Nithin Kamath, the Founder and CEO of Zerodha, has raised concerns about the worsening corporate governance issues in Indian startups, attributing equal responsibility to both founders and venture capitalists (VCs).
Kamath emphasized that while founders are often blamed for these issues, the VC ecosystem shares an equal portion of the responsibility. He pointed out that the overestimation of the size of the Indian markets by both founders and VCs lies at the root of the problem.
In a tweet, Kamath stated, “While India is a fast-growing economy that holds the potential to become an economic superpower in the future, it is not there yet. The size of the target market (TAM) by revenue needs to increase significantly to justify the valuations of the startup ecosystem in the country.”
Kamath’s remarks shed light on the importance of aligning expectations with the current market realities. While India’s economy is experiencing rapid growth, there is still a need for substantial market expansion to support the valuations of startups in the country.
The recognition of shared responsibility between founders and VCs is an important step towards addressing corporate governance issues in Indian startups. By acknowledging the need for a realistic assessment of the market size and valuations, both parties can work towards fostering a more sustainable and accountable startup ecosystem in India.
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The Entrepreneur Today Desk