Given that Byju’s and Paytm, two of the biggest poster boys of the new-age business sector, are facing challenges, and also not so many others, FY24. It may be tempting to describe it as a “disastrous year” for India’s startup industry. Last year, significant funding was announced.
However, to a degree, FY24 laid the foundation for the long-term sustainability and continued dynamism of India’s startup sector. India’s startup sector is already one of the largest in the world in terms of number of startups. This year is a warning for startup founders that a cavalier approach to governance and oversight issues will not work, and that taking a cavalier approach to these issues can be costly. This year was a great wake-up call. .
“Governance” has emerged as a buzzword in the Indian startup field, and it was mentioned prominently in the CII report released in March 2024. This is the best thing that has happened for this field, which didn’t have the means to do so. “Evaluation” was important. Increasing recognition that an ecosystem is only sustainable if it has as its fundamental pillars robust systems and processes, and effective monitoring mechanisms, will help the new era of business. Good news.
So far, the desire of startups to become unicorns and decacorns twice as fast has been so strong that the focus on building strong governance structures, which is a prerequisite for institution-building, has become more important than how fast to do so. was often considered to be a lower priority. Startups can take a big hit in pay. Perhaps by spending more time on governance issues, startups would have less time to spend doing what they need to do to shore up valuations to provide investors and founders themselves with big early exits. It is likely that it will decrease significantly.
They may be in the spotlight for the wrong reasons, but Byju’s and Paytm are not the only companies with governance issues. Governance is a weak point in the startup ecosystem, but the issue was ignored until Byju’s and Paytm’s problems became impossible to ignore.
For example, in December 2021, the Department of Education issued an unprecedented advisory asking citizens to exercise caution when doing business with edtech companies. Following the ministry’s move, several leading companies in the edtech field, including Byju, hastily came together to form the India Edtech Consortium (IEC) as a self-regulatory body. Nothing has been announced by IEC since the recent dispute between the investor group and Byju’s founders.
In 2025, it is hoped that this growth sector will not return to its previous ways. The investor community will need to take the lead in this regard, as actions taken to strengthen the governance mechanisms of portfolio companies will have the greatest impact on ensuring startups have a strong core. .
Undoubtedly, Indian startups have the potential to play a catalytic role in advancing the goals of a developed India. If weak governance structures prevent local start-ups from doing justice to the belief that people are resting on their ability to make a difference, then over 1.4 billion Indians (about 18 percent of the world’s population) ) would be unfortunate. .
(Sumali Moitra is a current affairs commentator. X: @sumalimoitra.)
Disclaimer: The views expressed above are the author’s own. Does not necessarily reflect his DH views.
