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Good Governance in Venture Capital
February 14 @ 1:00 pm - 4:30 pm
In recent times, the venture capital industry has come under scrutiny for allowing the rise of questionable firms characterized by poor corporate governance including ineffective boards, poor oversight, weak controls, and conflicts of interest. At the same time, an increasing number of investors are engaging in responsible governance practices aimed at strengthening the bottom line of investments. Why do investors continue to pour money into VC-backed companies that demonstrate serious governance flaws? What lessons and best practices should investors and directors of venture-backed companies learn from the failure of firms and platforms such as WeWork, Uber, Deliveroo, and most recently, FTX, and why have those lessons proven so hard to internalize? And can the venture capital industry embrace good governance without sacrificing returns, i.e., the needs of individual VC firms to make financially successful investments? This virtual program aims to bring together VCs, founders, independent directors of VC-backed companies, LPs, scholars, and policymakers to discuss how the industry can create standards and shared practices to enable the ecosystem to enforce good governance going forward.
Panel 1: Good Governance in VC Firms
Good governance in venture capital firms is an essential part of the day-to-day operations and the norms associated with investment practices. Yet there is little information or guidance on what constitutes good governance within VC firms. In fact, venture capital is one of the few industries which operates without established industry standards or shared-norms around governance even if informal practices are shared among different firms and investors. To understand what constitutes good governance practices and create a set of actionable guidelines in the industry, this panel aims to bring investors, LPs, and VCs together for a conversation on the topic. The goals are to shed light on the various ways in which governance practices are related to firm investment theses, industry and/or stage focus, and other commitments, such as DEI and/or ESG.
Panel 2: A Portfolio Company’s Guide to Internal Controls
Good internal controls can help companies to mitigate financial and operational risk, improve efficiency, prevent fraud, and comply with laws and regulations. Unfortunately, many portfolio companies fail to pay adequate attention to things like data quality, audits, regulatory compliance, and financial practices until an impending exit forces their hand. Neglecting internal controls can be costly and detrimental to the long-term health and well-being of a portfolio company, and can contribute to business failure and increase the risk of fraud. FTX is only the latest example from a long list of venture-backed companies that have failed at least in part due to poor internal controls.
What are internal controls, and why should portfolio companies care about them? How can portfolio companies ensure that information coming from across the company is timely, accurate and reliable? When should controls be implemented and what should they look like? What is the board’s role in establishing and maintaining a sound system of internal controls? Join a distinguished panel of experts to learn how companies and their boards can design, implement and monitor internal controls at a venture-backed company.
This event is co-sponsored by the Nelson Center for Entrepreneurship at Brown University, Venture Capital Inclusion Lab, VentureESG, The Rock Center for Corporate Governance at Stanford University, The NASDAQ Entrepreneurial Center and First Close Partners.