The GRC wake-up call for Indian unicorns

For years, India’s startup ecosystem has been driven by a single mantra: move fast, disrupt faster, and worry about the details later. From seed round to Series D, growth has been the primary focus.

Governance, risk, and compliance or simply put GRC has often taken a backseat to speed, scale, and splashy valuations.

In recent years, several high-profile Indian startups have found themselves in murky waters not because their ideas were flawed, but because their foundations were. Governance lapses, data privacy breaches, and opaque financial practices have led to regulatory interventions, media scrutiny, and a dramatic loss of investor confidence. In an era where news spreads in seconds, a single misstep can undo years of credibility.

So why should India’s startups and especially its unicorns care about GRC today? Because the world is watching, and it is watching more closely than ever!

The change

There has been a gradual change in regulations over the years. India’s banking sector regulator, The Reserve Bank of India (RBI) has tightened the checks over companies in the lending space. A more profound impact is visible over fintechs. The introduction of the Digital Personal Data Protection (DPDP) Act is transforming how companies handle consumer data. Meanwhile, global investors are no longer impressed by just a compelling pitch deck or a steep growth curve. They are asking tougher questions about risk management, audit trails, compliance frameworks, and operational resilience.

To them, a company’s GRC maturity is now a direct signal of its long-term sustainability.

What does it mean for the startup ecosystem?

Contrary to popular belief, adopting strong GRC practices doesn’t slow a startup down it can accelerate growth. A company built on a solid risk and governance framework is more resilient, more credible, and better equipped to navigate regulatory complexity. It becomes a safer bet for investors, a more attractive partner for alliances, and a more trusted brand for customers.

At the core of this transformation is culture. Governance is not something to be introduced once a company hits 500 employees or readies for an IPO. It starts at five. Founders need to champion accountability from day one by staying actively involved in compliance, encouraging team awareness, and creating an environment where transparency and integrity are non-negotiable. It is about making governance part of the DNA, not just a checklist.

Risk management, too, must evolve from being reactive to being proactive. Risks today come in many forms not just financial, but operational, cyber, legal, and reputational. The smartest companies are investing in real-time risk intelligence, forming internal committees to regularly evaluate threats, and integrating AI-powered tools to anticipate issues before they escalate. In the absence of a risk radar, many startups unknowingly walk straight into preventable crises.

Compliance, often viewed as a bureaucratic burden, can become a competitive edge if done smartly. By centralising processes, automating routine checklists, and staying abreast of the evolving regulatory landscapes, startups can stay ahead of the curve. A well-oiled compliance function signals maturity, reduces exposure, and wins investor confidence.

The discussion of modern risks would be incomplete if cybersecurity is ignored. As digital-native companies scale and collect vast troves of user data, they also become more attractive to malicious threats. A single breach can erase years of goodwill. That is why startups must treat cybersecurity as mission-critical embedding encryption, enforcing strict access controls, conducting regular security audits, and developing a well-tested incident response plan. Today, cyber preparedness is not just an IT issue; it is a boardroom imperative.

Being transparent is being credible

Transparency, meanwhile, remains one of the most underrated strengths in a fast-growth business. Regular financial reporting, even for private companies, builds stakeholder confidence. Independent audits, though often seen as an expense, can prevent costly mistakes down the road. And clear, open communication not just formal reports can strengthen trust with employees, investors, regulators, and customers alike.

As Indian startups dream of going global whether it is listing on overseas bourses, setting up operations in a foreign land, or expanding into a new continent, GRC becomes the most critical aspect. International markets come with their own rulebooks. GDPR in Europe, SEC norms in the United States, and fintech regulations across Southeast Asia are all evolving rapidly. Without a scalable and adaptive GRC strategy, startups risk tripping on non-compliance just as they attempt to cross borders.

Ultimately, GRC is not a hurdle it’s a launchpad. It is not the first thing a founder might think of while envisioning his business idea. However, it could be the reason that the same vision survives the harsh realities of scaling up, subsequent scrutiny, and market shifts. As IPOs loom and funding rounds grow more cautious, GRC will increasingly separate the enduring companies from the cautionary tales.

This article was published in CXOToday on 11 August 2025. Read here