Should startups bother with corporate governance?
As a company grows, effective governance processes do promote confidence among investors, key partners and employees.
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IT IS safe to say that corporate governance is rarely a priority for startup companies. A quick scan of startup boot camps in Singapore reveals that none includes corporate governance on its agendas.
After all, the resources of these startups are already limited, and they are too busy trying to gain market traction. What's more, the line between ownership and management in these startups is often blurred. The founders invariably run the company and do not take into account the interests of other shareholders simply because they are, usually, the majority or sole shareholders.
The situation, however, becomes tricky when startups find themselves needing to raise funds from angel investors and venture capital firms. And since the investors will usually require a seat on the board, it is at this stage that the startups will experience their first real taste of corporate governance.
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