7 of 11 Panel Members Had a Stake - the Ministry Says That's Fine. Is It?

THE SAFEGUARD ONLY WORKS IF RECUSAL IS ENFORCED, NOT JUST DECLARED

Seven of eleven members on a single investment committee holding personal stakes in companies later funded by that same committee - that number alone should stop you. The Ministry's answer is that a disclosure-and-recusal policy handled it: any conflicted member simply stepped out of the room for that specific decision.

The real governance question isn't whether such a policy exists. It's whether disclosure-and-recusal, as a mechanism, can actually neutralise a conflict this widespread or whether it just documents the conflict while leaving it functionally intact.

WHY YOU CAN'T AVOID THIS TENSION, ONLY MANAGE IT

Evaluating deep-tech ventures requires people who understand deep-tech markets - and in India's still-thin venture ecosystem, the people with that expertise are frequently also the people who've already invested in the sector's leading startups.

This isn't a one-off lapse to fix; it's a structural feature of using domain experts to evaluate a domain they're already financially embedded in. The Ministry's Technology Development Board Act-backed policy assumes that recusal on a case-by-case basis is sufficient.

But with 7 of 11 members conflicted, the committee wasn't occasionally missing a member for one decision - it was, for a meaningful share of its own agenda, operating with a majority of its composition disqualified from full participation.

WHAT RECUSAL DOESN'T FIX

Recusal removes a conflicted member from voting on their specific stake. It does nothing about the informal influence that member may still carry in the room during discussion of adjacent companies, peer startups or sector-wide funding priorities that indirectly benefit their portfolio.

A policy built entirely around individual-transaction recusal treats conflict of interest as a discrete, isolable event - when in a small, interconnected deep-tech investment ecosystem, it often isn't. The Ministry's statement answers "did the conflicted member vote on their own company"

• a narrower question than "did the conflicted member's presence shape the committee's broader judgment."

THE EXAM-RELEVANT TAKEAWAY

This is less a story about one funding round and more a live test case for a structural governance question: when public money must draw on private expertise to make sound technical bets, is transparency about the conflict enough or does genuine institutional integrity require actively restructuring who sits on the panel in the first place - rotating membership, independent third-party reviewers or caps on how many conflicted members a single committee can carry regardless of disclosure?

The Ministry has answered with process. The harder answer is about composition.