Byju’s-Paytm Aftermath: Time for National Startup Advisory Council to prove its worth

Its only fair that the startup sector is provided all the support necessary so that it can reach its highest potential.

Recent troubles witnessed at fintech giant Paytm and edtech colossus Byju’s – that, until recently, were considered among the stars shining brightest in India’s startup firmament – have already taken some sheen off the country’s startup arena, whose heady days of access to huge funds from a galaxy of PE firms, VC funds, and angel investors have long been replaced by a prolonged funding winter.

The glitz and glamour associated with the nation’s startup sector – one of the biggest in the world with more than 100,000 recognised startups as of 2023  – may further suffer a blow if questions are raised about business practices of more noted startups and their voluble and charismatic founders and/or senior leadership in the days ahead.

GoI’s NSAC Option

In such a challenging scenario for the Indian startup domain whose importance was underlined by Commerce and Industry Minister Piyush Goyal in a tweet on January 16 that said, “Bharat’s Startup Story = Bharat’s Growth Story”, it may, thus, be fitting if the National Startup Advisory Council (NSAC) could step in to smoothen the lives of startups. And, in the process, demonstrate its usefulness in ensuring that the country’s startup space does not lose its lustre.

Constituted by the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, the NSAC’s role is to advise the government on measures needed to build a strong ecosystem for nurturing innovation and startups in the country to drive sustainable economic growth and generate large scale employment opportunities.

Besides the ex-officio members, the Council has a number of non-official members representing various stakeholders from the startup ecosystem. Importantly, the NSAC, which meets on a regular basis, also suggests ways to ensure that the control of startups remains with the original promoters and domestic capital is incentivised for investments into startups.

The current NSAC – that was reconstituted in December 2023 – includes founders of successful startups, industry veterans who have grown and scaled companies in India, representatives of industry associations, etc., as non-official members. Some of the prominent non-official members include Nithin Kamath of Zerodha, HCL founder Ajai Chowdhry, former TCS CEO Rajesh Gopinathan, CarDekho co-founder & CEO (and also a Shark in Shark Tank India) Amit Jain, Rajan Anandan of Peak XV Partners, etc.

How Can NSAC Help?

The National Startup Advisory Council can play an active role in helping startups of all categories – bootstrapped, soonicorns (startup with potential to become a unicorn), unicorns, et al – to strengthen governance structures and, also, put robust systems and processes in place so that these companies can emerge as more well-managed and viable outfits inspiring confidence among all stakeholders. In this context, it may be relevant to mention that issues around governance and systems and processes have played a big part in the problems currently being faced by Byju’s and Paytm.

The NSAC could also come up with a mechanism through which startups can address the Achilles heel syndrome that afflicts many of the entities in this space. In the form of a vaulting ambition to achieve unicorn followed by decacorn status at the earliest by doing whatever it takes to get to these levels motivated by their success in raising a large amount of money from investors already sold on the India story.

Additionally, the NSAC could assist startups become standard bearers of quality service delivery so that these entities could make the cut on the most important parameter that could determine their sustained viability, namely, customer satisfaction. For all the slick advertising, sometimes use of celebrity brand ambassadors, and PR, consistency and seamlessness in service delivery are concepts that are still not the strongest suit of many local start-ups.

In December 2021, the Education Ministry had even issued an advisory urging citizens to exercise caution while dealing with edtech companies. This advisory subsequently led to many edtech companies, including the likes of Byju’s, UpGrad, etc, coming together to form the India Edtech Consortium as a self-regulatory body for the edtech domain.

Seen from a more immediate perspective, the National Startup Advisory Council could ensure that the startup arena does not throw up more unpleasant surprises ahead of the showcasing of India’s startup prowess at the 3-day Startup Mahakumbh to be held in Delhi in March. The NSAC could engage with startups in the fintech arena especially to evolve ways to bolster the governance mechanism at these companies.

At the end of the day, the startup arena is a glorious example of new-age audacious entrepreneurs engaged in shaping a new India. It may be only fair that the sector be provided all the support necessary so that it can reach its highest potential and more effectively contribute to India being able to realise the national goals of becoming the world’s 3rd biggest economy and thereafter attain the status of a developed country.

Sumali Moitra is a current affairs commentator. Twitter: @sumalimoitra. Views are personal, and do not represent the stand of this publication.