. Now, as of today's valuation, that is the consideration that you got paid. Correct. Now you have to pay capital gains on that, but you didn't actually, you know, you you didn't see any money, you've not received any money, but you have to pay tax, correct? Right? So why does one want to do this? And who is bearing this cost, right? So the shareholders need to be aligned with the founders' interests on why one wants to do this reverse flow. I would think that phone pay is not a precedent, it is an exception, right? Right. The intention to want to come back to India uh is patriotic, is great, but it should make commercial sense. You need to be a company which has India-based operations, otherwise, why would you do this? Why would it do it? You need to be, you need to want to probably IPO with a definitive near timeline. Right. As opposed to a sometime in the future, I want to IPO and therefore I will incur this cost. Because any cost that you incur needs to have a reason behind it. Yeah. Uh, what is the reason over here? So, unless you are looking your India operate, your very India operations heavy, or let's say 100% India operations, and you're looking at a defined timeline for an IPO, you're definitely pre-IPO, you know, a year or two. And third and most importantly, all your shareholders are aligned because they're all going to face the brunt of the taxes. Yeah. So tax is obviously the biggest issue. And if you're pre-IPO and you are going ahead for an IPO, that's the benefit that you would see if you did the reverse flip. And that's where you find that uh it's worth that expense. Right. Yeah. But if you don't, if but in addition to that, you also have typical regulatory bureaucratic issues that do come in. It should make sense for you. So if you say land mine, the most obvious land mine would be, you know, the taxation aspect of it. Uh other than that, this whole flip needs to. I mean, there's a reason why you started or you domiciled outside of India. Correct. Right. Maybe you wanted investors that you uh so now if you reversed it to flip back is a very expensive. It's going to be a very expensive effort. And what are you deploying your capital going back and forth? Correct. So it's a sort of a one-way traffic. If you do it, it should be expense.

SPEAKER_01 22:24

Yeah, absolutely. Wonderfully put, uh God. Now I want to speak to you about private credit and down rounds. Okay. I know these are quite uh technical terms. Uh, you know, if you if you will be willing to explain what private credit and down rounds are, yeah, and then I will jump into the question.

SPEAKER_00 22:44

Sure, sure. So uh when you look at private credit, it is in some sense a loan. I'm putting it very in a very simple term. Yeah, it's uh it's probably a loan, just not from a banking or non-banking or an NBFC, it is from somebody who's willing to uh an unsecured loan per se. Unsecured loan, but subject to certain regulatory compliances. Yeah. Like you cannot borrow from individuals, it'll be deemed to be a deposit, and there are certain compliances. But uh I'll just for the sake of simplicity, I'm going to say this is a loan. Yeah. Uh down rounds are different. Down rounds basically mean that if you had a valuation on the basis of which you did a fundraise, right? Let's say your company was valued at 500 crores, and you are going in for an and at 500 crores, somebody has put in money, and let's say you give them 10%. Now you are looking to fundraise again. But this time your post-money valuation should have technically been say 550 crores, because 500 plus 10%, which the investor previously put in. So 550. Now you're not touching 550. You're all that you're getting in the market is say 300, right? Yeah. So, but you need the money for the runway. You need to keep the company afloat, whatever reasons that you have, you need that money. So uh that is a downroad because you're not meeting that valuation. And with this comes its own set of compliances, uh issues. I won't say issues, but I would say when I say compliance, I mean obligations that you have to honor with your existing investors because there is a anti-dilution protection. Right. Pump in a little more just to keep you going until you're able to find somebody who where you don't have to do the downround. You don't want to do a 300. Correct. You still give yourself you know that little bit of time so that by the time we reach uh, you know, you're able to find somebody who can give you money at say, you know, five or 800 crores. Right.

SPEAKER_01 24:49

Yeah. So tell me, Godah, see we why I asked you about downround and private credit is because when a customer, right, when uh a founder is going through this, promoter is going through this, how do you advise them? Because uh down round also means that there's somebody ready to take advantage of your situation, right? So there are a lot of strings attached to money that comes in from a third party now between your investor and yourself is another story. You're asking for the bridge uh you know round. But when the bridge round doesn't happen and then you have a down round happening, yeah, how do you advise a client, okay, um, you know, uh, who has only very limited capital available or limited uh, you know, um what do you call it, investors available you have to choose from. Okay, yeah, and there are a lot of strings attached to the money that's coming in. How do you advise somebody like that?

