Tranche

Also called Milestone-Based Funding

A portion of a funding round released in stages, with later portions unlocked only when the company hits agreed milestones, rather than all the money arriving at once.

Why it matters

Tranched deals reduce an investor's risk by tying money to progress, but they can leave a founder short if a milestone slips. Understanding the triggers before signing keeps a tranche from becoming a trap.

For example

An investor commits 10 crore in two tranches: 5 crore now, and 5 crore once the startup hits 1 crore in ARR.

Worth your time

Startup India Seed Fund Scheme (SISFS): Grant, Tranches and How Disbursement Actually Works Patron Accounting · article This is the practical explainer that shows the money arriving in four milestone-tied tranches (business plan approved, prototype demoed, beta users on, first customers acquired) with rough rupee splits, so you see concretely why a 20 lakh grant never lands as one payment. Written by a CA, it also spells out the utilization-certificate and progress-report gate that unlocks each release. Open patronaccounting.com →

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Go deeper

See how founders actually handle this on Raising your first round, part of the Starting Up hub.

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