Engagements completed: 50+
Rounds supported: Angel, Seed, Series A
Turnaround: 5–7 working days
Signed by: Registered Chartered Accountant
Advisorate Private Limited is a private professional consultancy firm. Valuation reports are prepared for documentation and compliance support purposes. Final investment decisions are made independently by investors and all regulatory determinations are made by the relevant authorities.
Important regulatory update, Angel Tax abolished from 1 April 2025
If you have been told you need a valuation report primarily to avoid Angel Tax, that advice is now outdated.
Section 56(2)(viib) of the Income Tax
Act, the provision that taxed share premiums above Fair Market Value, was abolished by the Finance Act, 2024, with effect from 1 April 2025. For any fundraise from FY 2025-26 onwards, Angel Tax no longer applies. You can raise from Indian resident investors at any premium without Angel Tax liability.
However, valuation reports remain mandatory or strongly advisable for three other reasons that are very much still in force:
- FEMA compliance for foreign investor rounds remains mandatory. Under FEMA Non-Debt Rules, any issuance of equity shares to a non-resident investor must be at or above Fair Market Value certified by a Chartered Accountant or SEBI-registered merchant banker. This is a hard RBI requirement, failure to comply can result in compounding penalties. Angel Tax abolition did not change this.
- Rule 11UA methodology remains relevant for secondary transfers and ESOP pricing. Section 50CA of the Income Tax Act governs secondary share sales below FMV, if a founder or early investor sells shares at below the Rule 11UA FMV, the tax authority deems the actual sale consideration to be the higher Rule 11UA value for capital gains purposes. Additionally, ESOP exercise price and perquisite tax calculations continue to require a professional valuation.
- Investor-grade valuations remain a commercial expectation. Even where no specific regulation requires a valuation report, serious investors, particularly seed-stage and Series A institutional investors, expect a professionally prepared valuation as part of the documentation package. A startup that cannot produce a defensible valuation methodology is at a disadvantage in due diligence conversations.
If you have an open Angel Tax assessment from a fundraise before 1 April 2025, those proceedings continue and are not affected by the abolition. Contact us if you need support responding to a legacy Angel Tax notice.
When does a startup in India need a valuation report?
Valuation is not a single exercise. The same company may need multiple valuation reports prepared for different purposes under different regulatory frameworks, and the same report cannot serve all purposes. Here is when each type of valuation arises.
Fundraising from a foreign investor (FEMA compliance) Any issuance of equity shares, Compulsorily Convertible Preference Shares (CCPS), or Compulsorily Convertible Debentures (CCDs) to a non-resident investor requires FMV certification under FEMA Non-Debt Rules. The share issue price cannot be below the FMV determined by a Chartered Accountant or SEBI-registered merchant banker using an internationally accepted methodology, typically DCF. The FC-GPR filing on the RBI FIRMS portal, which must be completed within 30 days of allotment, requires this valuation certificate. Without it, the allotment may be treated as non-compliant and the company faces compounding proceedings with the RBI. This is the highest-stakes valuation context for most Bangalore startups raising from international angels, US-based funds, or Singapore-domiciled VCs. Learn more about post-round compliance support including FC-GPR filing.
Fundraising from Indian resident investors (commercial best practice) With Angel Tax abolished from 1 April 2025, there is no longer a statutory requirement to obtain a valuation report purely to protect against Angel Tax when raising from Indian resident investors. However, a professionally prepared valuation report remains strongly advisable for any structured equity round because: it gives investors a documented basis for the valuation they are accepting, it establishes the FMV for the purposes of any future secondary sale by those investors (relevant to Section 50CA), it demonstrates financial credibility and process rigour, and it forms part of the standard documentation package that institutional investors and angel networks expect. Learn more about our fundraising strategy consulting service.
ESOP pricing and perquisite tax When a startup creates an ESOP scheme and grants options to employees, the exercise price is typically set at or near FMV at the time of grant. Under Income Tax rules, the perquisite value on exercise, the difference between FMV at exercise date and the exercise price, is taxable as salary income in the hands of the employee. Both the grant-date FMV and the exercise-date FMV need to be professionally determined to ensure the ESOP is correctly structured and employees are not surprised by tax liabilities they were not prepared for. Learn more about ESOP design and management.
Secondary share transfers (Section 50CA)
When existing shareholders, founders, angels, or early employees, sell shares to a new investor or in a secondary transaction, Section 50CA of the Income Tax Act provides that if the transfer price is below the FMV determined under Rule 11UA, the tax authority treats the FMV as the actual sale consideration for capital gains purposes. This means the seller pays capital gains tax on a number higher than what they actually received. In down-rounds, structured secondary transactions, and ESOP buybacks, this provision is particularly relevant. A professional valuation establishes the Rule 11UA FMV and allows transactions to be structured appropriately.