SPEAKER_00 25:44

So it's a bit of a balance between legal and commercial, okay? Because the founder understands better on what they want. As lawyers, we can only advise on what could happen, what obligations are they taking, right? And you can you can advise, but you cannot decide. Yeah. Right. So you tell them that listen, okay, in the industry, this is how it normally works. You will not get a better deal than this. I mean, when I say not get, you may get, but as a standard, this is yeah, this is the best case situation in the scheme of things. Uh, we try and negotiate, saying, say, a board seat, some kind of following rights. We ensure that if there's a reserve matter, right, which is a veto for the investor, is very narrow, the founder promoters having actual control in the company. I mean, uh unless you have institutional investors, then it's different. Correct. But if you have fragmented uh angels, fragmented friends and family, smaller funds, uh, then and then the investor has lost control on the cap table, institutional investors become a little wary on, you know, okay, fine, so who's going to run this company? Correct. Yeah. So I think in a down brown situation, we can protect on a legal as a legal uh point of view to ensure that the liability is more limited, uh, all of that. But whether you want to do it or not, I think is a decision is a decision, purely, purely commercial decision. Correct.

SPEAKER_01 27:20

Wow, wonderful. No, because uh, you know, practically speaking, we all get to that point where you know, once you have the funding, you know, there's so many things that, you know, kind of your responsibilities increase. And so does your, you know, your sometimes your liability increases, and you know, you need some the right people to be by your side to be advising you correctly. And that's where I think uh, you know, you come in place, right? I mean, without that sort of a strong support, we don't know what we are exposed to.

SPEAKER_02 27:48

Yeah.

SPEAKER_01 27:49

And uh it's wonderful that there are a lot of boutique firms today, boutique law firms today, um, to you know, help out with uh such things. You know, what are the kinds of law firms that are available today, Goda, if you may, for businesses specifically, I would ask.

SPEAKER_00 28:05

Yeah. So I would say that uh, I mean, there are depending on the number of the team size, there are different uh tiered law firms, and then there are law firms that operate in boutiques. There are also consultant firms which provide legal service, right? Right. So these are all uh different depending on what your ask is. Uh, if you ask me, I would say that for every area of business there is a specialization today. Right. For every sector, there is a specialization. Right. And the easiest way to identify and say, is this the right person that I should go to, right? Is to simply say, okay, tell me what other deals you have done. Right. But also that doesn't, that means that just because somebody has not worked on in that specific sector, fundraising to a large extent, except let's say in insurance or some of these regulated sectors, is by and large sector agnostic. So if somebody has advised in the past on similar kinds of transactions, Indian lawyers are on par, if not I would like to say more qualified to be able to advise on all areas of law. Today's specialization is there is hyper-specialized, like micro specialization in every domain, every sector, every aspect of practice. Uh today I think we're falling out of fashion of being a generalist. Yeah. It's people don't want to come to a generalist firm because they're not really sure what advice you're giving. You know, whether it's it's uh, you know, you say you're acquiring a property and you want title diligence done, and then you're establishing a company which is tomorrow being acquired, they'll go to another firm. That same firm may not be able to. Yeah, yeah. Even like even in our own firm, uh our specializations are different. The minute it goes to real estate, we hand it over, it goes into litigation, you know, it's not that person's expertise. So it's um, I don't think there's any short dearth or shortage for uh specialization in India at all. And uh easily between higher one and two, we're adequately covered on every specialization of law firms.

SPEAKER_01 30:21

That's I think fantastic. I think I see the length and breadth of law spreading across the country comfortably for citizens to, you know, uh because people approach because people understand the cost of non-compliance.

SPEAKER_00 30:35

Yeah, it's two ways. One is we're seeing people want to compliance. Yeah, people want to be it's easier, correct, it's better. Uh, and when you're doing business in an ecosystem, you want to be compliant, right? So people are proactively compliant. Correct. And the other side is okay, yeah. I mean, there is a situation where there is a non-compliance which has happened, what do I do? What is the risk of non-compliance? So, as a board, when they take a decision, it's both ways. If I am I want to be compliant, what do I do? But they also look at if I'm if I'm not compliant, what is the cost of non-compliance, right? So you need that advice, absolutely. You need that legal advice. You you cannot be uh a pure commercial person running a business to also be able to substitute for a lawyer who's doing this day in and day out and give legal advice to run the company. So you need that specialization, and I think people reach out uh accordingly also.

