India Remains ‘Unblemished’ Despite Governance Lapses in Startups, Says Byju’s Investor Prosus

Prosus, which had written down its investment in embattled edtech major Byju’s to zero last year, doesn’t see the India opportunity’s attraction diminishing for investors despite a series of high-profile corporate governance lapses in the country’s startup ecosystem over the past few years.

“It remains unblemished, we just have to get governance right. It's a critical part of investing. People need to be sure that when they invest that the governance is correct, and it will improve. I think everybody is united in their belief that you can't have decent business without decent governance,” David Tudor, general counsel of Prosus Group, told Outlook Business.

The Dutch firm has been one of the most prolific foreign backers of Indian startups over the past decade, investing over $8 billion in companies like Swiggy, Meesho, Eruditus and Pharmeasy, among others.

At the launch of a report on the strengths of India’s burgeoning digital economy, the Prosus general counsel said that the firm sees large pools of untapped investment potential in the country. The report ranked India as the third largest digitalised country in the world, behind the United States and China.

“You look at the massive numbers of connections that you have. And then the number of people who are using smartphones. That is a huge untapped opportunity. There's a massive gap there. That for me was a sort of eye-opening insight that we maybe are underestimating the scale of the opportunity. If anything, it (could lead us to) bring more capital in India than we were,” said Tudor.

Incidentally his comment came days after a similar report by Blume, a local venture capital firm, raised concerns about the lack of discretionary spending power of the poorest 1 billion people in the country.

Tudor also said that the recent rise of geopolitical temperature due to US President Donald Trump’s continuous dangling of tariff threats doesn’t directly impact the firm’s portfolio companies.

“I think our businesses specifically are not exposed, on an individual basis, to the risks of tariffs. It's not like we're making and exporting goods that will be subject to those tariff risks. That's how we're thinking about it more broadly. But there may be impact obviously at a global stage on various economies depending on if and how the tariffs are imposed and how they play out,” he said.

The Prosus report said that the US and China have gained a decisive lead over the rest of the world in the AI race, followed by South Korea, Singapore and the Netherlands. India ranks 11th in AI research and 16th on AI infrastructure in G32.

"But with appropriate investment and policies, India can develop the scale and capability to challenge the AI hegemony of the US and China... India’s large population gives it the advantage of scale but also creates risk of cyber threats and environmental degradation due to the rapid digitalisation. There is considerable scope of improvement when it comes to dealing with these risks," it said.