Sanjeev Bikhchandani, the founder of InfoEdge and one of India's most respected entrepreneurs said the onus on governance rests on founders and a strong board, adding that no amount of oversight will help if the founders are not committed to governance.
His comments came in the backdrop of a blog on governance by Sequoia Capital, one of the biggest investors in Indian startups. Sequoia's post on the need for better governance came after several of its portfolio companies - from BharatPe and Trell to Zilingo have seen troubles in recent months, prompting larger questions on the funding frenzy fueled growth and expansion without adequate oversight in the Indian startup ecosystem
Sequoia Capital’s blog post titled Corporate Governance: The Cornerstone of an Enduring Company came in the backdrop of recent events that unfolded at merchant payments and lending startup BharatPe, in which it is the largest shareholder. BharatPe founder Ashneer Grover resigned amid allegations of misappropriation of funds in a public fallout.
The incident had prompted several discussions around corporate governance issues at startups and the need to look into the work cultures of these companies.
The blog post read: “Recently some portfolio founders have been under investigation for potential fraudulent practices or poor governance. These allegations are deeply disturbing. We have always strongly encouraged founders to play the long game.”
It went on to elaborate on its plans for a strong response to fraud and wrongdoings of companies. It said that it will continue to have zero tolerance for proven wrongdoing.
This prompted InfoEdge Founder Bikhchandani to tweet his thoughts on corporate governance. Notably, InfoEdge is an investor in a number of startups, including Zomato and PB Fintech, both of which recently went public.
A must-read thread from @sbikh on corporate governanceSince @Sequoia_India blogged about governance issues, I thought I would add some random thoughts of my own on corporate governance. (1/12)
— Info Edge Ventures (@InfoEdgeVC) April 17, 2022
In another tweet in the thread, Bikhchandani recalled the two great pieces of advice he received when he raised his first round back in 2000.
First, he said, “Always remember your independent directors and auditors are there to save you from yourselves,” advice from Kaushik Dutta, then Partner at PWC. And second, he said, “Always create situations of convergence of interest rather than a conflict of interest.” This advice was from Satish Mandhana, then with CDC.
Bikhchandani then said when he was on the board of MakeMyTrip, he was awarded an ESOP. In line with Mandhana’s advice, he said: “Hitesh (Oberoi), Ambarish (Raghuvanshi), and I decided that the economic benefit of this ESOP should go to InfoEdge rather than to me as that would align all of our shareholders’ interests.” According to him, spending time away from InfoEdge should benefit all of the companies’ shareholders rather than him alone.
Bikhchandani further added that a great company cannot be built unless there is a great board and that it is very difficult to get good independent directors, given the fiduciary responsibility and potential liabilities.
“There is very little upside for good people to accept board positions,” his Tweet read.
Bikhchandani ended the thread and said, “Finally, if you are better governed, you will sleep more peacefully at night.”
Sequoia India's portfolio companies facing such accusations include BharatPe, Trell, and Singapore's Zilingo. Zilingo recently suspended its CEO, Ankiti Bose, citing discrepancies in the company’s accounting. Similarly, Trell has also been under scrutiny for financial irregularities and related party transactions by its founders.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
