Amid a series of corporate governance lapses in the Indian startup ecosystem, Kris Gopalakrishnan, co-founder of Infosys and Axilor Ventures, which backs early-stage companies, on June 21 urged investors to have patience and not push founders for immediate results.
Gopalakrishnan’s comments come at a time when Ashwin Swaminathan and Rajat Gupta, founders of Mojocare, a heathtech startup, admitted that they inflated sales bills and overstated revenues to meet investor targets. A group of investors, which includes Chiratae Venture, B Capital and others, have appointed Deloitte to conduct a forensic audit of the company.
The Mojocare episode is a repeat of what had happened at GoMechanic. In January 2023, the founders of the car-servicing startup said that they got carried away, took the growth at-all-costs path and cooked books to show higher sales figures.
The Indian startup ecosystem is the third-largest in the world behind the United States and China. Gopalakrishnan said India is well positioned to grow to a $30-$40 trillion economy over the years, up from about $3.75 trillion, which augurs well for new-age companies.
“Opportunities in the Indian economy and startup ecosystem are real. VCs and investors should not push startups to higher valuations - valuations are (a) result of performance; sometimes (that) takes more time,” he tweeted.
At the same time, “Request startup founders to have patience and build businesses with strong fundamentals. Do not take shortcuts. Negative costs are high,” he added.
Negative costs would mean more difficulty in raising capital, stricter due diligence and the like when startups are already struggling to raise money.
While GoMechanic and Mojocare came on the radar more recently, there have been several such cases in the past year or so in the Indian startup ecosystem.
Earlier this month, Info Edge, the largest shareholder of Broker Network, Rahul Yadav’s second startup, also initiated a forensic audit at Broker Network. Yadav is infamous for the fiasco at Housing.com.
Fintech unicorn BharatPe, tech and commerce platform Zilingo, and lifestyle video app Trell are some of the other startups that find a mention in the list of new-age companies with corporate governance issues.
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