Terming it as an issue that is critical, Gupta said early moves on corporate governance can ensure smooth sailing for companies.
“And if you start early in terms of how the corporate governance things work, it makes it easier…there was a time when people were only chasing growth and investors also were chasing growth. And they were ignoring governance…but when it hits, it hits you hard,” he said advising founders and entrepreneurs to prioritise corporate governance.
He asserted that Boat has been focusing on corporate governance from day zero, as it “always wanted to be clean”.
Gupta said he is happy that the attention of the startup universe has shifted to this important issue now.
“There is a time in every market or industry where things change and now is the time, when in India people will care about corporate governance which they were not doing so far. It is heartening to see this happening now because it will clean up the system and it will make it easier for the ecosystem to evolve in future,” he said.
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Founders will be conscious of good corporate governance practices, as investors who were silent have become cautious. “So it is a cleanup happening. I’m very happy about that, it is good for the ecosystem,” said the entrepreneur and investor whose stint with Shark Tank India made him a household name and brought instant fame.
On how prolonged the funding winter will be for startups, Gupta asserted that good companies will keep raising capital.
“There is a lot of dry powder even with the investors, so they want to invest. I get a lot of offers from lots of funds where they want to invest in us,” he pointed out.
That said, the funding mechanisms have changed drastically.
“Companies that were loss-making are suddenly feeling that they not getting funding as they used to. There is scrutiny and more push on profitability…for such cases, the funding winter will stay,” he said.
The ‘honeymoon period’ of enjoying investors’ money is over, he emphasised.
Gupta underscored that Boat’s focus on profitability has held it in good stead, so far.
“We used to keep saying, we are a profitable company, and people used to judge us on profits, and not revenue. So at one time it felt like it was negative…but now I feel validated when everyone talks about profit,” he said.
Funding for growth is fine, but startups have to build profitability in their DNA.
“There’s nothing wrong in funding for growth but it can’t be sustainable…1-2 years you made losses, that is understandable…but it can’t be your DNA. The DNA should be profit. You can invest for some time, but again DNA should be only profit,” Gupta said.