SPEAKER_01 31:37

Yeah, I think that awareness is um becoming more and more today. Very much which is which is great. I think that shows that we are actually marching the path to becoming a really vibrant, which we already are a very, very vibrant, very uh competitive uh market today, right? Yeah, I think India is becoming a a solid country in that sense because there's uh so many things happening and adapting to the change. I mean, as much as we want to consider ourselves conservative, I don't think we are that anymore. Oh, not at all. I mean, adapting to the change so quickly. Yeah, yeah, it's fantastic.

SPEAKER_00 32:15

I mean it's not a new phenomenon. Let me say that MD has always been there, right? Because inorganic growth, when you have capital to deploy, yeah, inorganic growth is always good. Right? I mean, why not? It's faster. Exactly. You have the talent, you've identified, you probably they probably have their own customer base, so you don't have to spend to acquire more contracts. So it's uh it's easier to grow. So why not do it? Why not? The newer one, and I say new, it's a couple of decades in that sense, but relatively newer form of business is private equity, right? Where they look at it and they say, okay, this is how we're going to invest. But it works both ways, right? India also understands that we need this kind of money. This is this is the growth I see with this money. Correct. You have family offices, family offices which have the capital to deploy. Correct. And when you have the capital, take it, use it, grow your business because it's it's benefiting two people, both people, right? The idea is that you have capital to deploy, I need your capital, we both grow. Correct. So why not use it? There is more money in people's hands, we we we use it. Absolutely. And I think the number of, you know, I mean, if you look at the numbers, the number of homegrown funds in that sense are much more than ever before. Yeah. Than ever before. So it's still a maturing uh market, I would say, yes, compared to let's say the US, right? Because their sovereign funds and pension funds are more um, what do you say, are more active in this space. India is growing, growing, getting this. Yes. The a mindset changed that yes, even public money can be put into private hands to invest in portfolio companies and get that kind of a return. I think India is maturing there. It's definitely there because there's a lot of potential. And we see clients asking, saying, Can I, if I were to incorporate in India or I were to you know establish myself in India, how do we do this? We also see a lot of GCCs coming up, which because it's cost effective for companies to do so. So if you look at the potential, I I think I would think that India is is huge. It's it because India is not at is not even fully tapped yet. Yeah, absolutely.

SPEAKER_01 34:38

Yeah, so there's so much potential. Absolutely. And I think it's a wonderful insight that you've given, uh God. I want to ask you, see, one trend that I see and in the last uh couple of years is that MAs have become more and more uh, you know, uh I mean they are you know looking at MA as a way to scale, which is wonderful. They are also scaling in multifolds. I mean, yeah, for instance, they acquire a company which can aid what they're already doing, and that sort of acquisition has increased in the last few years. Yeah. Can you speak a little bit about what kind of a trend you are seeing because you are in that game completely? So, can you tell me about mergers and acquisitions today and how it used to be versus how it has become today and what you see, what you project for the future?

SPEAKER_00 35:29

Yeah. So, what has changed is the mindset of a target company in the sense that if I were to acquire another company, a typical traditional business would say, Listen, what is your revenue model? Is this company something that I want to acquire? But today people say, Okay, maybe you don't have the. I mean, I'm just saying there are different kinds of acquisitions that happen, right? Maybe you've not scaled the way you wanted to, but I see talent. So we'll do an acquire. So we're not really taking your company. Okay. So I just take your talent. I take the founders, I take your team. Yeah, okay. It's a uh acquisition of talent. Talent, okay. So I'm acquiring you, but I'm taking your talent. I don't want anything else. You leave your company behind, I don't want your company. I'll take the I'll take the personnel because I you already have a team and you guys are great. Correct. So you come and work for my company, and that's that. Whatever. I mean, quarter concentration in cash or shares, or that's different ways of doing it, right? And we also see, I mean, again, I don't do, I don't get into valuations as such, but we also see valuations being looked at differently from before and now. Yeah. But there are a lot of traditional business houses which are looking at MA from many points of view. One is businesses being sold because the next generation does not want to come in. Right. Where we are seeing, you know, a large, quite a few companies in that space, because people say, okay, selling my company is an option, and there is a market where I can actually sell it. And if the next generation of family-owned businesses, those you know, the kids are not coming in to run the business, that generation would say, Okay, I'd rather take this as retirement, correct, retirement money, and let's you know, shut sell and move on with that money. So that you know, it's it's changed in many ways, uh, because those opportunities have opened up, correct? Otherwise, if you are solely dependent, saying, Oh, nobody is buying this company, my next gen has to come in, but they're not, you know, kind of uh showing interest or they have other interests, whatever. What does one do with the business? So it's uh, you know, it's it has opened up a lot of options. Uh, it's very different in the sense, and also people I think now have more money to deploy in that sense, are a little more some business houses, they are uh very passive, they do not are not in the MA. Some are very active, they grow with MDA only. Only, yes. Every vertical of theirs is because of an acquisition. So you have a parent or or or or like a sort of a main holding company which has acquired many many, many, many smaller companies, and it's not necessary that it's a diverse portfolio, it would also just complement each other. And when you have say five, six different verticals under your cost, it becomes cost effective, correct? Why have four HR teams when you can have one one? Yeah, so it's um I mean, the why you would do MD is different, and the whole mindset of it is very different now.

