India's burgeoning startup ecosystem, which consists of over 1,00,000 companies currently, has a constant need for private capital investments. To gain investors' trust and ensuring long term sustainability and growth, focusing on building robust corporate governance policies is of utmost importance, as per Infosys co-founder and non-executive chairperson Nandan Nilekani.
Addressing a startup networking dinner hosted by SaaS platform Qapita in Bengaluru on Wednesday, Nilekani noted that over the last decade, there has been a 5,000 per cent increase in demands by public-market investors pertaining to having strong governance framework, and this trend is expected to flow into private markets as well, especially due to the slew of investor losses that have emerged in recent years due to a lack of governance in top startups.
Some of the shortfalls that plague startups today include patchy risk controls, a lack of succession planning and sound value systems, lax standards on transparency and disclosures, and the culture of overlooking due-diligence in the rush to make deals, as per Nilekani.
In terms of what startups can do to build governance within their firms, Nilekani stressed on the importance of founder cohesion, delayed gratification, and an agreement within the leadership on key strategic issues along with the company's purpose, values and timelines.
"The world is more competitive and technologically-superior now than it used to be. Having a robust governance policy ensures integrity, attracts investments and fosters sustainable growth," he said.
Published 04 October 2023, 15:41 IST