The importance of Governance for Founders (investor-ready practices)

In today’s challenging fund-raising landscape, founders must prioritise governance from the very beginning of their entrepreneurial journey. Neglecting this essential aspect of business can have dire consequences, especially when seeking investment.  Investors are increasingly vigilant, seeking reasons not to proceed, and suboptimal governance is an easy red flag.

Venture capitalists (VCs) typically expect pre-seed founders to demonstrate a governance respect, though not necessarily a formal structure:

  • In the current investment climate, founders must stand out to attract potential investors.
  • Poor governance can significantly detract from that goal.

Our recent conversations with Founders reveal a mix of attitudes toward governance:

  • While some founders recognise its significance and strive to implement it effectively, others tend to overlook it. However, the latter group is surprisingly small.
  • Many Founders we spoke to found governance to be a cumbersome task, often uncertain about where to begin. They typically have some system in place, but it consists of scattered records spread across various platforms. Their risk registers may either be non-existent or buried in a sprawling Excel spreadsheet that is hard to manage.

SEEIO is the platform which integrates your risk framework, business plan, corporate records, and board software so governance is integrated into your corporate structure:

  • As firms progress to Seed stage, VCs start looking for the governance framework to take shape.
  • By the A-round stage, governance systems and controls are considered non-negotiable.

The truth is, when you start as a brand-new company with just a couple of Founders, systems and controls are relatively straightforward. However, this changes rapidly as your business grows.

  • Making use of SEEIO the governance framework early on can yield substantial benefits.
  • As your company expands, the importance of having management systems and controls in place becomes more critical and challenging to implement.
  • Delaying this crucial step can lead to real trouble down the road.

The critical takeaway here is that the sooner you establish robust governance, the better:

  • Not only helps you navigate the complexities of growth but also enhances your appeal to potential investors.
  • In the competitive world of startups, effective governance is a cornerstone of success.

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