SPEAKER_01 38:44

You know, the way that we are also thinking is evolving every minute, is what I see. Because uh last year, you know, I spoke uh somewhere, I was asking somebody, they had acquired a business just to um, you know, it was like an add-on value add to what they had already built. So they just acquired something that was built and then they inculcated with it within their system, yeah, which was wonderful because at that point I was seeing that the trend was moving that way. And today you're telling me that you know they're just acquiring talent. Yep. They don't want the company, they just want your team. So, you know, there's a lot, a lot happening, and I think uh not just that.

SPEAKER_00 39:24

If you look at it, I mean, team is one aspect. Yeah, acquisitions happen for contracts. If you have, let's say, four valuable contracts that are something that you wanted, instead of you going talking to that company and then convincing them to be your customer, acquire the company that they're already a customer of. So you get the contract by innovation, assignment, whatever. But you get so acquisitions happen for many different reasons, but structuring has also changed. I think uh earlier acquisitions used to happen to a large extent on a upfront cash out, but now we're seeing it as a tranched acquisition where we say, you know, let's say 51% is paid out upfront. And then they want some hand holding for about you know three, four years. Sometimes yeah, and then uh the balance of the consideration is paid. Some of it is also linked to an eBITA performance or some revenue, you know, some sort of a milestone-based payout so that it is attractive enough for the outgoing uh uh management team to continue performing while till such time that the acquirer has established and integrated this acquired company well. Wow. Yeah, it's fantastic.

SPEAKER_01 40:37

No, I think uh you speak about management. One of the things that keeps coming about is that uh, you know, um the co-founder divorce, this is something that uh you know it it never fails to amuse me that you know, even to why I say uh use the word amuse is because most of the co-founders either they are husband, wife or they're friends. I mean most, I'm not saying all of them are, some come for the talent pool, but most of it is either friends or you know, some you know, a relationship, right? They do not sign, I mean, a typical term to use is a prenup, but they do not sign anything uh you know straight away in the first shot because most of these things are very silently told or untold. Yeah, okay, yeah. We don't put anything in black and white and we assume things most of the time. But when things go wrong and the prenup is not there, right? Yeah, yeah, it pulls you down faster than any other problem. That's true. That's true. What is that prenup they have to sign on day one, Goda? However small or big they are.

