Written by: Ms. Sowmya Iyer, Founder & CEO, Clarity Communication
For much of the last decade, the Indian startup story was told through numbers. How quickly a company was growing, how much capital it had raised, how many customers it had acquired, how many cities it had entered and, eventually, what valuation investors were willing to put on it. Growth was not merely an outcome. It became the organising principle around which young companies built their identities.
That environment is changing. India continues to add startups at an extraordinary pace. More than 55,200 startups were recognised during FY2025-26, taking the total number of recognised startups beyond 2.23 lakh. At the same time, capital is being deployed with greater scrutiny and expectations around governance and institutional maturity are rising.
What is less often discussed alongside this shift is the growing importance of reputation. Not reputation in the conventional PR sense. Not media visibility, founder profiles or the number of favourable stories a company can generate. The more useful definition is simpler: reputation is the confidence stakeholders have in how a company will behave when circumstances are not favourable.
That confidence has always mattered. What has changed is how quickly its absence can become visible. Consider what happens around a young company as it grows. Investors want reliable information. Employees want to know that leadership is making decisions for reasons that extend beyond the next funding round. Enterprise customers want predictability. Regulators expect compliance. Prospective senior hires look at the conduct of the founders as much as the compensation package.
Even journalists, who are often treated as an external audience, are making judgments about whether a company is willing to answer difficult questions directly. None of these relationships begins when a company reaches a billion-dollar valuation. The Indian startup ecosystem has had several reminders of what happens when growth gets ahead of institutional confidence.
Byju’s remains one of the clearest examples. Its decline involved financial pressures, acquisitions, debt, governance questions and increasingly difficult relationships with investors and creditors. The wider lesson is relevant to startups well before they reach that scale: a strong growth narrative cannot indefinitely compensate for weaknesses in the organisation supporting it.
The Gensol-BluSmart episode offers another, more recent example. After SEBI action against Gensol’s promoters, the company’s board faced serious governance challenges, while the related BluSmart business was forced to suspend operations. The case has since been used in business education as an example of the governance challenges that can emerge in promoter-led companies.
There is a tendency to treat governance as something separate from reputation, as though one belongs to the boardroom and the other to the communications team. In practice, they overlap considerably. A company’s reputation is shaped by what it does when nobody is looking, not only by what it says when everyone is.
That becomes particularly complicated in founder-led businesses. Indian startup founders have become unusually visible public figures. Their posts, interviews and opinions can reach investors, employees and customers directly, often before a formal corporate communication has been prepared.
That directness can be an advantage. It can also create a gap between the speed of founder communication and the processes required of the organisation. Founder visibility works best when the company behind it is capable of meeting the expectations it creates.
Ola Electric provides a useful illustration of how this changes as a company grows. Once a startup becomes a listed company, its founder’s public voice operates within a very different institutional framework. Bhavish Aggarwal remains the company’s Chairman and Managing Director, while the board now includes independent directors and formal oversight committees.
The distinction matters because communication, at that stage, is no longer simply communication. Information shared publicly can have implications for disclosure, investors and the functioning of the market.
The same principle operates at a more everyday level. A confusing interface, an unexpected charge or a poor response to a customer complaint may seem insignificant in isolation. Repeated across millions of interactions, however, these experiences shape what customers think the company stands for.
Ola Electric’s recent experience is instructive here too. In April 2026, ICRA cited weakening brand perception and service-execution gaps alongside declining sales, continued losses and stronger competition when it downgraded the company’s rating. The point is not that reputation caused the company’s financial difficulties. Rather, it shows that perception and operating performance can eventually become difficult to separate.
This is why the argument for building reputation early is not really an argument for doing more PR. It is an argument for building better habits. A startup does not need a large communications department at an early stage. It does, however, benefit from knowing what it is prepared to stand behind publicly. It needs discipline around financial and operational claims. Founders need to understand that a casual statement can travel much further than intended.
Employees should not routinely learn about major organisational decisions from the press. Customer complaints need to be treated as information about the business, rather than simply as potential social-media problems.
These may sound like small matters when a company has ten employees and is still trying to find product-market fit. They become considerably harder to fix when the company has several thousand employees, multiple institutional investors, a large customer base and a public profile that attracts scrutiny.
Reputation is therefore partly a question of timing. Companies often think about it when they have something to lose. By then, the reputation already exists. Every funding announcement contributes to it. Every hiring decision contributes to it. Every interaction with a regulator, employee, customer or journalist contributes to it. So does the way leadership responds when the company misses a target, loses a customer, faces criticism or has to acknowledge a mistake. This is also where communications professionals need to be honest about the limits of communications.
PR cannot create credibility where the underlying conduct does not support it. A carefully worded statement cannot resolve a governance failure. A founder interview cannot repair a broken product. A strong media strategy cannot make unsustainable economics sustainable.
What communications can do is help an organisation recognise the reputational consequences of decisions before those consequences become a crisis. It can bring consistency to what a company says, ensure difficult information is handled responsibly and help leadership understand that stakeholders are not simply audiences waiting to receive a message.
There is a useful distinction between visibility and credibility. A startup can have plenty of the first and very little of the second. It can be highly discussed, heavily funded and widely recognised, yet leave investors, employees or customers unsure about the organisation behind the narrative.
Another company may receive considerably less attention while steadily earning confidence because its behaviour is predictable, its claims are measured and its leadership is willing to acknowledge what it does not know.
As the Indian startup ecosystem matures, that distinction matters more. Recent governance controversies have already led investors to demand stronger protections, longer diligence processes and more formal controls. Industry voices have also increasingly argued that governance needs to be embedded from the beginning rather than introduced after a company becomes large.
The implication for founders is not that they should slow down. Startups exist to move quickly, challenge established markets and take risks that larger organisations often cannot. The implication is that speed and credibility do not have to be competing priorities.
In the strongest organisations, reputation becomes less visible precisely because it is embedded in how the company operates. Investors know what information to expect. Employees know how leadership behaves under pressure. Customers know what recourse they have when something goes wrong.
Founders know where their personal voice ends and the institution’s responsibilities begin. That kind of confidence is difficult to build in a few weeks of crisis management. It takes time, consistency and a willingness to make the less exciting decisions well.
Scale will continue to matter. It will determine market power, revenue, valuation and influence. But scale also increases the number of people who have to believe in the organisation behind the numbers. The question for startups, then, is not whether reputation should come before growth. It is whether they are prepared to discover the value of reputation only after they have something significant to lose.
