The Gensol Engineering scam and the accompanying turbulence at EV ride-hailing firm BluSmart have wreaked havoc on India’s startup sector.  Aman Gupta, co-founder of boAt, has weighed in on the matter, offering a severe reality check.  In a widely circulated post, Gupta expressed sorrow for those harmed while also calling for a broader reckoning in the country’s startup environment.

“The BluSmart scenario is challenging. It is unfortunate for all parties involved.  However, it also serves as a much-needed reality check for everyone in the ecosystem,” Gupta said.

His comments come as BluSmart, which is closely linked to Gensol and its co-founder Anmol Singh Jaggi, suffers an unparalleled operational problem. With no rides available on its app in Mumbai, Delhi-NCR, and Bengaluru, and stories of drivers going unpaid for weeks, the company appears to be in trouble.  A BluSmart driver told Fortune India that earnings had been delayed, and business staff were unhelpful.

Related: SEBI Alleges Gensol & BluSmart Founder Anmol Singh Jaggi Misused EV Loans to Buy DLF Flat

The dilemma, however, is centered on Gensol Engineering. Last week, the Securities and Exchange Board of India (Sebi) issued a devastating interim decision against Gensol and its promoter-directors, Anmol and Puneet Singh Jaggi, claiming serious governance failings, including as the diversion of funds intended for EV acquisition.  Sebi alleges that corporate funds were utilized for personal indulgences such as luxury real estate, foreign transactions, and even a premium golf equipment worth ₹26 lakh.

The Jaggi brothers are now forbidden from entering the securities market and holding board or management positions at Gensol. BluSmart is struggling financially, with a monthly burn rate of around ₹20 crore and stalled funding efforts.  The breakdown of a proposed ₹315 crore car lease contract with Refex Industries aggravated the situation.

In his tweet, Gupta reflected on the far-reaching consequences of such failures: investors lose money, founders lose years of hard work, employees lose stability, and customers lose a service they rely on.  “But more than that, this has eroded trust in the ecosystem.”  You will now hear, ‘Yaad hai BluSmart ke saath kya hua tha?!'” he wrote.

Gupta, a Chartered Accountant, emphasized the importance of clean books, timely audits, and transparent reporting.  “All so-called ‘not so cool tasks’ make businesses more sustainable,” he said, pushing founders to look beyond growth measures.

“EQ, IQ, and GQ (Governance Quotient)—sab important hote hai,” he added, adding that the fundamental foundation of a firm is in how it is formed, not how quickly it grows.  “Compliance and ethics are not boxes to check.  “They’re the foundation,” he explained.

Despite the gloom, Gupta concluded optimistically.  “India’s startup ecosystem is resilient.  We always become stronger.  “And we will this time,” he said. As BluSmart teeters and Gensol struggles for survival, Gupta’s statements serve as both a warning and a call to action—a reminder that when developing startups, governance is not an afterthought, but rather the very foundation of trust.