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No fibbing! Investors want real data on dashboard

An increasing number of investors are asking for a transparent reporting mechanism on key performance indicators of portfolio companies at the click of a button.

, ET Bureau|
Updated: Jan 05, 2016, 04.09 AM IST
Picture for representation purpose only.
Picture for representation purpose only.
HYDERABAD: From being the latest arrival in a hot sector in the startup world to cutting costs through layoffs, the Indian startup system has seen it all as the ecosystem matures. The implementation of corporate governance practices by the new-age companies has received a new lease of life post the tumultuous ride.

An increasing number of investors are asking for a transparent reporting mechanism on key performance indicators of portfolio companies at the click of a button.

“We see greater engagement from investors who want to make it easier for startups to report their performance on a weekly or monthly basis post investment. Early-stage companies typically do not invest in this,” says Dhruv Phophalia, managing director and head of forensics, dispute and investigation services at Alvarez & Marsal.

No fibbing! Investors want real data on dashboard “Wherever we have significant minority investment of 26% or above we have this practice. Before we invest, we agree on micro numbers that we can expect and hold the investee company accountable. Once this is fed in the system, every month or quarter these numbers are checked,” says Anish Jhaveri of Oliphans Capital which has companies like Ecom Express and in its portfolio.

Both employees and investors of on-demand professional service provider Urban Clap can access MIS reports of the company, while cashback site CashKaro added additional features on request from investors Kalaari Capital ahead of being funded.

Of late, companies are required to integrate management information system (MIS) reports apart from other metrics requested by investors, especially in the consumer-internet sector.

“We had an internal dashboard which was enhanced based on request from the investors for data on revenues, gross margin, customer acquisition costs ahead of the round. The practice has picked up in the last two years,” says Swati Bhargava, CEO and cofounder of cashback and deal site CashKaro which raised Rs 25 crore in a Series-A round from Kalaari Capital in November 2015.

The presence of an investor side dashboard reduces the frequency of company audit and data in realtime. “We never received a request from an investor for integrating our dashboard with theirs but we circulate our MIS reports to the investors. The only audit you face is ahead of the round of funding. Investors and entrepreneurs should not be second-guessing each other,” says Abhiraj Bhal, cofounder at UrbanClap which recently raised Rs 165 crore in a round led by Bessemer Venture.

Investing trust in the portfolio company plays a key role in investor decision to ask for an integrated dashboard.

“We trust the entrepreneurs to give us the right set of numbers, however, we have periodic audits. The reports from concept-stage companies are taken on a monthly basis and for growth stage companies on a quarterly basis,” says Bharati Jacob, founder-partner at Seedfund.

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