Integrity, good governance must for startups to grow in the long term: Amitabh Kant

“We have seen this happening in several startups in recent times. We’ve seen this in a housing company, in a trading company, in a payments company in recent times.. therefore, there are lessons to be learnt from all these examples where these challenges have arisen. It’s important that a clear governance framework (is laid down),” Kant said. He was speaking at a conference on Startup Corporate Governance organised by the Indian Institute of Corporate Affairs.

“We should lay down clear norms of self-regulation from inception to early-stage, from early-stage to growth stage, from growth stage to IPO stage…whether each startup is following or not, and if it’s not, it should question itself,” he added.

Also read | Startup governance: Audits in focus amid financial irregularities at new-age ventures

The Indian startup ecosystem has recently witnessed issues pertaining to lack of corporate governance emerge across edtech platform Byju’s, fintech firm BharatPe, Housinh cofounder Rahul Yadav’s 4B Networks, healthcare company Mojocare, and car-repair startup GoMechanic.

“For all startups, I want to point out, it is very important that there is integrity of the initial founders. It is critical for them to sustain and grow up…for a startup to grow into a top class company in the long term, integrity and good governance is the key,” Kant added.

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While corporate governance at startups has been a hot-button issue over the past year, the episodes of GoMechanic and Mojocare founders confessing to their investors on inflating revenues has underlined the need to keep a close watch on the operations of startups. “We need to embrace the importance of good startup self-governance. We have the opportunity to lead the world in producing exceptional startups…this we’ll be able to do only if we’re able to maintain a certain level of good governance. If there are constant stories of failures and bad governance…then global investors will lose confidence in the Indian startup movement,” India’s sherpa to G20 said.He also pointed out the need for robust and timely financial reporting by startups, which are typically private companies. The recent fallout at Byju’s with its investors, lenders and auditor has emanated from the delay by the company in filing its annual financial statements.