Industry calls for good governance in wake of fall of ‘poster boys’ adding to startup woes

Recent governance issues with well-funded startup giants have added to the bearish trend in the ecosystem. Major players like Paytm and Byju’s are facing regulatory heat, leading to cautiousness among investors for conducting due diligence.

According to Sanjeev Bikhchandani, good governance is crucial for sustainable growth of companies. “You cannot build a sustainable large valuable enterprise if you are not governed well,” he emphasized.

Shrijay Sheth from Legalwiz.in highlighted the importance of financial management and compliance. He stressed on the role of investors in flagging issues in time, especially when they hold a board seat.

Experts suggest that incubators and accelerators need to educate early-stage founders about compliance. Lack of knowledge often leads first-time entrepreneurs to non-compliance in areas like labour-related issues and accounting hygiene.

Corporate governance is essential at all stages of a startup’s journey. DevX Venture Fund CoFounder, Umesh Uttamchandani, stressed on setting the right expectations for organization management and accountability post fundraising. Regular communication with portfolio startups is vital for transparency and accountability.