Not just kiss & make up, but also tell
legal dispute between fintech BharatPe and its co-founder Ashneer Grover may be designed to free both sides from encumbrances in future business growth. But there's more that needs to be done than just kiss and make up. BharatPe is headed for an IPO and will seek to present a picture of a house in order to investors.
Grover has launched a new medical loan app startup. But there are charges of illegality brought about by BharatPe against Grover and his family being investigated. These can't become part of the corporate reconciliation, the timing of which would suggest the administration of justice has acquired an unstoppable momentum.
Charges include cognisable offences where arrests have been made. The clock can't be set back on these counts.
Apart from imperatives of justice, there's need for investors to know about corporate controls and hygiene, apart from business prospects of both parties to the legal dispute. The settlement should not serve to put a lid on the governance structure of BharatPe that allowed for alleged fraud by the management.
India's startup ecosystem should benefit from the BharatPe episode — more light needs to be shed on it. Ongoing investigations will do their bit. But internal corporate processes should be robust enough to detect and deter unethical behaviour at all levels.
Lower cost of capital makes transparency pay for itself.
Startup founders are facing heightened scrutiny from investors after a series of spectacular blowouts across jurisdictions. Startups typically enjoy some leeway on disclosure over mature companies. The pathway to scale, however, involves stricter corporate controls and greater accountability to investors.
