STARTUP GUIDE ISSUE 20
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Editor Shehab Farrukh Niazi Art Directors Aleeza Javed Mahnoor Haroon Niazi
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2020 MAY B U I L D
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IN REV IEW
MAY 2020
Post COVID19: The New Face of Tourism in Pakistan with Aneeqa Ali (The Mad Hatters), Muhammad Imran (NANOIT Solutions) and Muhammad Komail Abbas Naqvi (FindMyAdventure) to discuss the implications of the COVID19 lockdown on the tourism business; how it’s going to shape up post-pandemic and how these sh entrepreneurs are innovating to prepare for the new normal.
POST COVID19: THE NEW FACE OF TOURISM IN PAKISTAN
MAY 2020
A SOCIETY POWERED BY ENTREPRENEURS
In conversation with the global representatives of Accelerate Prosperity, discussing the various opportunities offered by Accelerate Prosperity Pakistan, which is a premier business incubator and accelerator in the country with a wide regional presence, diverse portfolio in multiple market mar sizes and scenarios and global impact.
IN REV IEW
Fuchsia Shoes features beautifully handcrafted ballet flats that bring with them a heartwarming story. They realized that such a combination is missing in the Western retail market today. Their search for a product to fill this gap led them to discover the challenges faced by the native artisans, such as lack of exposure to their art exposu and low wages. Startup Grind Islamabad converses with the co-founder and CEO, Afshan about how the company is faring amidst the COVID19 lockdown.
Due to the COVID-19 lockdown and the resulting policies and changes in consumer behavior, what are the effects on the creative industry of Pakistan? We're bringing together two creative entrepreneurs, Amneh Shaikh Farooqui (Co-founder Polly and Other stories) and Nimra Qazi (Founder & Principal Architect at Timeline Designs) to discuss the challenges they're facing and any a opportunities that have come forth during the COVID-19 lockdown.
IN REVIEW
MAY2020
CHALLENGES AND OPPORTUNITIES IN THE CREATIVE INDUSTRIES
HOW FUCHSIA, A SHOE COMPANY, IS POWERING THROUGH THE MARKET CRASH OF COVID19 LOCKDOWN
Afshan is CEO & Co-founder at Fuschia and member of the Board of Advisors at PWIC. She has also worked as Data Engineer at INRIX and at Microsoft Mic as Sr. Business Analyst (BI) where she Delivered reporting and analytics for OEM Finance during Windows 7 and Windows 8 launch including real time business insights for executive audience.
MAYMAY 20202020
GLOBAL WEBINAR: FIRESIDE CHAT W/ ZEESHAN ALI (VICE PRESIDENT, SALESFORCE CANADA)
In conversation with Zeeshan Ali,Vice President Salesforce Canada. Zeeshan Ali is the Vice President at Salesforce Canada for the digital transformation technologies since March 2015. He's responsible for Salesforce’s products portfolio, with a focus around financial services, tele-communication and retail verticals. He's spent 9 years at Salesforce and previously, he held various positions with technology giants like Oracle Corporation and BEA Systems. He talks about his background, his journey and the role he sees Pakistani diaspora playing in advancing tech in Pakistan. Pakistan
IN REV IEW IN REV IEW
HOW TO BUILD A NARRATIVE FOR YOUR STARTUP BRAND
MAY2020
IN REVIEW
HOW TO PITCH TO A VC
During the National Entrepreneurship Summit 2020, conducted by the National Incubation Center Lahore, a session was carried out for startups on building a narrative for a brand, discussing: how to build strong narrative; why building a strong brand is critical for startups; how to build a great g brand. The panelists included Junaid Aziz (Director Brand development at Montres Journe America); . He also served as brand manager Rolex USA and Dawn Group, Pakistan. Currently, Ayesha Khan (Brand Director, Nike USA); Â Umar Qamar (Founder of Export Leftovers); Faisal Sherjan (Director (Di National Incubation Center Lahore); Syed Talaal Burny (Developer Relations Manager, Careem) and Umer Hussain (Founder of Sweet Tooth).