Board documentation for private placements Under Section 62(1)(c) of the Companies
Act, 2013, any preferential allotment of shares requires the board to be satisfied with the pricing basis. A formal valuation report from a registered professional provides the documentation trail that supports the board's approval and protects directors from liability in the event the allotment is later challenged.
Valuation methods we use, and when each applies
Startup valuation is not one-size-fits-all. The right methodology depends on your stage, sector, revenue status, and the regulatory purpose of the report. We select the appropriate method, or combination of methods, for your specific situation. Here is how each method works and when we use it.
Discounted Cash Flow (DCF), required for FEMA compliance The DCF method projects your future free cash flows over a three to five year horizon and discounts them back to present value using a risk-adjusted discount rate that reflects your business model, sector, and stage. A terminal value is then added to capture value beyond the projection period. DCF is the primary methodology accepted by the RBI for FEMA pricing of foreign investor rounds. It is also prescribed under Rule 11UA as an alternative to NAV for unquoted equity shares. The quality of a DCF valuation depends entirely on the quality of the underlying financial model, which is why Advisorate prepares the valuation report and the financial model together, ensuring consistency between the two documents. For a SaaS startup, the DCF is built around ARR growth, churn rate, gross margin expansion, and the path to profitability. For a marketplace, it reflects gross merchandise value, take rate, and contribution margin progression. For a D2C brand, it reflects revenue per SKU, customer acquisition cost, and lifetime value. Learn more about our financial modelling service.
Comparable Company / Market Multiples method
This method values your startup by benchmarking it against publicly listed companies or recently funded private companies in the same sector, applying relevant multiples, revenue multiples, ARR multiples, EBITDA multiples, or GMV multiples depending on the sector, to your own metrics. In India in 2026, indicative pre-money valuation ranges are approximately ₹5 to ₹15 crore for pre-revenue angel rounds, ₹10 to ₹40 crore for seed rounds with early traction, and ₹40 to ₹200 crore for Series A rounds with meaningful revenue, though these ranges vary significantly by sector, team pedigree, and market conditions. AI and deep tech startups are attracting a 30 to 40% premium over sector peers at equivalent stages. We use platforms including Tracxn and VCCEdge to source India-specific comparable transaction data for this analysis.
Scorecard Method The Scorecard method is widely used for pre-revenue startups where there is no financial history from which to run a DCF, and no directly comparable funded companies. It starts with an average pre-money valuation for comparable early-stage startups in the region and adjusts it up or down based on a structured assessment of the startup against key factors: team strength and experience (typically 25 to 30% of the score), size of the opportunity (20 to 25%), product and technology (15 to 20%), competitive environment (10%), sales channels and partnerships (10%), and need for additional investment (5%). We apply the Scorecard method for pre-revenue angel rounds where the founder's track record and the opportunity itself are the primary value drivers.
Berkus Method The Berkus method assigns a specific rupee value to each of five key elements of an early-stage startup, a sound idea, a working prototype, quality management team, strategic relationships, and product rollout or early sales, with a maximum value assigned to each element. It provides a structured, defensible way to value companies that have no revenue and for which a DCF is speculative. We use the Berkus method primarily for very early-stage startups in combination with the Scorecard method to cross-validate the pre-money valuation range.
Net Asset Value (NAV) method The NAV method values a company at total assets minus total liabilities, essentially book value. Under Rule 11UA, NAV is the prescribed default method for unquoted equity shares. For most startups, NAV produces a very low valuation because it ignores future growth potential and the value of intangible assets. We use NAV as a cross-check and include it in reports where Rule 11UA compliance requires it, while also preparing a DCF-based valuation to represent the investment-case value. The higher of the two is typically what investors negotiate around.
Which method is right for your startup?
| Stage | Situation | Method we typically use |
|---|---|---|
| Pre-revenue angel round | No financial history, idea/team stage | Scorecard + Berkus cross-check |
| Pre-revenue with working product | Some user traction, no revenue | Scorecard + simplified DCF |
| Early revenue, seed round | ₹10–50L ARR, Indian investors only | DCF + Comparable Companies |
| Early revenue, foreign investors | Any revenue stage, FEMA required | DCF (mandatory) + Comparables |
| Growth stage, Series A | ₹1Cr+ ARR, institutional investors | Full DCF + Comparable Companies + Multiples |
| ESOP pricing | Any stage | DCF or Black-Scholes depending on structure |
| Secondary transfer | Any stage | Rule 11UA DCF or NAV (higher value) |
Not sure which applies to you? Speak with our team.
What our valuation report includes
Every valuation report Advisorate prepares contains the following components, structured to serve both investor-facing and regulatory purposes.
