Comments
As India strengthens its position as a global economic powerhouse, start-ups must set new standards in corporate governance and financial management, leaving no room for lapses on this front, Amitabh Kant, G20 Sherpa and former NITI Aayog Chief Executive, said on Monday.
The call to action comes amidst the nation’s drive towards sustainable growth and enhanced investor trust.
Asserting that start-ups are “national assets”, Kant exhorted the startup community in India to aim for becoming the No. 1 national for start-ups in the next five years. Currently, India has the third largest start-ups ecosystem in the world with nearly 1.2 lakh registered start-ups.
“Corporate governance is key. If there is no corporate governance, government and regulators will step in. This is a reflection point for start-ups,” Kant cautioned assembled start-ups at the first-ever ‘Startup Mahakumbh’ being held in the Capital.
Building trust
Kant said that the onus is now on startups in India to build trust. Startups approach of “valuations at all costs” leads to misgovernance, he said.
He reeled out several names including Byju’s, Zilingo, Mechanic, housing.com, infra.market and pointed out as to how all of them collapsed due to governance issues.
“There should be no lapses. Start-ups must adhere to a self-regulating ecosystem with a governance framework, and this will bring in transparency and ethical behaviour,” he said.
Kant highlighted that both regulators and government will get in if there is no self-regulation.
“If you want to create a vibrant start-up movement, there should be no government intervention and there should be no regulator intervention. You all know that government and regulator stifle innovation. You must understand that innovation is always ahead of regulation,” Kant added.
Kant also said that during the G20 Summit hosted last year under Indian Presidency, the Startup20 made a recommendation on corporate governance for start-ups. “My suggestion to all of you is just adopt it as bible in addition to following other rules and regulations,” he said.
Speaking at a plenary session at Startup Mahakumbh, Sanjay Nayar, Co-founder, Sorin Investments and Senior Vice-President, Assocham, said: “For me, the biggest takeaway over the evolution of the last many years is if you want the start-up and scale up to work, I think that a lot of focus has to come around early on in institutionalising these start-ups, having the right boards and governance and the right practices. Culture and values will matter more than valuation”.
PENSION, INSURANCE FUNDS
Kant also said that time is ripe for pension funds and insurance companies to start investing in start-ups.
Nayar also in his session highlighted that the whole pension and insurance segment, had the highest quality and longest duration capital in rupees.
“Ultimately, you have to change regulations slightly by allowing them to invest 5 per cent in public equities, 1 per cent in private capital, that’s how it starts.
“Economies like Chile, even Malaysia built the country on local savings. So, we need to focus more on harnessing local savings and for that finally, you need local institutionalised managers,” he said.
China has 8,000 of them, while India probably has 180, he noted.
Comments
COMMENT NOW
