Startups Don’t Usually Think About Governance

Most startups are built fast. Founders focus on product, users, and funding. Governance feels like paperwork that can wait. It’s boring. It doesn’t get clicks or close investor calls.

But skipping it early can wreck a company later.

Bad governance leads to messy decisions, unclear roles, legal trouble, and team tension. According to CB Insights, 14% of startup failures come from team problems. Many of those could’ve been avoided with better structure.

A 2022 Deloitte study found that 70% of early-stage startups don’t have clear internal governance. That means no defined responsibilities, no documented policies, and no plan for risk.

That’s like driving a car with no brakes because you’re busy building the engine.

Real Stories of Governance Gone Wrong

Here’s what it looks like in real life.

A founder hires a childhood friend to run operations. There’s no contract, no equity agreement, no clear title. They disagree about a funding round. The friend leaves. Now they’re in court. The startup loses time, money, and trust. That startup never closed their seed round.

Or a small team raises money but never forms a board. No one questions spending. One co-founder drains the company’s cash on “growth tools” no one else approved. The other team members find out too late.

No one planned for what happens when people disagree. That’s the point of governance. It’s not red tape. It’s guardrails.

What Is Startup Governance, Really?

Governance is how a company makes decisions. It defines who’s in charge of what. It creates a system for accountability, transparency, and planning.

It’s not just for big companies. Startups need it even more.

Here’s what governance usually includes:

• A board of directors or advisors
• Defined roles for founders and executives
• Policies for voting, equity, and major decisions
• Regular meetings and reports
• Basic risk and compliance systems

Without it, startups often waste time, lose trust, or face legal issues. And that’s before outside investors show up.

Roland Sanchez-Medina Saw This Coming

Roland Sanchez-Medina has worked with startups, large companies, and public boards. He’s seen what happens when people ignore structure.

“I once had a founder call me after a deal fell through. They had no written agreement between co-founders. The investor walked,” he said. “All that work, lost—because of paperwork they thought they didn’t need.”

Roland Sanchez-Medina has chaired audit committees, helped companies structure real estate and international deals, and served as President of The Florida Bar. His advice? Don’t wait.

“Start with a clear structure. You can always evolve it. But you can’t rebuild trust or fix a lawsuit after the fact.”

How to Fix Governance Early

Set Roles and Expectations from Day One

Write down who does what. Who owns what. Who decides what. It doesn’t have to be fancy. A simple document beats nothing.

Have a founder’s agreement. Define what happens if someone leaves. This avoids conflict later.

Form a Small Advisory Board

You don’t need a full board right away. Start with 2–3 trusted advisors. They should have experience in your industry, legal background, or financial insight.

They can help you ask better questions. That’s what a good board does.

Use Simple Templates

Legal templates for founder agreements, bylaws, and board minutes are easy to find. Use them. Don’t wing it.

Even free templates can protect you from lawsuits or tax mistakes.

Track Major Decisions

Keep records of key decisions. This helps if there’s ever a dispute or investor due diligence. Use a shared doc, email chain, or tool like Notion or Google Docs.

Clarity builds confidence.

Hold Monthly Check-ins

Once a month, meet with your team or advisors. Review progress, problems, and decisions. It doesn’t need to be long—30 minutes can work.

This keeps everyone aligned and stops little issues from becoming big ones.

Plan for Growth Early

If you want to raise money, you’ll need basic governance. Investors will look for a cap table, board minutes, and founder agreements. If they’re missing, it’s a red flag.

Set up your structure now. Don’t wait for a term sheet.

Why Founders Avoid It

Governance sounds like a slowdown. Startups run on speed. But speed without direction is just noise.

Some founders think it’s too early to worry about legal stuff. Others think trust means they don’t need rules. Both are wrong.

You can trust your co-founder and still want a written agreement. That’s smart. That’s respect.

Good governance isn’t about control. It’s about clarity.

Investors Care More Than You Think

Smart investors check governance before writing cheques.

They want to know:

• Who makes decisions?
• Are shares properly documented?
• What happens if a founder leaves?
• Is there a plan for conflict resolution?

If those answers aren’t clear, they walk away.

You don’t need to be perfect. But you need to be prepared.

Build Now, Adjust Later

The good news: governance isn’t hard to start.

Use basic templates. Ask mentors. Hold regular check-ins. Make things clear. That’s enough for now.

As your company grows, your governance can grow too. You can bring on more advisors, formalise your board, hire legal help, and upgrade your systems.

But if you wait until it’s urgent, it’s already too late.

Final Thought

Startups fail for all kinds of reasons. Don’t let structure be one of them.

Governance isn’t exciting. It won’t go viral. But it will save your company when things go wrong—and guide it when things go right.

Don’t treat it like a chore. Treat it like the backbone of your business.

Start today. You’ll thank yourself later.