Southeast Asia’s venture world needs better frameworks, honest founders, and hands-on investors.


Despite economic headwinds, Southeast Asia’s startup ecosystem continues to forge ahead, but scratch beneath the surface and you’ll find lingering governance issues that merit a level of concern for all ecosystem players involved. This is magnified by the geographic and regulatory diversity of the region, where levels of governance practices and compliance requirements tend to differ by country.

We’ve all seen the headlines, promising company A or B implodes due to a number of reasons – mismanagement, lack of oversight, and yes, even the occasional fraudulent transaction inside the company. Sure, it’s a fact of life that not all companies will succeed, maybe the product didn’t fit the market, or maybe there was no market at all, maybe the company simply ran out of cash and failed to budget accordingly. But the startup failure that stings the most and affects everyone the most — founders, investors, stakeholders, the ecosystem — is when lapses in governance and oversight lead to company failure. Hardly anyone might remember Company so and so for closing due to running out of money or for failing to find product market fit, but everyone will remember the story of the founder who committed fraud and the investors who didn’t see it happening right under their very noses.

Governance failures: A ripple effect 

While Southeast Asia’s startup ecosystem continues to attract both local and international investors, recent high-profile cases have highlighted the importance of robust governance as companies scale rapidly. Challenges like misreported sales data or erroneous financial practices might suggest gaps in oversight or board engagement. Although these incidents are not unique to the region, they serve as important reminders that strong governance frameworks are essential for sustainable growth and investor confidence.

Every time a startup issue emerges, it makes players more cautious about the entire region. That means less money, fewer opportunities, and harder questions for everyone else trying to build something legitimate.

The response: Maturation Map

Given the seriousness of these concerns, VCs have developed the “Maturation Map”, a sort of playbook, if you will, for how startups and their investors should handle governance issues.

The Map has five main pillars. First, more active monitoring by investors. We’re talking regular financial check-ins, and using tech tools to track what’s actually happening in real-time. Second, better boards with members who actively participate and dedicate the time and effort to the startup. Third, transparency that goes beyond what regulations require. Fourth, making it easier for employees to speak up when something’s wrong. And fifth, getting regulators more involved when needed, sooner rather than later. Here’s what I like about this approach: it treats good governance as something that helps companies succeed, not just another compliance burden.

Why cookie-cutter solutions don’t work

But corporate and startup governance, as most things in life, is not a one-size fits all situation. After years of investing and working with companies, we’ve seen that what works for one company might be completely wrong for another.

A three-person team building a mobile app doesn’t need the same level of oversight as a fintech company handling millions in transactions. A startup expanding into new countries faces different risks than one focused on a single market. Yet too often, I see governance treated as a checklist that every company needs to complete the same way for the sake of minimum compliance

Similar to how startups are known for being agile and able to pivot quickly, corporate governance also needs a level of agility. This isn’t to say that you should do away with regulatory and governance compliance simply because you’re an early-stage startup; rather, it’s the ability to recognize governance needs depending on the stage of the company. Early companies might focus on getting basic reporting and controls in place. More mature startups, especially those in heavily regulated industries, might need stricter oversight and more transparency. The good thing about the “Maturation Map” is that it recognizes the differing needs of startups depending on their maturity, and provides recommendations and different approaches to match.

Lest you forget: Founder integrity

No framework, however sophisticated, can fully account for the integrity of founders. Investors can mandate audits and board seats, but they cannot legislate character. Founder integrity is often only truly revealed under pressure, and its absence can render even the best-designed governance structures ineffective. For investors, this underscores the importance of deep, ongoing engagement with founding and management teams, not just transactional oversight.

The real-world impact: Reputation and investment

Governance failures come at a steep cost. Damage to reputation can come quickly and severely, not only to the startup itself but also to the wider ecosystem. Investors must now deal with increased scrutiny, extended due diligence periods, and an enlarged role as risk managers rather than merely capital suppliers. Each negative high-profile case raises perceptions of risk of investing within the region, with a resultant threat of slower capital and innovation flows.

So, what’s the solution?

Venture capitalists must move beyond a static transactional and minimum compliance checklist approach to a more dynamic, proactive, and agile governance approach. They should:

  • Engage with startups early, helping to identify and address governance challenges from the outset
  • Advice on risk mitigation, conducting frequent governance audits, and employing technology for tracking on a real-time basis
  • Foster close, trust-filled relationships with founders so you can recognize red flags early.
  • Engage cross-functional teams from HR, legal, communications, and tech, to collectively uphold governance responsibilities

Building a resilient SEA startup ecosystem

Southeast Asia’s startup scene is still teeming with potential. But developing its true potential will require all of us to accept governance as an ongoing, collective responsibility. By accepting agile models, founder integrity as a priority, and intense VC involvement, we can transform governance from a burden into a competitive advantage. This will forge the SEA startups of the next era as ones based on trust, clarity, and building value over time.


Jecky Pelaez is Partner for Investments, Legal & Compliance at Kickstart Ventures.

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