The #MeToo movement has snowballed into one of the largest social movements against sexual harassment at the work place, claiming several high-profile CEOs, directors and senior management personnel. Allegations of misconduct against key personnel and lack of effective action by the management can cause extensive reputational damage and lead to business disruption. For a venture capital (VC) investor, such damage could impact returns and jeopardize a successful exit. This has driven investors, globally, to add another dimension to their diligence and build in additional safeguards to ring fence their investments from such risks.
As the movement gathers steam in India, it is becoming increasingly apparent that, so far, startups have paid no more than lip service to the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act (act), 2013. While the enactment of the act was a momentous step towards ensuring safe workplaces for women, its implementation has been patchy. Many startups have yet to put in place appropriate policies and also do not have adequately trained staff to deal with the complaints.
It is therefore imperative for a VC investor to ask a few fundamental questions regarding the investee company’s work culture:
Have there been allegations or claims against key employees? How were these allegations handled?
Does the company have robust processes to handle any such allegations?
Has the company made an effort to promote a safe and egalitarian work environment?
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Natasha Mahajan is a partner and Neeraj Vyas is an associate at the Bengaluru office of Samvad Partners
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