For startups, knowing the right way to pitch in front of venture capitalists is extremely important. This session covers: how to pitch to a VC firm; what should a startup do before approaching VC firms; how VC firms in Pakistan think about Covid-19. The panel consisted of renowned investors including Ali Mukhtar (CEO, Fatima Gobi Ventures); Misbah Naqvi (Partner at i2i Ventures); Aatif Awan (Founder & Managing Partner at Ventu Indus Valley Capital); Rabeel Warriach (Founder & CEO at Sarmayacar); Meenah Tariq (Partner at Karavan, Ex Head of Strategy & Accelerator at Invest2Innovate); Omar Shah (Founder & CEO at Colabs); Ali Samir Osman (Director at Jaffam Management Consultancy) and Faisal Aftab (Managing Partner at Lakson Venture Capital). The session was held during the National Entrepreneyrship Summit and was moderated by Khurram Zafar, Director 47 Ventures.
1 2 S I M P L E WAYS TO I N C R E A S E S TA RT U P S A L E S
CROWDFUNDING IN THE NEW NORMAL
For many startups, the dilemma is that they start a business, but then what? How does one go about increasing sales with limited resources? To discuss this in detail, Daud Yamin (VP Sales - TeraData), Abdullah (Head Business Dev - Pakwheels), Abu Bakar (Head of Sales, Foodpanda), and Imran Khan (Regional Sales Manager, Zameen.com) came together for a panel discussion during NES2020 to share some great hacks to increase your sales.
Startups are seeing a new normal when it comes to getting funded. Amy Vik is a Ph.D. Research Fellow at the University of Agder and she's helping startups grasp the concepts around crowdfunding. National Incubation Center conducted a session with her, he aimed at helping startups effectively raise capital with careful and thorough crowdfunding campaigns.
THE FUTURE OF WORK What actually is the future of work? How can digital communication tools enhance productivity and efficiency? What industries will be most affected by the current pandemic? NIC Islamabad brought together esteemed panelists like Osman Rashid, Fatima Mazhar, Mazha Ghazanfar Ali and Puruesh Chaudhary to share their expert opinion on the topic.
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LAWS FOR STARTUPS
THE BASICS Barrister Khalique Zaman did his Bar-at-Law from Honourable Society of Gray’s Inn and L.L.B. (Honours), from SOAS University of London. Mohtashim Ahmad Siddiqi is a Solicitor of England and Wales and did his Bachelors in Engineering from Loughborough University, U.K. At Professional P Consultants Limited (PCL) there is a team of Lawyers, Chartered Accountants and other Taxation and Financial experts who are well-equipped and have been providing services for the last 9 years to several businesses and startups. PCL is a one of a kind consultancy company offering a one-stop solution to all businesses and startups to all their problems. The team at PCL has already assisted several startups all across the country and are consultants with several incubation consult centers of Pakistan. Mohtashim and Khalique outline the basics about registering a company, filing requirements etc. and the impact of the new amendment to the company law on startups.
WHY REGISTER YOUR STARTUP There are different types of legal entities that a startup can register as. First and foremost is the sole proprietorship. Any single person who wants to register an entity can just go to the FBR website where they can generate an NTN and become a sole proprietor. Usually, multiple people are involved in forming a startup. In that case, you have to go for an AoP (Association of cas Persons) or get a private limited company registered with the SECP. The thing with startups is that there are people from different backgrounds and want their liability to be limited, so they mostly pursue the private limited route. In case of a startup getting investment, the different VCs prefer to have a company which is registered as a private limited. Personally, we recommend that that in case of people who have partners, they should go for an AoP. The reason is that the statutory obligation is limited. It’s a simple process, which can be achieved with a simple stamp deed. There’s not even a need to go to the registrar to get it done. It’s a very simple matter to start your business. If and when your business starts to prosper and you start making money, then you can decide to go for registering it with the SECP. In SECP, there are statutory requirements – you need an auditor, an accountant, a lawyer. We always advise startups to focus on their operations first and hence go for a sole proprietorship or an AoP to begin with. with On part of startups, there is hesitation in registering the business. This is because of a trust deficit between the government and the startups. They think that if they get into the government’s books (it might be the tax authorities or the SECP), they would get tangled into legal matters. The more important thing to note is that when startups sta start working, there are two things for us to consider: (i) what is going to make more commercial sense for
them; (ii) if multiple people are coming together to form an entity, what measures can be taken to avoid disputes in the future. If there are more than one person involved, it is very important to have a legal agreement, written down properly in terms of what their individual roles are and what they’re going to get in monetary terms. There are two types of partnership: one is a registered partnership and the other is an unregistered partnership. One needs to be registered and the other one doesn’t. The only difference is that you can take a registered partnership deed to the court in case any dispute arises. We often see that startups quite understandably, do not have the capital in the beginning – so, it’s a good idea to keep costs down. Startups struggle to get on their feet and so, it is not recommended that they should hire costly lawyers and accountants to do their filing work at the SECP. So, we suggest to startups that we would get their partnerships made – we speak to the various partners pa and draw up an agreement accordingly. The day they start generating money, they can get a private limited company registered. A private limited company is a manner of limiting your liability. If there’s a single person, you can initially get a sole proprietorship registered and when money starts coming in, they can register a Single Member company, which is also a private limited company compa at the SECP. Sole proprietorship and AoP only have the FBR where taxes need to be filed. There is no other entity involved. If a startup thinks that it needs an exit strategy, we advise startups to take the SECP route when they start generating money. One concern is that if a startup doesn’t get itself registered with the SECP from the beginning, they might lose the name. What we suggest is to get a trademark registered with the IPO, which basically protects their logo and their name. What we need to understand is that the name of the company is not necessarily the business name. So the business name can be completely different from the name that is registered. What is important is to protect the brand name that a startup is building.
