Good governance more important than highest market capitalization for startups: Industry
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New Delhi (Uttam Hindu News): Some Indian digital companies like Byju’s, which was once valued at $22 billion, have run into corporate governance issues. Top industry leaders say running a clean company with integrity and good governance is more important than reaching the highest market capitalisation.
Experienced investor and founder of Info Edge, Sanjeev Bikhchandani, in conversation with Kunal Shah, founder of Cred, a leading company in the fintech sector, said that the role of the company leader is not to sell the stock, but to ensure that when someone else sells his stock. If it wants, there should be enough buyers. “A leader needs to build the company for all shareholders, and make sure everyone is rich, not just themselves,” he told Shah on the latest episode of “CRED Curious.”
Shah said founders need to build trust by talking to co-founders, colleagues and shareholders. He said, “The principles of trust are integrity, continuity, competence, benevolence; The presence of all does not guarantee trust, but the absence of any creates distrust.” According to him, one person’s mistake affects the entire ecosystem. Industry veterans argued, “There will be many more profitable and larger Indian Internet companies in 10 years. We are all participants in the ecosystem and every error in ability, judgment, behavior affects us all.
“Running a clean company with honest practices and good governance is more important than having the highest market capitalization.” Bhikchandani advised founders to take the company public only when profits are sufficient to support it. At the same time, Shah suggested that companies should go public only when they have run for eight quarters like a public company.
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