The Confederation of Indian Industry (CII) has created a set of guidelines for startups to improve how they are managed. It offers advice on corporate governance tailored for startups and provides guidelines for the different stages of a startup’s growth.
The guidelines include an online tool for startups to assess their governance practices and track their progress over time. This tool helps startups measure and improve their governance practices.
The guidance is divided into four stages: inception, progression, growth and going public. Each stage focuses on specific governance principles important for that phase of the startup journey.
This initiative comes at a time when concerns have been raised about governance standards in startups like Byju’s, BharatPe, GoMechanic, Groyyo, Mojocare and Zilingo over the past 12-18 months. There have been reports of governance failures in well-funded startups, which have made investors hesitant to invest large amounts.
Corporate governance in India refers to the rules, practices, and processes that guide and control a company, ensuring it operates fairly and in the best interests of everyone involved.
Kunal Bahl, chairman of CII National Startup Council and Co-founder of Titan Capital and Snapdeal, emphasises the importance of good corporate governance for startups. He believes that while startups thrive on innovation and fast growth, strong corporate governance improves decision-making and fosters long-term strategic thinking.
Chandrajit Banerjee, director general of CII, notes that the guidelines cover key areas for startups to focus on regarding governance and introduce innovative concepts to enhance overall governance standards for startups in India.
Amitabh Kant, India’s G20 sherpa, highlighted the importance of good governance practices for startups to become successful large companies. He mentioned the need for proper audits and a competent chief financial officer (CFO), as well as the increasing trend of early and mid-stage startups hiring CFOs and investors demanding financial controls across portfolio firms.
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