Indian Regulators: Let start-up founders and investors worry about Silicon Valley; you try and deliver Delaware. Please.

Indian regulators have, in recent times, been talking a lot about creating a conducive environment for businesses, specifically startups, given the recent exodus of some renowned startups to foreign shores to take advantage of friendlier business policies and regulations.

In order to create a thriving ecosystem, they are taking inspiration from places like Silicon Valley, considered globally to be the Mecca of technology entrepreneurship. I am often asked by budding Indian entrepreneurs and even the successful ones –will Indian regulators be able to give the Indian startups an ecosystem similar to what Silicon Valley has provided?

My answer to this oft-asked question is – Why just look at Silicon Valley when there’s so much more that the Delaware framework can teach us? And trust me, they often get confused.

It is Delaware where most businesses are registered in the US and not Silicon Valley. Reason: the flexible governance framework that allows for ease of doing business, which is all the more crucial for startups.

The first and foremost reason behind this is that the Delaware General Corporation Law, by design, is a simple yet dynamic one. Although it was written in the last decade of the 19th century, it has been constantly fine-tuned since then to suit the ever-changing business environment. Moreover, it has managed to strike the perfect balance by treating both, regulators and business entities at par, with no bias towards either, which is rare to see in other countries. Even the statute permits companies and their shareholders to work with maximum flexibility to ensure they work smoothly.

Then there’s the Delaware legislature that not only gives high priority to corporation law but also has a good expertise over these matters. The state legislature also has an understanding with the bar and it is clear that when proposing corporate legislation, the bar will deal candidly on any matter that involves Corporation Law.

Lawyers too, swear by their courts. The Court of Chancery has developed an exemplary expertise over matters related to Corporation Law. Not only do you see some of the best lawyers practicing in Delaware, you will be pleasantly surprised to see how familiar the judges are with complex business transactions and the kind of insights they have about the inner workings of corporations. Since the court has already dealt with cases that cover almost all aspects of businesses, it more or less has answers to most questions that haunt businesses. This offers them a greater sense of security.

Another feather in the cap is the ultra-modern, user-friendly and absolutely pro-business Delaware Secretary of State Office, which facilitates businesses in the true sense rather than following a bureaucratic approach.

It is difficult to find any other ecosystem that has so much to offer to startups or even half of what Delaware offers. The kind of philosophy, processes and above all, mindset to run businesses there is enviable for even Silicon Valley. If a similar framework can be replicated in India, there will be no looking back for the dreamers in India who are trying to take baby steps in the world of business.

What are your thoughts?

Guest Post contributed by Ravi Kiran.