Corporate Governance - Evolutionary Journey

The startups' growth path in its various stages (ideation, operation, traction, scale) is focused on product acceptance, market growth, profitability, team and investment capture.

Okay so far, after all the startup has to be agile in this process. The governance theme is not well known, much less worked on in the initial phases, until the moment when it is demanded by investors.

Then, CEO/managers rush to adapt to the requirements and, at times, they can have difficulties due to the disorganization already installed. Governance does not have to be synonymous with complexity, but with good management.

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After all, what is governance?

It is a system with practices, processes and structures that promote transparency for the company.
Governance defines and guarantees the rights, duties and relationships between people inside and outside the organization.

 

Why do I need governance?

Governance is an important factor to drive the company's value and increase its trustworthiness for all stakeholders (founders, team, investors, customers, suppliers).

Investors demand transparent actions that show the company's credibility.

The roles and responsibilities of founders and managers need to be clear and well fulfilled, consistently building on these practices and processes.

 

What is the governance journey like?

In each phase of the startup, the menu of practices and processes evolves. Some examples:

 

• Operation / validation: contracts and agreements, defined company purpose, separation of company and partner pockets, financial controls to render accounts to investors, management rites, relationships with customers and suppliers, relationships with mentors and advisers, registration of intellectual property ,...

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• Traction: establishing what the partner does and what the executive manager does, responsibilities and competences, budget planning and monitoring, evolving management rites and controls, strategy thinking and execution, establishment of the advisory board,...

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• Scale: standards of conduct, board of directors and external audit, medium / long-term strategic management and risk management, maturity of controls and investor relations, and even leadership succession planning,...

• Monitoring: full maturity of reports and management and governance rites, strategic advice, full service to investors and other stakeholders in the company,...

What benefits does governance bring to the startup?

Governance organizes the company and provides comfort to partners, investors and managers, because:

 

• Reduces conflicts between partners and investors.

• It gives confidence to investors and other interested parties.

• It explains and anchors the company's values, organizes behavior, protects intellectual creation.

• It organizes controls and management practices, processes and rites, and brings strategic and operational clarity.

• It organizes strategy and risk management, preparing for new leaps.

• Values ​​the company in the market.

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Market View

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Governance is an important issue for accelerators and investors. The implementation of governance at the startup is considered a differential for attracting investments.

Because?

Because investors value companies that have control over management processes and are able to deliver the promised results.

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In the startups' growth process, having well-structured management processes and well-defined internal responsibilities brings efficiency and professionalization, in addition to being a great help to better weather crises, reposition and grow sustainably.

According to Ahmed Kadura, CEO and founding partner of startup Hyupp,“To raise funds, it is essential to have good governance, a well-designed business plan and a well-presented project. That way you can show that you're not an adventurer and that you have control over the outlined plan”.

And if you wanted to invest in a startup, would you also consider choosing one with governance to minimize the investment risk?

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LEAN SOLUTIONS

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DMS PARTNERS / LEAN SOLUTIONS supports the process of growth and structuring of STARTUPS with products aimed at solving the pain and anxieties of new managers, in an agile way and respecting the evolution in the different stages of the startup: company and team management; go-to-market/marketing; branding; strategy/governance.

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