India now offers one of the fastest growing startup ecosystems in the world and the recent announcement from one of the Big Four consultancies made its future even brighter. According to recent media reports, PwC has decided to mentor 10 handpicked startups to give advice on matters of taxation and fundraising.
A senior PwC executive said to the daily, “According to Indian laws, auditors cannot invest or pick up stake in any Indian company. So PwC would neither invest any money in these startups nor will it own any stake in these firms. What we would do is mentor them through their growth cycle.”
A team of ten experts has already been formed by PwC to supervise the startups on matters like taxation, regulation, investment and risk advisory to handhold the startup. The team will be the adviser of these startups at every stage of their growth, that too without charging any fee.
A Senior Executive working in one of PwC’s rival companies asked, “If they are not charging any fees for their advice, what is it for them in the deal?” On which a PwC executive, requesting anonymity, replied in a lighter note, “Well, the only hope is that at least two of the ten startups would become tomorrow’s Flipkart or Snapdeal. And when they do, they would prefer PwC for their activities like IPOs or other services.”
To explain the motto of this initiative another PwC executive said, “There are a lot of small problems like (in) fundraising, public relations, taxation, auditing, hiring and overseas expansion which could become a big roadblock for a startup. These, however, are solved daily at a much larger scale in much bigger companies in consultancies, and consultants can bring this experience to the table.”
In response to an email sent by the Economic Times, PwC spokesperson replied, “We are firming up a plan to mentor and nurture select startups and will roll out a customized program soon. With the right kind of strengthening and guidance related to their unique needs, be it for their funding or expansion plans, we feel these startups have immense business potential.”
The other three of the Big Four – EY, Deloitte and KPMG apparently don’t have such plans in India, although some of them offer handholding service to startups in other countries. “EY has an exclusive mentoring program, Accelerating Entrepreneurs, which is designed to help high-potential entrepreneurs around the world scale up their business through one-to-one guidance, networking and insight sharing,” EY said to media.
Deloitte has a similar and successful model in Japan, where it helped a number of startups to grow. A senior Deloitte India executive said: “There are a lot of international models which could be brought to India including this (startup incubation) one. However, we are very cautious as we do not want to enter any new space when there are already bigger issues at hand, like the change in Indian regulations.”