Apart from other things, founders need IQ, EQ and GQ: boAt cofounder Aman Gupta
The comments come when many stakeholders in India’s startup ecosystem have shared their takes on the issue
Over the past few months, discussions around corporate governance lapses at Indian startups have intensified
According to boAt cofounder and CMO Aman Gupta, startup founders will be measured on not just their IQ or EQ, but also their governance quotient, alluding to the surging incidence of corporate governance lapses across India’s startup ecosystem.
“Apart from other things, Founders need IQ, EQ and GQ. Governance quotient now will become more important than ever and it’s good for the ecosystem that Corporate Governance is taken seriously from Day Zero,” said the boAt CMO in a tweet on Saturday (July 8).
The comments from Gupta come at a time when many prominent stakeholders in India’s startup ecosystem have shared their takes on the issue.
While it is hard to pinpoint the source of corporate governance issues, Zerodha cofounder and CEO Nithin Kamath said in June that the venture capital (VC) ecosystem is as much to blame for these issues as the founders.
Kamath put the blame for increasing corporate governance issues at Indian startups on the overestimation of the Indian market’s size by founders as well as VC firms.
“While India is a fast-growing economy that will hopefully be an economic superpower in the future, it isn’t that today. The size of the target market (TAM) by revenue needs to increase significantly to justify the valuations of the startup ecosystem in the country,” said Kamath in one of his tweets on June 29.
The Zerodha CEO added that believing in a TAM that does not exist and the subsequent cash burn from chasing unrealistic targets was the root cause of the problem, with subsequent issues stemming from it.
Similarly, G20 Sherpa and the former CEO of NITI Aayog, Amitabh Kant called on Indian startups to build strategies to improve corporate governance and create benchmarks not only for India but also for other G20 nations.
Kant said that it was important for startup founders to adhere to best practices in corporate governance and financial management at the grassroots level and not consider those as an afterthought.
“For India to emerge bigger and stronger, maturing of Indian startups is mandatory,” said Kant at the event in May.
Corporate Governance Issues Haunt Indian Startups
Over the past few months, discussions around corporate governance lapses at Indian startups have intensified, given the number of cases of alleged misconduct, financial irregularities and incorrect financial reporting jumping over the past few quarters.
Since the start of this year, events at GoMechanic, Rahul Yadav’s Broker Network and Mojocare have shaken confidence in India’s startup story. GoMechanic and Mojocare’s founders were accused of allegedly fudging sales figures, while allegations of siphoning money out of Broker Network were leveled against Yadav.
Besides, the likes of BYJU’S, Trell, Zilingo and BharatPe have also been in the public eye for alleged corporate governance lapses and misconduct.