SPEAKER_00 41:45

So that's the thing, right? When you when we spoke about it saying, you know, legal expenses in some sense a they look at it as a unnecessary expense. Yeah. We're starting out a business. Absolutely. Why should you and I sign a document on day one? Let's see how the business goes, and then we'll figure this out. So when we we start on that premise, any I mean, typically when two people more than two people come together, uh they start off saying, let's see how this goes, and suddenly, you know, you're looking at investments, funding, and you know, the revenues and all of that, you know. And then you say, Okay, hold on. Suddenly, one of the founders decides that you know this is not working for me. I need, for example, a more stable income. I don't think I'd be able to say everybody's right for whatever reason. Correct. And says, I'm going to walk out. Okay, fine, alright, you can walk out, but what do you do with your shares? Because you are let's say 50% shareholder in the company. What do you do with it? So the other founder says, Okay, I'll take your shares. Sounds great till now. The exiting shareholder says, Yeah, but for how much? So this is I don't have any money now, but whenever the money comes, I'll give it to you. We have a dispute in hand. But I will I'll take employment elsewhere. And you know, let's see how this goes. We'll see. Investor comes in, he says, Hey, you have 50%. Where's the other 50%? Yeah, but you know, this other person is working elsewhere or is doing something else, which is not connected with the company. Yeah, but you don't have control of the company. How can I invest? Now we're in a bit of a spot. So I think when you say preen up, I would say, but you know, put a document where you say if anybody wants to leave, what are the terms for walking away? Right? It's easier said than done because many times I ask my clients, saying, What do you want? What is it that you have agreed upon? But they cannot agree on a price because they say, Well, I put in four years. I may have walked away in the fourth year, fifth year investors coming in. But I put in that four years, correct, right? Maybe I Or walked away one year too soon. So I don't know. How do you attach a value for that? What price do you buy out of the shares? So on paper, it's probably the right thing to do. You should, I would say, yeah, no, if you have a solution, please put it right. Ensure that there is a way of solving this issue if one wants to part ways. It may be for good reason, it may be for cause. You know, let's say there was a non-compete clause. One of the founders decided that they want to start something competing for whatever reason, then that becomes a cause for cause. So it's good to have a prina. Do we see it always? Unfortunately, no, because it's very hard to put a value and give a solution for this. If there was a solution, everybody would be writing this out, right? Uh, but if you're able to agree on it upfront and say, listen, in the next if we're not committed to this for the next two years, and if you leave within two years, you have to give me the ships for free. Whatever is your ownership, you give it to me for free. Or this is the cost. If we make some money, I will pay it to you. So I mean, whatever, something. So if you put in some form of a structure, it's probably good for the company, but that's pre, right? When I say pre, pre to any investor coming in. When an investor comes in, all obligations that we usually see become joint and several on all the founders, irrespective of what your relationship is. Because many times when it's between a family, siblings, parent, uh, spouse, whatever, we say, okay, that's we're fine with joint and several uh you know liabilities, obligations. But let's say it's between two friends, unconnected uh people. One does not necessarily have control on the other. Correct. So if the other were to breach, let's say, a non-compete clause and starts a competing business, correct? What does the continuing founder do? Yeah, why why should they take on uh the other person, even though on day one? But again, all this from an investor point of view, they say that it's your no no, they'll say it's your problem, it's your internal issue, you figure this out. For me, it's a joint and several obligation. Both of you, three of you, whatever, all of you, whoever is part of the founder group, you have to uh figure it out. The the the preena is good to have between founders, but is there a solution to it? I would say it's it's hard to find, but it's worth the effort. It's good to talk about it on day one. It's good to say, okay, listen, let us write down something that you know which somewhat works for us. You can't, it's tough to probably say exactly how we want to do this. But uh it's good. I I would say before you start off, put that effort.

SPEAKER_01 47:00

My my question to you, as uh plainly as I'm going to put it, why has it not been made compulsory when we register a partnership? I'm just asking you very simply because I think uh, you know, when we What is the answer? When you say make it compulsory, what do you do? No, I'm not saying that you know this is how I exit, but there needs to be a document. Like you said, it's better to have a document. Whatever it being so being written down is decided by the partners. Right? You do this and then you can exit and all that. But definitely have that preenap. I don't know, I'm just asking because not what is stopping people from actually making it compulsory? Who should make it compulsory?

SPEAKER_00 47:42

The market or the regulator?

SPEAKER_01 47:43

The government, the regulator?

SPEAKER_00 47:45

No, no, why why why does the regulator care? Because a lot of people regulate, no, when you over-regulate, you force non-compliance. That I mean the gov the regulator needs to tow a very careful line on how far they want to go on regulation. Right. And why does one regulate? If it affects the public at large, yeah. You know, on those stems on a policy level, you regulate. Between two individuals on a private contractual basis, other than that, I don't think uh regulation is necessary for a prenup. It's good to have, I would say, I would advise having it. Uh if you ask me for a solution, I myself wouldn't have it because for each person it works differently. Very differently. Definitely, promoters should spend the time talking about it on day one and documenting it correctly in at least loose words. Correct. So by and large, we know what the expectations are. That listen, if you're leaving, you have to give me the shares. Correct. Maybe you cannot put a value to it, that we can see later. But at least we know that if you're walking away, the shares are with me.

