Startups That Fail Have One Thing in Common: Poor Governance
Everyone talks about scaling fast, but what if the real edge lies in something most founders ignore?
In the rush to product-market fit and rapid scaling, many startup founders push corporate governance to the sidelines. It’s often seen as a formality to revisit after fundraising, not during the build. But this mindset can be costly. The truth is: strong governance isn’t just about compliance. It’s a strategic enabler that, when applied correctly, helps you scale smarter, not just faster.
Why Governance Matters Early, and Why It’s a Growth Enabler
As Herwan Ng, Endeavor Mentor and Co-Founder of Verum Consulting Indonesia, reminds us: the absence of structure, not bad ideas, is what kills most startups. Around 90% of startups fail within their first five years, and one of the most overlooked reasons is poor financial management — a problem closely tied to weak or absent governance.
Governance done right provides clarity, alignment, and resilience. It aligns your team, investors, and goals around a shared understanding of value creation. It builds internal trust and external credibility, which becomes vital when you hit turbulence whether that’s a failed product launch, market shifts, or tightening capital environments.
More than just policies or board meetings, governance becomes a compass that helps you prioritize, adapt, and lead with intention.
How to Build Governance Without Slowing Down Your Company
For founders especially between Seed and Series B, the question isn’t whether to implement governance, but it’s how to do it in a way that grows with you. Governance is essential, but overengineering it can slow your agility, while underinvesting can breed chaos that risks collapsing your company. The key lies in designing “right-sized governance”: lean, practical structures that mature as your company does.
Start with the basics:
1. Transparent communication across founders, investors, and key team leaders.
2. Regular check-ins guided by clear, measurable business milestones not just vanity metrics.
3. Mentorship and advisory boards that evolve over time, offering both strategic direction and critical oversight.
This phase is also where mentorship becomes mission-critical. Many younger founders may feel disconnected from senior advisors, finding governance advice too rigid or outdated. But the right mentor, or someone who’s scaled a business, weathered crises, and learned from failure, can bridge that generational gap and make governance both accessible and actionable.
Your Board Could Be Your Superpower. Don’t Wait Until It’s Too Late
A common misconception is that boards are for later-stage companies. In reality, building a board, or at least an active advisory council, as early as the Seed or Series A stage can supercharge your strategic clarity.
What makes a high-impact early board member?
1. They’re not just investors; they bring hard-won experience from building and scaling companies.
2. They challenge without ego, help anticipate blind spots, and know when to push and when to support.
3. Most importantly, they’re aligned with your long-term vision, not just your next valuation.
The board’s role at early stages isn’t to rubber-stamp decisions. It’s to ask the tough questions, guide smart prioritization, and ensure the startup doesn’t lose sight of its core purpose as it grows.
Is Your Board Helping You Grow or Holding You Back?
Strong boards can unlock founder growth. Dysfunctional ones can derail it. The difference often lies in the relationship.
A healthy founder–board dynamic is built on:
1. Trust and transparency, especially around bad news.
2. Mutual respect for roles with founders leading the vision and execution, and boards supporting strategy and governance.
3. A shared long-term mindset, especially when navigating pivots, crises, or investor tensions.
By contrast, a dysfunctional dynamic emerges when:
1. Founders view the board as a threat or checkbox.
2. Board members overreach into operations or micromanage.
3. Communication is reactive rather than proactive.
During tough moments such as a sudden market pivot or a cash crunch, these relationship dynamics become magnified. Founders who’ve invested in board trust early on will find these moments to be transformative. Those who haven’t often find themselves isolated or directionless.
Build for Scale, Not Just Speed
Startups thrive on speed, but they endure because of structure. At Endeavor, we see time and again that governance is not just a box to tick. It’s a foundational layer that empowers founders to mature in their journey, helping them move beyond blind spots. Through connections with world-class mentors, we support founders in solving their challenges, while our global network fuels their growth every step of the way.
Strong governance helps you build not just a company that grows, but a company that lasts – and the only way to secure that lasting success is by growing alongside Endeavor’s community of High-Impact Entrepreneurs.