“The moral of the story is that even a billion-dollar company can go to zero. All it takes is one bad decision,” said a fund manager at a private-equity firm based in Singapore. He referred to the recent turn of events at BharatPe and Infra.Market and the disappointing stock performance of players like Paytm. 

Until a few months ago, the 46-year-old favoured facetiming with entrepreneurs and closing deals remotely. He has now switched to a different approach. “I am spending more time in India, meeting people on the ground and conducting in-depth reference checks,” he said. 

He is not alone. A year after mega funding rounds and valuations, investors who backed tech businesses purely on growth momentum are seeing signs of governance negligence. They are adopting new processes to scrutinise startups closely before agreeing to bankroll them.

A Hong Kong-based fund has introduced a protocol to interview a prospective company’s CFO and CXOs and conduct thorough reference checks before finalising the investment.