Executive summary and purpose statement
The report opens with a clear statement of the valuation purpose, FEMA compliance, commercial fundraising documentation, ESOP pricing, or secondary transfer, along with the valuation date, the interest being valued (typically equity shares on a fully diluted basis), and the Fair Market Value conclusion. This section is what investors and regulators read first.
Company and business overview
A structured summary of the company's business model, revenue streams, target market, competitive position, and key operational metrics. This section contextualises the valuation for anyone reading the report who is not familiar with the business, which includes the RBI reviewer for an FC-GPR filing.
Industry and market analysis
An assessment of the sector the company operates in, market size, growth rate, competitive dynamics, and the macro factors relevant to the company's trajectory. For a Bangalore SaaS company, this includes global SaaS multiple benchmarks and India-specific market sizing. For a healthtech startup, it includes the regulatory environment and addressable patient population. This section is critical for justifying the growth assumptions that drive the DCF.
Financial analysis
A detailed review of the company's historical financial performance, revenue, gross margin, operating expenses, EBITDA, and cash position, for the last two to three years of available history. For pre-revenue startups, this section covers burn rate, runway, and the capital efficiency of the team to date.
Valuation methodology and calculation
The core of the report, a detailed walkthrough of the methodology selected, the key assumptions underlying it, the sensitivity analysis showing how the valuation changes under different growth scenarios, and the Fair Market Value conclusion. For DCF reports, all discount rate assumptions are documented with reference to market data. For Comparable Company analysis, the comparable set is identified and the multiples applied are explained.
Fair Market Value conclusion A clear, single-page statement of the FMV per share on a fully diluted basis as of the valuation date, signed by a registered Chartered Accountant. This is the page that goes into the FC-GPR filing, the board resolution for the allotment, and the investor data room.
What we need from you to prepare the valuation
The quality of a valuation report depends on the quality of the inputs. Here is what we typically need from founders before we begin work.
Always required: Certificate of Incorporation, Memorandum and Articles of Association, current cap table showing all issued shares, classes of shares, and any outstanding warrants or convertible instruments, latest audited financial statements or management accounts (balance sheet, profit and loss, cash flow), bank statements for the most recent completed financial year, and a brief description of the business model, revenue streams, and target market.
For FEMA / foreign investor rounds additionally: Details of the proposed transaction, number of shares to be issued, proposed issue price, investor name and country of residence, and the instrument type (equity shares, CCPS, or CCD). This determines the specific FEMA pricing rule that applies.
For revenue-generating startups: Monthly or quarterly revenue data for the last twelve months, gross margin breakdown by product or service line, key operational metrics relevant to your sector (ARR and churn for SaaS, GMV and take rate for marketplaces, DAU/MAU for consumer apps), and a three to five year financial projection if available, or we build one as part of the engagement. Learn more about our financial modelling service.
For ESOP pricing: The proposed ESOP scheme document or a description of the scheme including the total option pool, exercise price you are considering, vesting schedule, and the grant date. Learn more about our ESOP design and management service.
Timeline and cost
Timeline: Five to seven working days from receipt of complete inputs. Complex cases, startups with multiple instrument classes, foreign holding structures, or significant historical transactions requiring reconciliation, may take eight to ten working days. We confirm the expected timeline before beginning work.
Cost: Valuation reports prepared by
Advisorate range from ₹15,000 to ₹50,000 depending on the complexity of the business model, the stage of the company, the methodology required, and whether a financial model needs to be built as part of the engagement. Pre-revenue startups using the Scorecard and Berkus methods are at the lower end of this range. Growth-stage companies requiring a full DCF, Comparable Company analysis, and sensitivity modelling are at the higher end.
We provide a fixed-fee quote before beginning work, no surprises. Government fees, RBI filing fees, and any third-party costs are separate and are not included in our professional fee. Contact us for a specific quote.
How our valuation service works with our other fundraising services
A valuation report does not exist in isolation, it is one document in a broader fundraising documentation package, and its quality depends on the quality of the other documents it is connected to.
The valuation's DCF methodology is driven by financial projections. If your financial projections are weak, inconsistent, or not built on clearly stated assumptions, the DCF valuation will reflect that, and an experienced investor will notice. This is why Advisorate prepares the valuation and the financial model together as a single integrated engagement wherever possible, not as two separate exercises by two separate people.
The valuation's per-share FMV conclusion then feeds directly into your pitch deck, specifically the financial summary slide and the ask slide, ensuring the numbers in your deck are consistent with the numbers in your valuation report. The valuation conclusion also feeds into your cap table, showing the post-money valuation and ownership split at the proposed round size.
After the round closes, the valuation report is referenced in the SHA and SSA documentation as the basis for the share price, and the allotment is filed with MCA and RBI (for foreign rounds) through our post-round compliance support. One team handles all of this end to end, no handoff between a valuation provider and a legal team working from different numbers.