Governance sounds like paperwork. It’s actually trust infrastructure. Several high-profile Indian startups have faced governance controversies over accounting, related-party dealings or founder conduct, and the cost to their valuations and reputations was severe.
Your board
- Early on, the board is usually the founders plus one or two investor representatives.
- As you grow, add independent directors with relevant experience.
- Hold regular meetings with a standard pack: metrics, financials, cash and runway, hiring, risks, and decisions needed.
- Use the board for advice and introductions, not just reporting.
Investor updates
Send a short monthly update: highlights, lowlights, key metrics, cash and runway, and asks. Founders who communicate consistently find follow-on funding easier.
Financial controls
- Two-person approval for payments above a limit.
- Separate roles: whoever records transactions shouldn’t approve them.
- Monthly reconciliations and a timely statutory audit by a reputable firm.
- Clear expense and travel policies, including for founders.
Conflicts of interest
- Disclose and get approval for related-party transactions (deals with founders’ relatives or their companies) as company law requires.
- Avoid personal use of company funds or assets.
- Document all major decisions in board minutes.
Compliance and ethics
- Keep statutory filings on time (Level 4).
- Have policies on data protection, harassment (POSH), anti-bribery and whistleblowing.
- If you collect customer data, comply with India’s data protection law (DPDP Act).
Your takeaway
Build governance habits before you need them. They’re cheap now and priceless later. Final chapter: exits, acquisitions and IPOs.