startup culture: Boards are getting younger as the startup culture catches the fancy

More than a third of people who got a director identification number (DIN) in the last fiscal year were aged 30 years or younger, data from the Ministry of Corporate Affairs (MCA) showed. Any individual who wants to start a company or on the board of a company needs a DIN as per the rules.

The MCA had issued 420,000 DINs in fiscal 2022 of which nearly 123,000 were younger than 30 years, while another 182,000 were aged 31-45 years, according to the data.

These numbers are increasing at a time when new company incorporations have gathered traction. As many as 167,000 companies were incorporated in India in the year ended March 31, 2022, taking the total number of registered companies to 2.318 million.

Young graduates are seeing entrepreneurship as a viable alternative to a regular job, especially in the technology circles, according to experts. India currently has more than 100 unicorns, or startups valued at $1 billion or more. Also, there are many small and medium-size companies that are doing good business.

Easier funding opportunities, especially from private equity and venture capital firms, is acting as an incentive for youngsters to become entrepreneurs. In 2021, startups received $11 billion in funding. While there is a slowdown in fund inflows at present, Indian startups still got $4.6 billion in the first five months of 2022, according to reports.

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“The higher percentage of younger directors is largely driven by the rise of the Indian startup ecosystem and the growth of young entrepreneurs,” said Raja Lahiri, leader of tech, media & entertainment at Grant Thornton Bharat. “This trend is expected to continue given the growing interest from youth in entrepreneurship as well as backing of private equity, venture capital investors and the government’s impetus to the startup sector.”

This is the first time the MCA has provided age-wise split-up of directors; hence no comparison was possible with previous years’ data.

Another key factor contributing to this rise is the central government’s push for ease of doing business. According to experts, five years ago one needed to go through a significant compliance burden to incorporate a company. Even after the incorporation, there had been several regulatory requirements which had to be taken care of by companies in the normal course of business.

“These days incorporation of a new company has become fairly easy,” said Shriram Subramanian, founder, InGovern Research – a proxy advisory firm. “Popular culture has also had its impact on the youngsters as some of the popular TV shows on startups have brought aspirational value to starting of a new company,” he added.

Of the new directors under 30 years of age, nearly 20,000 (18% of the total) hailed from Maharashtra. This is primarily due to the presence of the financial services sector including markets and banking in Mumbai, making the state a more likely choice for fintech companies. Interestingly, Uttar Pradesh took the second position with 13,000 new directors under 30 years, beating the startup leader state Karnataka (5,905) and the manufacturing hub, Gujarat (7,051).

However, a closer analysis of data shows there is a significant gap between male and female directors. Of the new directors under 30 years old, 91,545 were male and only 31,048 were women. In the age group of 31-45, 124,000 directors were male, while the number of women was less than half that at 58,420. This trend is mostly in line with the overall numbers: just 30% of the newly registered directors in FY22 were female.