Bad Influence: World Startup Convention Fiasco And Influencers

Influence is a loaded word. It could mean a positive push but a confused state of mind before some undesirable action. In many ways, some of the biggest startup influencers including founders and angel investors in India are finding this out right now with talk about influencer responsibility, misleading content and fake news growing louder in the aftermath of the World Startup Convention.

Unsurprisingly, the Fyre Festival for Indian startups has become a thorn in the side for the associated influencer-founders and celeb entrepreneurs.

Indeed, there could be serious repercussions for many influencers involved in the World Startup Convention, if there is a major investigation into the allegations raised by attendees of the event and its sponsors.

At the moment, World Startup Convention founders have been named in an FIR filed in the Gautam Budh Nagar police station, as per sources close to the authorities, who declined to be named. However, founders Luke Talwar and Arjun Chaudhary have denied the charges and also said they would file a complaint against disruptors of the event.

Whatever the final outcome of this police probe, many have called the World Startup Convention a sham and the involvement of influencers has raked up a fresh debate. Primarily there are concerns about the role and responsibility of influencers in such a case.

The WSC’s ghost might very well linger on and haunt the likes of Ankur Warikoo, Prafull Billore, Chetan Bhagat, Raj Shamani and others who were roped in for the event’s promos.

The fact is that India’s influencer economy was already in the midst of some undesirable attention. The Indian government looks to frame regulations for influencers in certain sectors, including financial services after issues at companies such as Vauld and other investment platforms last year.

And now the World Startup Convention has even prompted many to use the ‘fake news’ label to describe influencer content. Could there be more trouble brewing for India’s influencer economy?

When Influencers Become Bad Influence

Critics, including other startup founders, believe that the drive to earn more money has made many influencers forget something very fundamental — their influence is built on honesty and relatability.

“The reason people click and buy from influencers is because they have a very high trust factor. Influencers stake their face and reputation in exchange for a brand or a startup, so the audience trusts their content more than regular ads,” says the founder of a influencer-focussed ecommerce platform.

Even one bad call can tarnish the reputation built over a number of years, and it can also damage future revenue streams. This is also why creators are increasingly cutting down their reliance on brand collaborations for revenue.

Bengaluru-based D2C brand Bambrew, which makes sustainable packaging, spent over INR 50 Lakh to become a sponsor for the World Startup Convention. Now, it is preparing to take legal action, and also plans to name the influencers that promoted the event.

“You have some influence and credibility. People look up to you. You should have been careful. You are an idol for young founders,” Bambrew founder Vaibhav Anant told Inc42 earlier.

Warikoo has come under criticism on social media for the World Startup Convention promos, even though the former Groupon India CEO and Nearbuy founder has claimed that the deal signed with the event did not allow such use of his video. This is the second major controversy for the author and angel investor in under a year with the previous one involving Vauld.

Warikoo told Inc42, “We had done an Instagram collab reel on 19th January where I spoke about the importance of funding for a startup and how this event could be a good opportunity to explore the same and meet other founders.”

Warikoo, who has over 2.7 Mn followers on Instagram and Twitter combined, added that the terms of the collaboration were clear that the video will not be used for promoting the event.

“While they took down ads of the video when we asked them to, the video was still used on their website and in all of their communication. In January itself we distanced ourselves from the event. They repeatedly asked me to be present for the event, which we declined.”

Like Warikoo, Shamani also claimed that his team was trying to get the World Startup Convention to delete his video from their website, but there was no response from the team behind the event.

Shamani also stated that he was supposed to do one video for Instagram but this post was then reused by the WSC team. Shamani said his team contacted the World Startup Convention in February to take down the posts that used his video for promotions, but never got any response.

While Inc42 has seen some screenshots of messages exchanged between Shamani and his team, we could not independently verify whether the World Startup Convention team had indeed shared any response with Shamani or Warikoo.

One could also question whether influencers are simply reading a script or doing some due diligence before making claims about any brand. It’s a matter of responsibility given how large the influencer economy has grown.

Scrutiny, On Its Way

Like we said, this is the second major controversy in recent months surrounding Warikoo, who was also under the spotlight for his role in the Vauld saga.

