Don’t Expect Investors To Teach Ethics: Pine Labs CEO Amrish Rau On Corporate Governance Lapses

According to Pine Labs CEO Amrish Rau, though investors are supposed to give a sense of direction, they can’t be expected to teach founders ethics and corporate governance.

Rau was speaking at Inc42’s MoneyX investor conclave as part of a panel discussion with Peak XV Partners MD Mohit Bhatnagar and Rajat Tandon, the president of the Indian Venture and Alternative Capital Association (IVCA).

“Governance is a very interesting topic. When you look at what has happened in the Indian startup ecosystem with the cases which have gone rogue, it’s not governance, it comes down to basic ethics. If my parents couldn’t teach me that, no investor can teach me that,” said Rau.

The Pine Labs CEO added, “Some of these cases which are out there are so worrisome, and then to point out and say it is the investors’ fault to identify these things? I just cannot agree with that at all.”

Talking about the kind of relationship the investor and the founders should have, Rau and Bhatnagar noted that the founder should be the ‘pilot’, and the investor should be the ‘air traffic controller’ when it comes to running a startup. The duo also stressed the importance of building trust at an early stage.

“When you receive a call on a Sunday evening from your founders, talking about how they don’t know what to do anymore, that’s when you know you’ve built trust with your founders,” said Bhatnagar.

For some context, Pine Labs and Peak XV (erstwhile Sequoia Capital India) have been partners for more than a decade now. Peak XV was one of the early investors in Pine Labs and was also on the captable of fintech startup Citrus Pay, a startup cofounded by Rau and Jupiter cofounder Jitendra Gupta. Citrus was sold to PayU in 2020, following which Rau joined Pine Labs as CEO.

The discussion around corporate governance and the relationship between the founders and investors comes as several instances of lapses in corporate governance have come to light. Several big-name Indian startups have been implicated in such cases, including Mojocare, GoMechanic, BharatPe, Zilingo, BYJU’S and Trell.

The investors of these startups have, almost ubiquitously, started a forensic audit, and in the cases of GoMechanic, Mojocare, BharatPe and Zilingo, either ousted the founders or told them to take the back seat.

Presented in partnership with Peak XV Partners, supported by Venture Catalysts, JSA, Samsung, IVCA Associates, Indian Angel Network, JIIF and Marwari Catalysts, MoneyX is aimed at bringing the driving forces of the Indian startup ecosystem under a single roof.