DailyPost 2469

Are the startups doing fine? Has the fairy tale story ended, with first sunshine? It seems to the same oft repeated story in this country, where hype is used to prove success, finally getting unstuck. Did we create the sub-prime loans type of a situation in the Indian startup ecosystem? Where we have come from can be researched upon, and also what ails the startups, but what is most critical at this juncture is whether we have wherewithal to come out of this vexed up existence. Are we ready to come clean out on what has transpired so far, take it as beginning and try and overhaul the whole startup machine once and for all?

While the government and founders celebrated India becoming the third biggest stratup space and unicorns getting created by the dozens, and we being at the cusp of transformational change, the story turned out awry in no time. As is our DNA, if anything goes haywire, our first response is to keep away from it. We don’t ask questions to the people who have made it happen, might be because we are convinced of the fact that we will not be able to pull off a solution. Corporate governance issues are the root cause to bring Indian startups where they are, has been opined by Nithin Kamath of the Zerodha fame.

Nearly every startup has been selling a story of the Peter Theil variety of the Zero to One type, in reality it would difficult even dozens of that variety. Funding, funding and funding has been the mantra of the Indian startup fraternity. Bootstrapped lost the flavor of the day completely, when world’s greatest businesses were created in that manner. If funding is the goal, then valuation, is the route. So, the whole game was to reach a valuation figure, which could facilitate their funding. The formula of creating that magical figure was yours. That was the magic which has got broken, it was bound to.

As per Nithin Kamath, corporate governance issues would be traditional frauds now, but ”misreporting things to justify the stories founders have oversold to raise capital.” The stories are out there in the open from BharatPe , to Byju’s to Mojocare to GoMechanic and endless more. A booming ecosystem can survive and sustain only on good corporate governance and oversight. Where did the figures come from, and who were the experts who validated the figures and narrative in the hyped startup venture capital system. By some statistical jugglery, the founders and VCs were happy with the overestimation of the Indian market, believing in a Total Addressable Market, TAM, that did not exist. Heart of heart they wanted to make hay while the sun shines. Having known the issues and also the fact that startup are must for country’s economy, growth and technological trajectory, who is ready to bell the cat?

Sanjay Sahay

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