Decoding India's Startup Ecosystem | NDTV Profit - video Dailymotion

NDTV Profit

The #startup landscape in India is expanding rapidly, but the key concern remains: How successful and sustainable are these ventures?   Here's Mallica Mishra with the answer.   For the latest news and updates, visit: ndtvprofit.com

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00:00 Hello and welcome to NDTV Profit.

00:03 Last week, the government announced the interim budget and its intention to make India a developed

00:07 nation by 2047.

00:09 While the road to being a developed country involves many imperative factors at play,

00:15 the startup industry is one space that has been significantly contributing to the country's

00:20 robust economy.

00:22 The startup ecosystem at present in India comprises 111 unicorns with a combined valuation

00:28 of nearly $350 billion.

00:32 This number is expected to multiply in the coming years as we turn from a developing

00:37 to a developed nation.

00:39 But there is a question.

00:41 How successful and sustainable are these startups?

00:45 Are there lessons to learn from their hits and misses?

00:48 We have some solid examples of damage to doubt, the potential and strength of this space.

00:56 Number one, let's consider the case of Vijay Shekhar Sharma's Paytm.

01:01 The company's questionable practices include onboarding customers without proper KYC, associating

01:07 thousands of customers with a single PAN, and maintaining multiple dormant accounts

01:13 ostensibly for potential money laundering.

01:16 As a result, regulatory crackdowns have led to a staggering $2 billion worth of erosion

01:23 in investor wealth in just two days.

01:26 Paytm stocks are plummeting, affecting millions of investors.

01:31 The Paytm IPO, originally priced in the range of Rs. 2080 to 2150, now trades at just Rs.

01:42 487.

01:44 Another example is the once-celebrated Edtech company, Byjuice.

01:47 In a few short years, the company's valuation skyrocketed from $1 billion in 2018 to an

01:54 astounding $22 billion by 2022, fueled by aggressive expansion strategies and relentless

02:01 acquisitions.

02:02 However, as the company poured millions into marketing campaigns, including the high-profile

02:08 signing of Lionel Messi as a brand ambassador, concerns regarding financial practices and

02:14 governance surfaced.

02:17 Investors complained of subpar products and services, while employees suffered in a toxic

02:21 work environment.

02:23 The absence of required financial statements further raised doubts about the company's

02:28 true worth.

02:30 The valuation has now plummeted by nearly 99%, leaving marquee investors in despair.

02:38 Next we have Bharatpay.

02:39 Bharatpay filed a criminal complaint with the Economic Offences Wing in 2022, citing

02:46 17 accounts, including embezzlement, forgery, and criminal breach of trust.

02:52 Accusations included the Grover family raising fake invoices with initial invoices from five

02:59 firms linked to Grover's family, allegedly siphoning off funds from the fintech company

03:05 for fictitious recruitment services.

03:09 Registered addresses of all eight alleged HR firms belonged to family members.

03:16 Approximately Rs 7.6 crore was found credited to these firms, despite them not assisting

03:23 in recruiting any employees.

03:25 A 2,800-page civil suit unveiled a web of fake bills and misappropriation of company

03:32 funds for personal use.

03:35 Madhuri Jain, Ashne Grover's wife and the former head of controls at Bharatpay, approved

03:41 payments totalling Rs 72 crore to 30 third-party vendors who allegedly provided no real services

03:49 or goods to the company.

03:52 Furthermore, contracts for office renovation were awarded to Jain's own interior design

03:57 firm, Mauve and Brown, without proper disclosure.

04:02 The company also covered personal trips for the Grover family to foreign locations, sometimes

04:08 even paying twice for the same trip through different agencies.

04:14 Inflating books was another trick employed by startup firm Go Mechanic.

04:19 Amit Bhasin, co-founder of the automobile after-sales service startup, admitted to errors

04:25 in financial reporting leading to a forensic audit and a significant restructuring that

04:30 saw 70% of the 1,000-odd workforce being laid off.

04:35 Almost two years after securing a massive $42 million in funding, it was revealed that

04:42 Go Mechanic had manipulated its financial records to inflate revenue numbers.

04:49 A conflict of interest was seemingly bypassed when online food delivery platform, Zomato,

04:54 acquired the quick commerce grocery delivery platform, Blinkit, for Rs 4,447 crore in an

05:02 all-stock deal.

05:03 This acquisition raised concerns as Zomato's balance sheet appeared ill-suited for such

05:08 a move.

05:09 Furthermore, Albinder Dhinsa, the CEO of Blinkit, previously held a key role in Zomato and is

05:18 the spouse of Zomato's co-founder and former CFO, Akriti Chopra.

05:23 The lessons for all of us are clear.

05:26 Not everything that glitters is gold.

05:29 Regulators must exercise vigilance not only in the listed space but also with unlisted

05:35 companies that attract billions of dollars from prominent investors.

05:40 After all, the reputation of India as an investment destination is at stake.

05:44 [Music]

Decoding India's Startup Ecosystem | NDTV Profit

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