SPEAKER_01 48:53

Yeah, yeah. No, you're very right. I think uh it's important for us to understand where the government can also help us, where the regulators can also help us, because you know, by and large, I think uh we're transitioning from an era where things, a lot of things were unsaid and you know, very loosely left to you know, tightening of uh how we function as a society, right? That that transition has happened in the last decade, yeah, and which is visible, which is great. And I think uh, you know, there's a better understanding of what kind of a society we are living in right now. There is a lot of transactions happening, you know, it's becoming transactional in nature, which is also good for the growth of our country, which is uh wonderful. And I think getting that sort of clarity was something uh important for me as well as a founder. So thank you for that, Goda. Uh, across your experience, I want to ask what are the most common legal mistakes that happen early on that affects a business, a business house at a later stage, like when there's evaluation happening or when there is, you know, an investor coming in. What are these things that they have to be very wary of? What should they be watching properly?

SPEAKER_00 50:08

Yeah. It's very tough for me to say what are all of the things, but I can give you the typical small issues that often come up, right? When your company is incorporated, and the proof of being a shareholder is a share certificate. People incorporate their companies. We've seen this in so many deals. For some reason, it is not given enough importance, but it becomes a very big transactional issue when there is a deal on the table. Companies incorporated, and they're like, Yeah, this is my company. Uh I've run this for uh say four or five years. Actually, I would like to extend this to say that even family-run businesses which are in a company format, right? In a private limited company, I've run this for 40 years. What more ownership do you want? Correct. That this is not my business, my obviously it's my company. Who else's company is it? He said, Yeah, I understand. And we have had situations where I've had to sit the promoter down and say, I mean, no senior people, right? Because they've run this for many decades and say, I understand, but there is a piece of paper called a share certificate, which uh is proof that you own this company and it needs to be stamped correctly. Now, only then uh can the buyer take the certificate and put his name on it and say, you know, now I own this company. I don't know, it's been 40 years since I run this company. Nobody asked me for a share certificate. Where am I going to get one correct? And it's the same thing in more recent uh promoters, right? You have somebody who's incorporated your company, then you move over to opening your bank account, getting your GST registration, etc. etc. Commencement of business, you start your business. Correct. Nobody nobody told you that the share certificate is an important part of the thing. Yeah. So then there's a deal on the table. If nobody has looked at it, finally, we're saying, okay, I'm going to transfer the money next week. Please hand over your share certificates so that then we give it. Yeah, we'll, you know, we'll assign the necessary transfer forms, whatever. Not there. The promoter is campering trying to find what's what is a share certificate. And then he'll and then you know, I've had clients saying, Gota, can you send me a picture of what this share certificate should look like so I can go and check in my records. I mean, it's a process. It's a process. Yeah, there is a reason the government has thought of this as a policy. We can get into the details of why this policy is there, but there is a process and you need to follow it. Correct. You know, certain forms need to be filed, there are compliances that need to be approvals that have to be taken. Some of it can be made retrospective. Another issue that we see is early on, just in the uh uh what do you say to raise capital, we see founders diluting uh and also diluting to a fragmented number of people. Right? 20% being held by 40-50 people. Uh huh, you know, 0.5%, 0.7%. One time we had a situation where the deal was all negotiated, all done. But when you sign a shareholders agreement, you need all the shareholder signatures. Correct. Right? Now, this one shareholder is not traceable, not responding to emails, not picking up the last known phone number. What do you do? I mean, it's it's a bit of a catch-to-in-to- situation because you cannot sign this. So you can't move forward, you can't find this person to the point that the promoter even went to the address of that person to see if they live there anymore. They don't. So it's a bit of an issue, right? To say, so uh the advice is if they're anyway a group, it's better to bring them in through one entity. Yes. So on your cap table, it's not so fragmented. You try and if you're looking at an angel network, bring them in through the net through the network as opposed to taking them individually. But again, you know, uh, we can say many things in a very perfect situation, but at that point, if you have 10 investors who say, no, no, I don't, I don't know who the other nine are, I don't want to come in together, you take my check or not. What do you do? What do you do? So um you try, at least you know that this is the issue that can come up. You at least be in touch with your shareholders, correct? Saying, okay, you gave me a check last year. Hi. Hello. Hello. So we don't end up in this kind of situation. You don't not necessarily they'll block the transaction, but this was a bit of a you know a weird spot opinion.

SPEAKER_01 54:40

Yeah, I think the the the problems are also new, yeah. Yeah, what we are facing are also new. We have to battle it out as it correct.

SPEAKER_00 54:48

Correct. Because what happens is especially on angel networks, uh the there be one person coordinating on behalf of you know a bunch of people. So till that person you are coordinating with them, you have a point of contact, correct? But once the investment is done, five years down the line, it's not necessary that you maintain that same point of contact. Absolutely. So these are small things that I think uh you know you need to be careful about.

