In a Nasscom summit today, Murthy came down heavily on VCs and the way in which a start-up's topline is seen as more important than its bottomline 
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In a Nasscom summit today, Murthy came down heavily on VCs and the way in which a start-up's topline is seen as more important than its bottomline The venture capitalists' theory of looking at the topline of start-ups as all-important without focussing on the bottomline has become a Ponzi scheme in many ways, Infosys founder NR Narayana Murthy said on Thursday at the Nasscom Tech and Leadership Forum 2023 in Mumbai.
His comment was in response to a question from Snapdeal founder Kunal Bahl on how young organisations can scale up fast while keeping an eye on culture and values.
The retired chairman of Bengaluru-based tech giant Infosys said he doesn't hold the younger entrepreneurs responsible for the ambition to scale up fast. "I would hold the VCs who propounded the theory is that what is important is only the topline and not the bottomline . That's completely wrong. In many ways it became a Ponzi scheme," said Murthy, who has founded the VC & PE firm Catamaran Ventures.
He elaborated that the VCs who provide money to start-ups and their board of advisors and directors have to tell them to accept deferred gratification and to realise that sacrifice in the short-medium term will indeed lead to much bigger returns in the long term.
"That is indeed the story of Infosys," he said, adding that all Infosys founders travelled economy class till the firm reached a billion dollars in revenue.
The VCs and advisors have to be open and honest with the entrepreneurs in telling them things as they are. Otherwise, even if the investors in early stages exit with a profit, it will be the series Z person who will be left with the burden, the Infosys founder noted.
Murthy co-founded Infosys with six fellow computer professionals in 1981. It became the first Indian company to be listed on an American stock exchange.
He received the Legion d’honneur from France, CBE from Britain and Padma Vibhushan from India. He serves on the boards of the Institute for Advanced Study at Princeton, New Jersey, and the United Nations Foundation. He was the Chairman of the Indian Institute of Management (Ahmedabad). His son-in-law Rishi Sunak is the Prime Minister of the United Kingdom.
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