The Indian startup ecosystem has come a long way equipped with billions of dollars in capital that is being poured into innovative ideas. About $4 billion was raised in the June-September 2024 quarter. Powerful governance frameworks are an option and also necessary for long-term success.
Many Indian startups were swept up by the allure of rapid growth in the early stages. The ecosystem saw a boom and driven by success stories like Walmart’s acquisition of Flipkart in 2018 and the rise of popular entrepreneurial platforms like Shark Tank India. The excitement was palpable and the fear of missing out (FOMO) became a driving force. However, governance often took a back seat. The narrative became more important than the numbers and ethical oversight was frequently sidelined in the name of expansion.
This growth-at-all-costs approach may have worked for a few rare cases and the long-term sustainability of such models is questionable. The cracks in approach are beginning to show as the Indian startup scene matures. Poor governance has led to numerous issues such as founders reluctant to disclose detailed financials, legal disputes and cases of fraud. Early-stage investors were initially blinded by high-level metrics and flashy pitches.
The truth is that the governance is not just about ticking boxes, but it is about embodying the spirit of responsibility. Startups must respect the trust placed in them. If the cost of acquiring customers spikes due to rising keyword prices, a responsible company should immediately pivot its marketing strategy rather than blindly following old plans.
Investors are looking at governance as a reflection of management quality. A startup that prioritizes governance stands out. It does not signal a mature approach to business, but it also strengthens the company’s financial position as well as boosts investor confidence. This can lead to higher valuation multiples.
It is a regulatory checkbox, but it is also the backbone of sustainable growth. Indian startups must recognize that governance starts at the top. Making transparency and ethical business practices a priority. This earns the respect and trust of investors, peers and customers.
