The recent report by market intelligence firm PrivateCircle Research has thrown a spotlight on the considerable disparities in compensation among unicorn founders in India. While some founders take home nominal salaries, others command multi-crore remuneration packages. This article delves into the implications of these findings, focusing on individual earnings, sector-specific differences, gender pay gaps, and location-based disparities.
Credits: Money Control
Individual Earnings: Rajan Bajaj vs. Supam Maheshwari
Rajan Bajaj, the founder of the fintech unicorn Slice, received an astonishingly low remuneration of Rs 12 per year in FY23—a stark illustration of divergent pay approaches. The CEO of FirstCry, Supam Maheshwari, received an incredible Rs 200.7 crore in compensation during the same time period, in sharp contrast to this. Maheshwari’s compensation was then cut by 49% to Rs 77.5 crore in the first three quarters of FY24 as a result of the selling of 6.2 million shares before FirstCry filed for an IPO in December.
The stark contrast between these two approaches to compensation begs the question of what the guiding ideals are for founder salaries. Bajaj’s low pay could be the result of a calculated strategic choice to reinvest earnings in the expansion of the business or better reflect the financial constraints of a developing fintech enterprise. On the other hand, Maheshwari’s substantial compensation can be a reflection of the business’s strong financial performance as well as a prize for reaching important benchmarks.
Revenue Growth Amid Regulatory Hurdles
Slice claimed a significant revenue increase, hitting Rs 847 crore in FY23—a threefold increase from the previous year—despite the founder’s meagre pay. Despite regulatory obstacles that forced the company to discontinue its main credit line product early in the fiscal year, this remarkable growth was achieved. This hypothetical situation shows how fintech businesses can succeed despite strict regulatory frameworks if they can quickly innovate and adapt.
Gender Pay Gap: A Persistent Issue
The survey also highlights the significant disparity in salary between men and women in unicorn firms. In FY23, the average income of female founders was 44% lower than that of their male counterparts. In particular, the median pay for female founders was Rs 1 crore, whereas the median pay for male founders was Rs 1.8 crore. This discrepancy suggests more general systemic problems impeding gender equity in the entrepreneurial sector. It emphasizes how important it is to work together to guarantee equal chances and pay for female business owners.
Sector-Specific Salary Differences
Unicorn founders’ salaries also varied significantly across different sectors. Founders in the media and entertainment industry enjoyed the highest median salaries at Rs 3.5 crore. They were followed by those in logistics with median salaries of Rs 1.9 crore, and edtech at Rs 1.6 crore. The logistics sector, in particular, had the highest average salary at Rs 12.4 crore, driven by a few high earners.
These differences can be attributed to the varying revenue models, funding landscapes, and profitability margins across sectors. For instance, media and entertainment often involve high upfront investments and significant revenue from diverse streams, while logistics and edtech face different financial dynamics and growth trajectories.
Location-Based Disparities
The report also highlighted geographical disparities in founder salaries. Pune emerged as a standout location, with unicorn founders in the city earning the highest average and median salaries of Rs 20 crore and Rs 3.7 crore, respectively. This could be reflective of the unique business environment in Pune, which perhaps supports higher valuations and better financial performance for startups compared to other regions.
The Impact of Gender Disparity in Board Representation
The report’s startling finding was the underrepresentation of women on the boards of Indian unicorns. There were no female directors for 57 unicorns as of March 2024. The culture of the organization, the way decisions are made, and overall performance may all be significantly impacted by the lack of gender diversity at the highest decision-making levels. Diverse boards are more likely to encourage creative thinking and produce better financial results, according to numerous studies.
Conclusion
The results of PrivateCircle Research highlight how complicated creator pay is for unicorns in India. The large differences in pay, which are a result of sectoral, regional, and individual factors, draw attention to the variety of approaches and financial realities present in the startup ecosystem. Furthermore, there are ongoing difficulties in attaining true equality and inclusivity in the entrepreneurial sector, as seen by the significant gender pay gap and the dearth of female participation on boards.
To overcome these disparities, a multimodal approach involving regulatory initiatives, corporate governance reforms, and a cultural shift toward valuing diversity and justice is required. As the Indian startup ecosystem continues to evolve, it is imperative to strive toward a more equitable and inclusive environment that supports the growth and success of all entrepreneurs, regardless of gender or geography.
