Flipkart co-founder Sachin Bansal has expressed his support for differential voting rights in the context of Indian startup ecosystem, in order to empower entrepreneurs.
“If you look at China and the US, dual-class voting structure has helped create better companies. Building a company is like a very long train journey. The entrepreneur is the driver, investors and employees are passengers. They get on and get off. If you take a 20-30-year view, no investor or employee will stay. Empowering the driver is good.”, said Bansal.
In support of his claim, Sachin Bansal gave the example of the founders of tech giants Google, Facebook, and Snapchat, how they have maintained control even after significantly diluting their shares with the help of differential voting rights. In a number of IT companies overseas, promoters hold less than 15% equity but exercise full control.
This becomes even more important in the Indian scenario as major international investment firms are taking up larger stakes in Indian startups leaving the founders with less say and lesser decision-making freedom.
In May, it was reported that the government was exploring the option of hybrid instruments that will allow promoters to retain control of an entity even with a minority stake.
The Indian government is currently in the process of reviewing the draft e-commerce policy that aims to ensure level playing field for local businesses doing digital trade in India. The policy also seeks to regulate all aspects of online retail and recommends strict restrictions.
The government has created a thinktank for discussion on the draft policy. The thinktank is headed by commerce and industry minister Suresh Prabhu, it also includes officials from commerce, finance, home affairs, among other ministries, along with representatives from e-commerce firms like Reliance Jio, TCS, Wipro, Ola, Snapdeal, MakeMyTrip, among others.
E-commerce giants Flipkart and Amazon have been left out of the deliberations, leaving them vexed.