The suspension of operations by asset-backed lending and borrowing platform Vauld amid the global crypto crash in July last year had raised questions about the credibility of influencers, particularly those who are promoting investments and financial products.

Singapore-based Vauld suspended operations last year and since then customers have faced uncertainty over recovering their invested amount.

Social media influencers such as P.R. Sundar, Ankur Warikoo, Akshat Shrivastava, and Anish Singh Thakur were questioned by noted investors such as Ashar Jafri for promoting Vauld, and whether they had added adequate disclaimers in their promos. Except Warikoo, the others primarily analyse investment opportunities on social media.

Following this, reports emerged that SEBI is also reportedly looking at mandating registrations for social media influencers, on the lines of rules governing registered financial advisors.

Largely known for breaking down complex financial jargon into simple terms, ‘finfluencers’ have lately come under fire for unsound financial advice to millions of viewers.

Funding festivals such as the World Startup Convention are not a financial service. But the pitch for any funding festival does involve a kind of yarn that investors are just waiting with open wallets to back the startup. Simply claiming that investors would be present is no guarantee for funding, but this can often appeal to young founders who may be in the market for funds or students who want to expand their network of investors.

It’s especially true now after the popularity of Shark Tank India, which paints a very simplistic picture of the fundraising process for startups.

This is indeed the typical profile of the audience as seen by Inc42 during its visit to the World Startup Convention.

Additionally, SEBI had concerns about the ‘detrimental’ impact of such influencers during startup listings and IPOs especially given the current market volatility.

At the time of the Vauld controversy, Warikoo acknowledged that creators like him need to be more careful about whom they are promoting and how they do promotions through their content. But now a few months later, this problem is biting Warikoo’s reputation again.

It was reported then that Warikoo was paid INR 4.47 Lakh for the Vauld promo, but it’s not clear how much he was paid for the WSC engagement. As per sources in the industry, A-list influencers such as Shamani and Warikoo can charge anywhere between INR 6 Lakh to INR 10 Lakh per Instagram branded content post.

Who’s To Blame?

While some blame can definitely be apportioned to the event, one also wonders whether the influencers themselves jumped the gun when it comes to some of the claims in the video — even if it is just a one-time collaboration.

For instance, the videos say the World Startup Convention will host 75,000 startups and 1,500 venture capitalists and 9,000 angel investors. This is more or less the entire startup ecosystem in India, including startups that are no longer around.

And the promos also said that startups can even get deals such as Series A and beyond.

As someone who founded Nearbuy and then raised funds for the company, Warikoo would be more than familiar with how funding at these stages works. Pitch sessions at funding festivals typically are only for seed or pre-seed startups.

Besides, no investor would commit to any Series A round at an event, without any due diligence. This is not just unheard of, but also impossible since even a commitment takes some amount of evaluation of the business.

Which is why many consider the promotions for World Startup Convention and others of its kind fake news.

“Warikoo, MBAChaiwalla [BIllore] and Shamani have millions of followers. It’s more than some news channels. And we have already seen people getting in trouble for spreading fake news during Covid. Even such events that make tall promises should be considered equally harmful,” a Delhi-based angel investor added.

The Responsibility Question

Influencers are the new tastemakers in today’s India and trust is a major factor behind the meteoric rise of some creators. Not only are brands leveraging their reach, but influencers and creators are developing brands and ecommerce stores of their own.

Online consumers prefer the raw takes and unpolished reviews from influencers rather than cold ads. Brands see influencers as a sales channel, while consumers see them as idols and role models.

According to a survey by digital marketing agency iCubesWire, 35% of the nearly 1,500 respondents said their buying decisions were driven by influencer posts. Besides, 43% of respondents at least checked out products or services recommended by influencers.

That just goes to show that influencers bear a lot of responsibility for the brand promotions as well as everyday content that they post. Promoting the World Startup Festival without question is one thing, but ignoring the concerns about it being a sham or acknowledging it publicly is only making critics angrier.

Like investors with their due diligence and news outlets with fact-checking, influencers need to have a higher bar for what they promote, especially when their audience is impressionable young minds.