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Mumbai: The pursuit of growth and valuation at all costs can sometimes lead to misgovernance in startups and if India is to have a story of constant growth, there should not be any room for lapses, said India’s G20 Sherpa Amitabh Kant. He added that startups should adhere to a self-regulating ecosystem with a governance framework.
“Today’s startups are tomorrow’s great companies…Infosys was also a startup once. If you want a great company, we need to avoid headline-grabbing valuations. As a startup, we need to avoid endorsing Lionel Messi for instance. This is not called for. There’s no need to do excessive branding… good governance is key to long-term value creation,” Kant said at the Startup Mahakumbh event on Monday.
His comments come amid instances of corporate governance lapses at various startups including Byju’s, which was once one of India’s biggest startups with a $22 billion valuation. The troubled edtech startup — now valued at under $250 million — is mired in a series of crises including a dispute with its lenders and investors. In fact, shareholders recently voted to oust Byju Raveendran as the CEO of the company and revamp the firm’s family-run board. Rather than focusing on developing a good product, Byju’s had spent several thousand dollars on marketing to build its brand, say analysts, and in 2022, when the company had been cutting jobs, it announced soccer star Lionel Messi as the global brand ambassador of its social impact arm.
Startups must also ensure orderly exits for venture capital investors who provide the fuel for their growth, Kant said.
“Today’s startups are tomorrow’s great companies…Infosys was also a startup once. If you want a great company, we need to avoid headline-grabbing valuations. As a startup, we need to avoid endorsing Lionel Messi for instance. This is not called for. There’s no need to do excessive branding… good governance is key to long-term value creation,” Kant said at the Startup Mahakumbh event on Monday.
His comments come amid instances of corporate governance lapses at various startups including Byju’s, which was once one of India’s biggest startups with a $22 billion valuation. The troubled edtech startup — now valued at under $250 million — is mired in a series of crises including a dispute with its lenders and investors. In fact, shareholders recently voted to oust Byju Raveendran as the CEO of the company and revamp the firm’s family-run board. Rather than focusing on developing a good product, Byju’s had spent several thousand dollars on marketing to build its brand, say analysts, and in 2022, when the company had been cutting jobs, it announced soccer star Lionel Messi as the global brand ambassador of its social impact arm.
Startups must also ensure orderly exits for venture capital investors who provide the fuel for their growth, Kant said.
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