SPEAKER_01 55:15

You have to be careful about, but uh you you will have to figure out on the goals. Yeah, my God. Goda, uh see, there is something very, very interesting that I see that the government is uh actively promoting entrepreneurship, actively promoting new businesses to come in into play, and the way that businesses are shaping up are also very, very transformational in the sense the system itself is evolving constantly, like we spoke earlier. How is the law changing to suit the dynamism of the you know of uh how entrepreneurship is perceived today?

SPEAKER_00 55:57

That's a very uh interesting question because and I'll tell you from a lawyer's uh point of view, right? We all know of the push for ease of doing business in India. Yeah, yeah. We've also seen, you know, many a time. I mean, we've seen several laws, for example, the uh labor laws, have all been uh narrowed down uh and in and made into a more concise uh legislation, a single point legislation where people say, okay, this is a limited area that you need to look, and this is then you are compliant. Right. Uh also what the government has nowadays been doing, two things. One is for newer areas of law, for example, let's say in the NBFC space, non-banking, financial. So they uh have something called a regulatory sandbox where they ask some companies on what do we need to do to get the to regulate this. Should we regulate it or not? Right? So they put they have a regulatory sandbox where they try and test out, but these are more niche matters, right? Uh there's also dialogue between the side. I was just gonna say, you know, there's a dialogue. Of course, there is a dialogue between the government and uh promoters uh of different sectors. I think the recognition that there is a startup culture that people want to set up their own businesses, people want to do something of their own is definitely recognized because uh there's only that much that larger companies can do, right? You the innovation, the disruption comes from startups in that sense. So the government recognizes that you know these are things that we can support. Correct. And as I mentioned earlier, uh I don't think it's ever the intention and should not be to over-regulate. Because when you do that, you force non-complexity. Correct. There has to be a reason as to why you want to regulate. Then uh what we would like to see is also certainty in regulation where the government tells you that you can do this, or if we don't tell you that you cannot do something, it means everything else you can do. Right. That kind of a you know, some sort of bifurcation. But uh, is there a recognition? Definitely, yes. Definitely, yes. Uh is it easy to do business in India? I would say easier than before, definitely easier than before. Is there a cost for compliance? Uh yes, definitely, yes. You're working in this system, it is a new budget for it. This is what it is going to take. And if you have the aspirations of setting up something new, this is your uh you know, establishment cost. This is what you work into it. So, yeah, I mean, I I think that there is a lot that is being done, both from the government side. Some sectors may feel why is there no active uh participation, but the government's policy is always very pro-people in that sense, because ultimately the whole point of the ecosystem is to ensure uh employment. Correct, right? I mean, as one of the larger aspects, yeah. So uh there is a lot of uh interdependencies in that sense, and um I think that there is, I mean, at least at least as a lawyer, I see a lot of things moving. Definitely, would you say have we reached the ideal state? Obviously not. There is work to be done, but is there work being done in the right direction? Yes, yeah, yeah.

SPEAKER_01 59:41

I think it's very recognizable at this point that there's so much of work going into a holistic approach to building the nation, right? Yes, and more than ever before. More than ever before. The proactiveness is very visible these days. And uh on those lines, I want to ask you, uh, the last two questions for you, which I feel are very important. Are we as a society, we spoke about government, but are we as a society moving towards a preventive uh sort of uh you know approach to law, or are we only still looking at curative? Because the first question to you was are we running to you to do the firefighting? Yeah, but uh do you see signs of it moving towards as a society, not individually, but as a society, do you see it moving towards the preventive hundred percent, especially when you look at large business houses 100%?

SPEAKER_00 1:00:36

The example I gave you earlier on the compliance for the data privacy laws, just taking that as an example because it's just been uh and the implementation is in three stages, uh, it's being rolled out in three stages, but we see companies wanting to comply. Yeah, definitely, yes. So um, I mean, if something has happened, then yeah, you look back and say, okay, how do I fix it? But if you know that this is the compliance that you need to do, what is the most effective manner in which I can do 100% yes?

SPEAKER_01 1:01:08

Wow, yeah, it's fantastic, and I think um it's it's very uh intriguing because as a society we are also wanting to move forward in the right direction, and I think uh law is one of the biggest portions, but uh not spoken about that much.

