Corporate governance is not just an overhead, but an essential part of building a startup that protects shareholder interests in the long term. Suraya Turk, Rawan Baddour, Ravishankar GV, Rayan Alsharif, and Abdallah Mutawi discussed the importance of corporate governance in the early stages of startups in a panel discussion.
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HIGHLIGHTS
(05:34) Corporate Governance in the Early Stages
(09:33) Advisory Boards in Mature Companies
(14:10) The Importance of Good Governance
(17:35) Transparency: The Key to Success
(20:54) Fiduciary Duty to Shareholders
(24:20) Paying Non-Executive Board Members
(27:01) Functional vs. Dysfunctional Boards
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QUOTES
"And of course, anybody who's out there raising, certainly institutional capital is always going to be required by their investors to have solid corporate governance and a good framework for decision making, and a good framework for accountability."
"While you're playing offense, you can have someone else in the team playing defense and doing the right thing for your shareholders. I like to think of it as not as overhead but as an integral part of how you build something to protect shareholder interest in the long term."
"The whole purpose of having a corporate governance in place is to take a company from this stage to another better stage."
"You have to figure out people that may be interested in giving back in a way and then have some interest in mentoring companies."
"You will have to then go to people who think of some upside from being remunerated from these situations, not the best kind of board member to start with, but you have no choice but to do that."
"It's about kind of the mentality of the board and your shareholders because the word self-interest, or anybody acting self-interest at any stage of a company will automatically create conflict, and it'll automatically lead to an inefficient situation."
"No matter what stage a startup is at, especially in the early stages, they should have some form of corporate governance structure in place."
"One way to build trust is by talking about the bad news first."
"It's about today, where do we want to see start with the end in mind and work backward... how do we leverage off the skills and knowledge that we have?"
"Your first investor should actually treat you like a partner, there should be engagement transparency from day one."
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