Valuations-over-values mindset can sour India’s startup story.

The success of startups has been a notable achievement for India in the past decade, showcasing unique innovations tailored to Indian needs and adapting global concepts such as cash on delivery for e-commerce. Indian entrepreneurs have utilized their ingenuity, skills, and the country's robust digital infrastructure to build significant companies that have delighted consumers and enriched investors.

However, recent events have cast a shadow over the startup success narrative. Challenges such as failing business models, discrepancies in market estimation, and macroeconomic factors impacting businesses are not uncommon, even affecting global giants. Yet, it is disruptions and failures stemming from weak corporate governance that raise serious concerns.

For instance, Byju’s, once valued at $22 billion and aiming to revolutionize education, witnessed a drastic decline in valuation to under $250 million due to governance issues, leading investors to call for the founder's removal. Similarly, fintech major Paytm faced restrictions from the RBI on its banking arm due to compliance issues, causing its stock price to plummet until it obtained a third-party app license.

These instances contribute to a growing list of early-stage companies facing setbacks due to governance failures, including BharatPe, GoMechanic, Housing.com, Infra.Market, and Trell. While innovation and rapid growth are essential, they should not come at the expense of disregarding laws and regulations.

Weak corporate governance extends beyond startups to large Indian organizations, as evidenced by incidents like the Satyam scandal, IL&FS collapse, Yes Bank crisis, DHFL scandal, and controversies within the NSE. The common thread among these is poor governance practices, highlighting the need for transparent, accountable, and responsible management.