India must embrace the significance of good start-up self-governance if it wants to continue to be a vibrant and energetic start-up ecosystem, Amitabh Kant, G20 Sherpa, said on Saturday.
“We have an opportunity to lead the world in producing exceptional start-ups that inspire and influence at a global scale. This we will be able to do only if we are able to continuously maintain self governance of our start-ups”, Kant said at Startup Corporate Governance National Conclave, organised by the Indian Institute of Corporate Affairs (IICA).
Kant asserted that he was a great believer of good self-governance by start-ups and not on regulations from outside.
He suggested that clear norms of self-regulation are laid out from the inception to early stage to growth stage and from the growth stage to IPO stage. “Each start-up should question itself if it is not following the laid out self regulation norms,” he added.
Kant also stressed the need for start-ups to recognise the importance of timely and accurate financial reporting.
Right governance
He highlighted that constant stories of start-up failures, bad governance, and constant fall in values would lead to global investors losing confidence in Indian start-up movement.
“With right governance practice, start-ups can achieve huge progress. As we concentrate fostering the growth of start-up ecosystem, it is imperative to prioritise good governance, build trust with stakeholders and create culture of transparency and accountability”, Kant said.
The G20 Sherpa noted that there are aberrations, but care has to be taken to ensure this does not happen.
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“There should be a very strong regulatory framework. It should be a self-regulatory framework. If government starts getting into regulations, it will be a sad day. Government is not equipped to do it. The more government does it, it will kill innovation. The minute government gets in, we kill innovative spirit. That should not be our endeavour”, he added.
On the occasion, Kant along with BSE Managing Director & CEO Sundararaman Ramamurthy and former SEBI Chairman Ajay Tyagi released a Start-Up Governance Playbook, prepared by IVCA in partnership with Deloitte India.
The playbook provides a holistic framework of different corporate governance recommendations for start-ups to follow and streamline their journey to success.
India has seen an astounding rise in start-ups in the last six to seven years. There are now 98,000 registered start-ups, 400 plus incubators and 108 unicorns.
India has established itself as one of the fastest growing start-up nations.
Kant also said that all start-ups should have integrity of the initial founders. “To sustain and grow up, start-ups must grow and evolve into top class companies. That has to be its objective. It can’t remain a start-up all its life. To emerge as top class companies, integrity and good governance are the keys,” he said.
Sachin Paranjape, Partner, Risk Advisory, Deloitte India, said that the playbook attempts to map Governance building blocks throughout the journey of startups to help them get better prepared. “We hope the founders, investors, and the boards utilise this resource guide to strengthen the foundation of the ecosystem as the Indian economy produces many more unicorns for the world”, he said.