Why Governance Matters for Your Startup

The Importance of Corporate Governance in Private Venture-Backed Companies.

Founders, investors, board members, employees and all participants in venture-backed companies should understand the basic principles of corporate governance. By corporate governance we generally mean the system through which the corporation is managed and controlled. Different rules and practices will apply depending on the type of organization, ownership structure, stage of the company, investor base, size, geography or industry. Thus, applying a “one-size-fits-all” or “check-the-box” approach to governance will usually not work since context matters.

In terms of the legal structure of the company, significant distinctions will apply depending on whether the entity is a public corporation (with variations if the company is a large, mid or small cap), private corporation (such as a venture-backed or family-owned business, for example), limited liability company, partnership, non-profit, foundation, state-owned enterprise (SOE), among other structures.

The focus of this article is on co…