What are the benefits of Flipping?
Written By
Priya Kapasi Shah, Rohit Gandhi
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AI Summary
- Flipping core business operations outside India gives startups access to a wider, global audience rather than being limited to the Indian market.
- Jurisdictions such as Singapore and the USA offer easier multi-currency payment gateway management, enabling faster reconciliation and swifter business growth.
- A flipped structure opens access to global incubators, venture capital firms, and accelerators that may otherwise be restricted from funding companies incorporated abroad.
- Countries like Singapore and the USA offer more flexible regulatory frameworks, including faster ESOP grants, quicker IP registration, and robust judicial procedures.
- Startups gain access to flexible financing options such as revenue based financing and lines of credit, reducing the need to raise funds solely through equity dilution.
- Certain countries offer lower corporate tax rates than India, which helps startups manage cash flow and plan resource allocation more effectively.
- Global incubator and investor access through flipping can widen the pool of specialised funding players available to the startup.
- Improved ease of doing business in flipped jurisdictions supports greater operational flexibility as the startup scales.
- Flipping is presented as a strategic route for startups seeking global market reach, better financing terms, and lower tax costs.
- Global Market Access: Flipping core business operations outside India provides a wider audience to the startup. This enables the startup to reach out to a global audience as compared to just India. This access is enabled because of the reasons below which act as a catalyst for such access and expansion.
- Ease of Operations to manage foreign currency transactions: Multi-currency payment gateway management is easier in jurisdictions like Singapore and the USA. This facilitates faster reconciliation, easier payment mechanisms enable the business to grow faster and swifter.
- Access to global incubator/s, investors, etc: Flipping opens up new funding opportunities for startups. Exposure and access to global incubators, VCs, and accelerators who may be restricted from funding companies abroad. The new company enables startups to pitch and seek funding from such specialized funding players.
- Flexibility of financing options and structuring: Countries like Singapore/USA have easier and more flexible regulatory frameworks for the functioning of businesses. For eg in terms of granting of ESOPs, faster IP registration mechanisms, and robust judicial procedures. This offers ease of business and malleability in business operations that startups require. Additionally, options like revenue-based financing and line of credit schemes for startups are easily available. This empowers the entrepreneurs to avail of better financing options than diluting equity all the time.
- Lower tax rates in certain countries: Multiple countries have lower tax rates which turn out to be lucrative for startups. A lower corporate tax rate helps startups to manage cash flows and plan better for resources.
About the Author
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Priya Kapasi Shah
Associate Partner | Tax & Regulatory | priya.k@treelife.in
Heads Treelife’s Financial Advisory practice, specializing in investment structuring, cross-border transactions, and tax and regulatory advisory. Also leads on AIF setups and advisory services for GIFT IFSC.
Rohit Gandhi
Senior Associate | Tax & Regulatory | rohit.g@treelife.in
Specializes in financial due diligence, valuations, business structuring, and income tax advisory. Contributes to the Financial Advisory team by helping startups and businesses make informed strategic decisions.
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