Commerce and industry minister Piyush Goyal on Thursday exhorted start-ups to consider putting in place some standards, “maybe for self-regulation”, to bring in greater transparency in the way they conduct their businesses and report their financial status.
Any such standards will also make life easier for even auditors, who can then declare to the world the transparent governance and ethics system that is driving the Indian start-ups, the minister said. Issues like misreporting of revenue, data frauds or tax evasions by start-ups need to be nipped in the bud, otherwise the country will “get a bad name”, he said, without naming any start-up.
Recently, BharatPe alleged that the family of its co-founder Ashneer Grover “engaged in extensive misappropriation of company funds”. Grover has strongly refuted such charges. The minister acknowledged that the Indian start-up system has remained “largely insulated” from such issues so far with only few cases and expressed hope that “these don’t become the norm in the years to come”.
Goyal was speaking at the Global Unicorn Summit, organised by the industry ministry and the CII. He also suggested that domestic start-up founders should have a greater share in the company’s growth story, going forward. “The founders need to respected more and they need to have something in their pockets left for them, as the companies grow,” he said.
“Whether it’s a claw-back mechanism or preferred equity, whatever may be the form, I think our founders need to get their real share in the growth story that they deserve… I do hope investors will keep that in mind. I am given to understand that there are mechanisms in Silicon Valley where they protect the interest of the original generator of the ideas,” Goyal said.
He called on home-grown start-ups to incorporate in India and list here as well, with an assurance that the government will further prune the burden of compliances and create an even more lucrative environment for these entities to grow and, if necessary, exit easily as well if things don’t work out.
He also asked start-ups to look beyond the metros and expand presence in tier-II and tier-III cities and exhorted investors to ensure that the intellectual property rights of these entities remain in India.