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Why Are Indian Startups Denied Entry Into Global SPAC?

There were 743 registered startups in India from FY2016 to FY2017, while in FY2021-FY2021, the startups have exponentially increased to 16,000 startups. Startups have gained an incredible craze and contribute the lion’s share to the country’s GDP. 

Nowadays, startups have become the essential factor to consider the rise of India’s Gross Domestic Production. However, earlier, startups were considered bullshit. In contrast, today, these are the booming industries every potential investor is looking for. In general, startups fill the gaps and provide essential services to consumers. 

It’s pretty challenging to find startups without getting invested after entering the market. Almost all startups will be funded once it enters the market. The best startups effectively and strategically fill the market gap and drive huge investments. To get global funding, these startups should register for LLP(aka Limited Liability Partnership). 

In this article, let’s understand the importance of LLP registrations contributing to startup growth and the significant reasons for the denial of Indian startups into global SPAC. Read on!

What Is LLP And Its Significance? 

LLP is also commonly known as the Limited Liability Partnership that usually requires a minimum of two members. LLP is a company that restricts the responsibility or accountability of company members based on the number of shares they own. 

A few best features of this company is it offers immense flexibility and protects from liability risks. LLP takes care of its entire asset and limits the risk to the members based on their agreements. Even if the company members change, it functions smoothly without any interruptions and holds contracts as usual.  

Significance of LLP in the growth of startups: 

Startups are the early stages of the business where passionate people start to fill the gaps in the market either with revolutionary services or innovative products. SInce LLP ensures the responsibility of each member in the community for their company shares, it provides legal protection and reduces the risks. It safeguards the startup and ensures zero disturbances and a risk-free environment for the investors. Most significantly, the LLP protects the company from several minor to significant allegations, interruptions, and disruptions. In a nutshell, registering under the LLP supports the growth and success of the startup.   

Primary Reason For The Denial Of Indian Startups  

Despite Indian startup success stories, Global SPAC has shut down the entry of Indian startups. Although the Indian finance ministry has open foreign investment in the markets, the SPAC is delaying the process due to a few issues. Once SPAC allows the Indian startups, it receives 120 to 200 billion at one go. However, the major concern holding back the entry of SPAC is illegal activities such as money laundering. Until the issues are resolved, the SPAC heavily examines the process to allow Indian startups for foreign investments.  

Key Takeaways 

Startups are the backbone of the Indian economy in the present era. Once these startups enter the global SPAC, they receive immense inflow. The Indian government is trying hard to resolve the issues and restore foreign investments to make this process feasible.