Business Schools Embrace Training for Aspiring Startup Investors
- ByStartupStory | November 8, 2023
The Indian School of Business (ISB) and the Indian Institute of Management (IIM) have collaborated to develop specialized courses tailored to the needs of professionals appointed by private capital funds to oversee early growth stage companies. This initiative comes at a crucial time, as nearly 7,500 listed and over 20,000 unlisted companies in India are set to revamp their boards in March, coinciding with the Companies Act 2013 completing a decade. As a result, approximately 30,000 independent directors will retire after completing two terms in accordance with the provisions of the law. The changing landscape of the Indian economy, coupled with the complexities of new-age businesses, underscores the importance of having boards with directors capable of implementing best corporate governance practices for young companies.
Karthik Reddy, co-founder of Bloom Ventures and chairperson of The Indian Venture and Alternative Capital Association (IVCA), emphasized the significance of securing risky investments in the private capital market in India. He stated, “Securing such risky investments is a challenge, and it is key to determining the growth of the private capital market in India.”
IVCA, in partnership with ISB’s Center for Business Innovation, recently introduced a training program designed to cater to the needs of professionals appointed by private capital funds to serve on the boards of early growth stage companies. The program’s objective is to strike a balance between theory, practice, and real-world experience, enabling participants to gain a deeper understanding of the economic drivers of business performance and valuation, while enhancing strategic thinking and critical analysis. This program has garnered support from prominent venture capital and private equity funds, including Accel, Ascent, Catamaran, Peak XV Ventures, Ski-Capital, T-Hub, and TMF Group.
Reji George Palathitta, a professor at IIM Bangalore, highlighted the importance of board functioning as a key focus area in the B-school’s program on corporate governance. IIM Bangalore offers various programs, including its flagship two-year MBA program, a Post Graduate Program in Enterprise Management (PGPEM), and an Executive Post Graduate Program in Management (EPGP), all of which include a compulsory paper on Corporate Governance and Ethics. The B-school engages with participants in family business executive programs and industry-specific programs to address issues facing startups and their boards.
The need for effective board management and corporate governance has become increasingly apparent, with a rising number of cases involving board members and investors demanding forensic audits and taking action against founders over alleged lapses in corporate governance and fraud. The fear is that if these startups were to close down, it could jeopardize private capital investments in India.
In some instances, like that of Byju’s, India’s most valuable startup, three board members resigned in June, alleging that corporate governance practices at the company had not kept pace with its rapid growth.
Anish Sugathan, an associate professor of strategy at IIM Ahmedabad, highlighted that IIM Ahmedabad also offers specialized corporate governance courses at advanced levels. These courses comprehensively explore the various dimensions of the board’s functions and responsibilities.
Educational institutions, particularly business schools, play a vital role in equipping future leaders with the necessary skills to navigate the evolving dynamics of board management effectively, promote strategic decision-making, and adaptability in leading boards. Professor Himanshu Rai, Director of IIM Indore, noted the rapid changes in the business environment and the need for agile governance structures. IIM Indore offers various optional courses on board management and executive education programs, covering a range of essential areas related to strategic decision-making, organizational leadership, and boardroom effectiveness.
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Rai emphasized the changing landscape of industries due to technological advancements and shifts in consumer behavior, requiring agile governance structures. Additionally, the COVID-19 pandemic has accentuated the need for quick decision-making and adaptive strategies, underscoring the critical role of board governance in times of crisis. The emerging startup ecosystem has further highlighted the importance of effective board management in attracting investment and guiding the trajectory of these ventures, with boards evolving towards more diverse structures that recognize the importance of diverse expertise and inclusive decision-making.
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