At a time when developments surrounding Byju's and Paytm Payments Bank have rocked the Indian start-up ecosystem, top investors are stressing on the importance of good corporate governance, ensuring complaince and urging investors to proactively stay informed and engaged with their portfolio companies.
"Investors cannot just be shocked. They have to be on top of their own (portfolio) companies. I don't think there should be any surprise to an investor if something goes wrong in a company. Investors have to remain engaged all through their journey. I think when founders take money, they have to be custodians of investors' money. It goes both ways," Sanjay Nayar, Founder and Chairman of Sorin Investment Fund told Moneycontrol.
Info Edge Founder, Sanjeev Bikhchandani, while stressing on the importance of ensuring good corporate governance, claimed that the majority of Indian start-ups are compliant and practice good governance.
"I think governance is very important. At the same time, I would like to say that 95 per cent of Indian start-ups are well governed, they are honest, they are compliant," he said.
In 2023 alone, issues of misgovernance and alleged fraud have come to light at start-ups such as Mojocare, GoMechanic, and 4B Networks. In, November 2023, Info Edge, the largest shareholder of 4B Networks Ltd, accused the company and its Founder Rahul Yadav of entering ‘suspicious transactions’ with 4B Realtech Pvt Ltd, a company allegedly started by an associate of Yadav.
Bikhchandani said, "As an investor, we have always been vigilant and compliant. We continue to do the same. But we are cognizant of the fact that we need to be more careful going forward."
Also read: A dishonest founder will find his way around regulation, governance measures: Sanjeev Bikhchandani
Sorin Investment's Nayar and Info Edge's Bikhchandani were speaking to Moneycontrol on the sidelines of the curtain raiser of the Startup Mahakumbh event. The mega start-up show which will look at 10 start-up sectors is scheduled to be held in March.
Prashant Prakash, Founding Partner of Accel Partners said, "The whole idea of looking at a broad range of 10 sectors is to ensure that people understand that start-up ecosystem is not just edtech or D2C. Of course, we need to make sure that we up our game when it comes to governance and building profitable start-ups and so on .But I think it is also important that there are start-ups emerging in areas which were earlier not considered as start-ups."
"I think one or two areas where we had challenges, need to be addressed. But at the same time, the breadth and depth of the start-up ecosystem is so large, that these 10 pavilions (in Startup Mahakumbh) will showcase and amplify (the same)," he added.
The Startup Mahakumbh will be held from March 18-20, 2024, at the prestigious Bharat Mandapam in Pragati Maidan, New Delhi. It is being supported by the Ministry of Commerce and Industry and organised by ASSOCHAM, NASSCOM, Bootstrap Incubation & Advisory Foundation, TiE and Indian Venture and Alternate Capital Association (IVCA).
Also read: Startups are New India’s backbone, it's our time under the sun: Union Minister Piyush Goyal
There will be multiple pavilions where participants will have the chance to explore products and brands in the sectors of AI, SaaS, D2C, agritech, fintech, deep tech, biotech and pharma, B2B manufacturing and so on. Executives from the start-up industry, such as PeakXV's Rajan Anandan, Zomato CEO Deepinder Goyal, Razorpay's Harshil Mathur and others are expected to attend.
Shri Sanjiv, Joint Secretary, DPIIT, said, “We are hoping to see 1,000+ start-ups, 1,000+ investors, 500+ incubators at the event. We have also invited 21 start-up bridge countries to actively participate and engage with start-ups and inspire them during Startup Mahakumbh".
Also read: Zomato CEO Deepinder Goyal urges established businesses to fund startups without seeking ownership
“We are really excited to meet the start-up ecosystem at the Startup Mahakumbh and they can count on Invest India to be their support. We are here to support and reiterate on how Invest India can help in the development and flourishing of the Indian start-up ecosystem. I believe that entrepreneurship and policy is the way for us to grow," said Nivruti Rai, MD & CEO, Invest India.
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