Seeing this figure as a startup founder was frightening, but having researched why these businesses fail, I have found that it almost always boils down to one thing.

Governance.

My observation from the startup world is that a culture still exists where governance is at the back of people’s minds when starting a business, but I honestly can’t stress how much I believe it should be the first.

Governance is not just another chore; it’s a foundational building block that can cause the entire building to collapse without being a core part of the business plan.

Still, there isn’t a massive culture of governance in startups. I get it, some people don’t see it as the sexy or exciting part of starting a business, but as an advocate for it, I want to change that culture to help more businesses succeed.

But what is governance?

I see governance as the bible for businesses. It gives you a guide or overview of how your business should be properly managed, allowing you to make better decisions and mitigate for any bumps in the road that may arise. There are five main principles of good governance: accountability, leadership, integrity, stewardship, and transparency.

One example is having regular meetings within your team, which allows you to fulfil these five core values, especially when you are discussing organisationally defining decisions. When I was researching why startups fail, I was shocked to hear how often this step is missed.

As the founder of Unikorrn, we have created a meeting management platform that supports governance, except specifically for startups.

There are no governance systems in circulation made for just startups, and that’s because there simply isn’t enough emphasis on governance in the start-up world. Prior to becoming a founder, I had years of experience around governance as a Chartered Company Secretary, and trust me, I’ve seen the devastating effects of not having proper governance systems in place.

Governance covers three core areas of business: the governance/legal aspect, compliance, and risk management. Startups fail because they usually run out of money, are outsmarted by the competition, aren’t up to date with changing regulations, or simply because their product is no longer a good fit. However, all these risks can be mitigated with proper planning and precision.

Something people don’t often like hearing is that running a startup isn’t just about you as the founder. You need to consider your stakeholders and people that can be affected if your business falls flat.

It is vital to take all the necessary steps to plan, and that’s why I wanted to work on a platform that not only allows you to plan effectively but also gives insights and clues about what your business should be discussing to avoid the common mistakes that startups make.

Aside from founders making governance a core requirement, I think Investors, VCs and Accelerators need to do more to emphasise it. They have an immense impact and influence on startups, and if they want to see a return on their investment, they should absolutely put more pressure on companies to implement good governance and solid management practices. Governance will form the foundation of your business and you are never too early to start thinking about governance; don’t wait until it is too late to start running your business properly.

My mum always says: failure to prepare, prepare to fail. I’m sure plenty of parents have impacted similar wisdom, but it’s repeated so widely because it’s true.

Governance is crucial because it gives investors, or any third party invested in your business the confidence that you are doing everything possible to ensure their investment is protected and your business succeeds.

There are over 800,000 startups in the world, but only 44 of these startups have made it to the unicorn stage. Almost every startup has the potential to make it there, but we need to normalise proper governance as a crucial aspect of building a business before we can truly expect to see serious increases in that number.  

No matter how much money you raise, if proper governance isn’t in place, it’s only a matter of time before you fail.

The only startups that needn’t worry about governance are those without potential risks, and if you know any startups that are totally risk-averse, I’d like to meet them.