Startups must comply with self-regulating ecosystem: Amitabh Kant

Startups: Indian startups must comply with a self-regulating ecosystem for ushering in transparency and ethical behaviour, according to G20 Sherpa Amitabh Kant.

Speaking at the StartUp Mahakumbh on March 18, the former NITI Aayog CEO said chasing valuation at all costs sometimes causes misgovernance.

If India wants to create a vibrant startup movement, there should be no regulatory intervention, Kant said since “government regulation stifles innovation”.

The country has been able to create the third-largest startup ecosystem in the world, with the India facing a challenge to make it the number one nation of startups in the world in the next five years.

"Startups must adhere to a self-regulating ecosystem governance as this will bring in transparency, ethical behaviour in our statup ecosystem," he said.

Noting that startups are 'national assets', Kant said they must bring in best practices. Following these best practices will ensure startups trust their stakeholders, attract investors and finally attain sustainable growth.

"It is very important that startups should focus on growth...(but) valuation at all cost sometimes leads to misgovernance," he noted.
Kant also spoke about the challenges some startups in India faced recently, emphasising that all startup leaders leaders must ensure proper financial management and audit.

"In my experience, I have witnessed startups flourishing, while others like BYJUs, GoMechanic, Housing.Com and Trell faced challenges. There must be good corporate governance in place.

Kant noted that there should be no government intervention if India looks to create a vibrant Indian startup movement.

"All of you entrepreneurs are innovators. As you grow and expand, you must ensure that there is proper financial management and a proper audit. Self-regulation is the key," he said.

Kant also stressed on the investment of funds from the Life Insurance Corporation (LIC), pension funds, and HNI's into the Indian startup movement.

He pointed out that Indian startups have recorded a 20 times jump in funding, almost 12 times growth in the number of investors and an 8 times increase in the number of incubators, adding that there is a requirement for focusing on exits for venture capital investors.

Kant also suggested that India needs to learn from countries like Israel as they started innovating military tech, cyber security and defence equipment.

"By initiating procurement and aggregating demand, the Israeli government catalysed growth for startups, ultimately driving economic expansion. Growth comes when the government is the first buyer," he said.

(With PTI Inputs)