VCs usually require the startups to have private limited companies because it’s easier for them to do subscription agreements because they would purchase a certain amount of shares for the money that they’re going to invest in the startup. So, for them it’s it easier and more convenient to invest in a private limited company. In case of an AoP, if there’s investment, a lot of changes need to be made to the deed, so they prefer to invest in private limited companies. That is why, when startups are incubated, they are encouraged to register as private limited company. On the other hand, we recommend a slightly different route that once your idea is validated or you have convinced a VC to invest, at that point in time, you should get a private limited company registered. You can also convert an AoP to a Limited Liability Partnership with the SECP. The VCs feel much more confident when a company is registered with the SECP. This is mainly because when you’re registered with the SECP, your company records are public and compa anyone can go and check the records, that is also why VCs find it much easier to do their due diligence better with a private limited company.
When we talk about filing requirements, there are two things: (i) the tax requirements – any entity would be making some kind of income whether it ’s a product or service . pr When it comes to tax, there are two aspects. One is income tax and the other is sales tax. The income tax needs to be filed with the FBR no matter what type of o legal entity and no matter where it ’s registered. The other thing is that you have to file your annual bank statements with the r eturns. When it comes to sales, you have to file statements reflecting your monthly sales and you have to deposit your sales tax amount. (ii) If you are a p rivate limited company, then during registration, there is a form A and a form 29 in addition to all the other documents. This means that you’re informing the SECP about who your CEO, shareholders and partners are and what your financials look like . There is an update to the company law now, under which they ’ve amended some the of the statuary requirements.
FILING REQUIREMENTS
WHEN LOOKING FOR INVESTMENT
AMENDMENT TO THE COMPANY LAW Under the new amendment, certain statutory obligations have been updated for companies that have been operational for less than 10 years and have less than Rs. 500 million turnover. turnove Most, if not all SMEs would fall under the category. They have sort of put them under the same bracket as startups. We have to realize is that it’s hard for the government to introduce regulations just for startups. By taking this step, the government has made this exception not just for startups but also for SMEs.
One of the brilliant things they’ve done is that what we see is that when a startup wants to register as a private limited company and has share capital – there’s a difference between the issued share capital and the paid up capital of a business. If a company wanted to have share sha capital of one million rupees and a paid up capital of one million as well. Before this amendment, the partners were required to subscribe to this paid up capital within 30 days of registration. Now, SECP is going to start rules where these startups can subscribe to the money at a later stage – this is helpful if startups don’t have that much money at the time of incorporation. When we incorporate companies, they need a lot of share capital because they need to perhaps bring machinery from abroad and need to set it off against their assets. This is a big problem for them because they don’t have that much money. Previously, companies with paid up capital of less than a million rupees were required to file their financial statements with the SECP, now they’ve gotten rid of it completely. completel The requirement of auditing for companies with paid up capital of more than a million rupees still remains. Before the amendment, every company was required to have a common seal and now they’ve removed that requirement, making it a lot easier. They have also introduced this new section 458 (A) for ease of doing business – they will introduce further regulations that would help the startup community.