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Startups and Corporate Governance: What’s Missing?
- The lack of regulation and monitoring in the governance of startups, especially in Africa, allows them to operate with minimal oversight compared to larger corporations.
- The African startup ecosystem experienced a surge in investments following the success of unicorns like Flutterwave, ChipperCash, and Opay, attracting more investor interest.
- Easy access to capital led to some founders mismanaging funds, exemplified by Dash, a Ghanaian fintech startup that closed after raising substantial investment.
- The speed of execution in startups is attributed to their loose structure, providing an advantage over larger, more bureaucratic corporations.
- Arguments exist against early-stage startup governance, suggesting it may stifle innovation and speed in achieving product-market fit and growth.
- Investors are increasingly concerned about protecting their interests, recognizing the risks associated with startups beyond traditional market-related challenges.
- One overlooked risk in startups is corporate governance in resource allocation, particularly regarding founder compensation impacting company finances.
- Investors in early-stage startups have historically disregarded the need for strong corporate governance, allowing founders autonomy in decision-making.
- Implementing effective corporate governance in startups presents challenges due to cost and time constraints, highlighting the need for tailored structures for different growth stages.
- Open discussions around creating practical corporate governance frameworks for startups are crucial to enhancing transparency, efficiency, and financial protection.
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