Kotak Mahindra Bank vice chairman and MD Uday Kotak on Wednesday cautioned startups to follow the law and conduct a “health check-up” while aggressively pushing their businesses and initial public offerings (IPOs). While in the early stages, startups have the need to be aggressive, being aggressive has “to be consistent with following the law and ensure you are within four corners of law”, Kotak said while speaking at the Institutional Investor Advisory Services’ (IiAS) conference on ‘The Start-up Boardroom: Building for the Future’. A host of new age startup companies with hardly any track record have lined up for IPOs to raise funds from the public. Kotak advised startups to go for “health check-ups” before raising public funds. “Have a thorough health check-up of your firm in every which way by getting an independent governance expert, investment banker or a lawyer to do a top-to-bottom check-up of how ready you are for coming to the public markets. Pre-mature launches (of IPOs) run the risk of accidents along the way,” he said. “The Cinderella times won’t last forever, and we’re not far away from the clock striking midnight,” Kotak cautioned startups. IPOs of some startups have seen weak listing on stock exchanges with some of them now trading at huge discount against the issue prices. According to Kotak, startups should make sure sustainable growth in value rather than just a pop and a flat or a negative pop at the point of listing. Compounded annual growth over a long period of time is what will endear you to investors, particularly from the start-up world, he said. Kotak added that principles-based regulation has been misused by the system in many cases.