SPEAKER_00 1:01:25

Uh I would say definitely I'm not spoken because law is never the forerunner, but it is the framework. Framework, yeah. It's not the center of the picture, but it is the framework. So I don't think it's possible to do business and commerce in a society which is not regulated. Everybody is expecting regulation. Regulation should ensure some form of stability and predictability on what is the right thing, what is what is compliance and what is non-compliance. And uh in that direction, I think we are taking many steps.

SPEAKER_01 1:02:04

Fantastic. One question to you. I don't know if you're allowed to answer this, but what is the biggest fund you worked on so far, the fund size?

SPEAKER_00 1:02:12

I would say 1200 crores was a recent deal that uh we did last year, early last year. Wow was yeah, 1200 crores.

SPEAKER_01 1:02:20

And tell me something, um Goda, that uh I understand from you know uh as sad as sometimes it is to hear this, that uh the negotiation table sees fewer women even today. Why is that?

SPEAKER_00 1:02:37

This is I think my pet answer, actually, because I my whole team is a all-women team, okay, and I have consciously kept it that way because I want to set a sort of a uh uh a notion that no women can show up, you can keep your career. It doesn't mean that marriage, children, moving cities, anything should change it. If you want to do this, you can do this. Just because you're I mean, we've had situations where I would be the only woman, not would be, I there are deals even now where I am the only woman at the table, at the negotiation table. Uh, and there's another deal that we did where everybody were women, excepting the uh founder uh and the investor, the entire team. All the entire team, their lawyers, our lawyers, everybody, all the professionals on the deal were all women. So I guess it's uh staying on, which I think seems to be the issue for whatever reason, right? Just hanging in there, making it work, um, inflexibility of timings in many uh workplaces. Once you brave it through your first five, eight years, I think, um then you see the reward of sticking around. But yeah, even today there is a vast minority of women representations, unfortunately, on negotiation tables.

SPEAKER_01 1:04:12

And so you're saying that you know the situation is not conducive because of certain uh personal reasons that they're not able to stay on, or is it uh you know, the environment that demands? Yeah, I would say both.

SPEAKER_00 1:04:29

I would say both. Because uh if you do not have the support system at home, if you're at a childbearing age and you have a young child at home, I don't think it's possible to show up. Right? If you're in a workplace that is not supportive of the different stages of your life, you cannot continue working there. The other side of it is if you're in an organization that somehow does not recognize your talent just because you're a woman, right? Right? Somehow, if a man is aggressive, you come across as I mean, if you're loud and vocal in your negotiation, the man comes across as firm and uh you know standing up for the cause of his client. But somehow, if the woman says the same thing, you know, you're labeled, oh she's so uh what is this catfight? Yeah, what is this? Why is she so aggressive? You know, we've heard all of these words uh through the negotiations, but uh you brave through them. Yeah, you brave through it, yeah. You and it's appreciated. I think at the end of it, we've had both sides, not just the side that I am representing, even the other side coming and saying, you know, yes, you did what you had to do, and I'm glad we worked together. So, yeah, I guess uh it's still unfortunately a minority representation, and we'd like to see more women at the negotiation table. There's no reason why you should not be there. I think so. Show up. I mean, if somebody to take a career break, take it, but show up. Come back. And yeah, come back. And there's no reason to bow down just because you are a woman at the table. Right. Yeah.

SPEAKER_01 1:06:13

That's I think a very, very important message you're leaving here for us today to think about. I think you know when women start uh, you know, showing up more and more and showing people that uh, you know, we can do it if we want to. I think that's where our development really starts. And I think India is doing a phenomenal job in trying to bring that sort of an equality uh, you know, to both genders. Yeah. Um, not that men are not uh finding it difficult in some spaces. I think they are doing a lot more than what used to be done, and I think uh we're on the right track with that, Goda. Thank you so much. I think it's been a wonderful conversation, enlightening one. I think uh we all need to understand so much more about what's happening around us, and uh more so if we are a part of the workforce today. Business owners are not. I think we need to start understanding what needs to be complied with. That is the base of anything we want to build on.

SPEAKER_02 1:07:18

Yeah.

SPEAKER_01 1:07:18

Um, thank you so much for being here. If you have a word about the podcast that you can leave for us today.

SPEAKER_00 1:07:26

Thank you so much for having me. And this has been uh uh very well thought through uh talk in that sense. Uh very uh how do I put this? Very I I think that your audience would take back uh a lot from this. Thank you. Thank you so much.