By Jyoti Banthia

Copyright thehindubusinessline

As India’s new-age companies gear up for the public markets, a growing number of founders are reclaiming an old-school title — promoter. From Lenskart and Urban Company to Groww, PhysicsWallah, Ather Energy and Bluestone, several startup founders are now formally identifying themselves as promoters in their draft prospectuses and corporate filings.

This move marks a significant shift in India’s startup landscape—from venture-backed, professionally managed firms to founder-led companies asserting long-term control and accountability. Experts say this signals a phase of institutional maturity, as public market investors increasingly seek clarity on who steers the business.

“This shift is about moving from building a product to building an institution. When founders start thinking like promoters, they signal maturity, accountability, and a focus on long-term value,” said Ankita Vashishtha, founder and managing partner of Arise Ventures. “It is no longer just about vision and growth; it is about governance, continuity, and credibility with public investors.”

Vashishtha noted that once a founder becomes a promoter, “the rules change completely”. The Securities and Exchange Board of India (SEBI) mandates transparency and disclosure for every action related to ownership, related-party transactions, and key decisions. “It brings a higher level of responsibility and public accountability. Founders can no longer operate in a private or informal way. They step into the role of stewards, not just entrepreneurs. It is a big mindset shift—from agility to structured governance,” she said.

According to Vashishtha, this evolution has dual implications. “For many investors, a promoter-led structure creates confidence that the company has stable leadership and long-term commitment. But if control is too concentrated or unchecked, it raises red flags. The key is balance. Founders need to build strong boards, empower professionals, and show that control and accountability can exist together,” she said, adding that the next wave of listed startups will likely adopt a hybrid model—combining entrepreneurial agility with corporate discipline.

Legal experts agree that the shift is as much about perception as it is about regulation. Pooja Rao Putrevu, founder of Annex Legal, said the transition from founder to promoter “marks a move from entrepreneurial freedom to public accountability”.

“When the public invests in a stock, it’s not just based on financial performance but also on the captain steering the ship—the promoter,” she said. “The disclosure obligations intensify, transparency becomes a continuous duty, and flexibility around liquidity or restructuring is restricted. With this transition, founders assume personal regulatory liability not just for corporate performance but also for disclosures and market conduct.”

Putrevu noted that the move reassures investors by clearly defining who holds control and responsibility within a company. “Public investors tend to trust companies aligned with traditional governance models—these frameworks have evolved to balance innovation with accountability. For startups, adopting such structures in a way that fits their business model is essential as they prepare to scale sustainably,” she added.

Industry observers believe this shift reflects India’s startup ecosystem coming of age. As more new-age firms eye IPOs, founders are reimagining their roles — not just as innovators, but as custodians of long-term public trust.

Published on October 8, 2025