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AC Ventures and PwC unveil comprehensive corporate governance playbook for tech startups

Published on October 31, 2023

Last night, AC Ventures, in collaboration with the global consultancy, PricewaterhouseCoopers (PwC) Indonesia, released a comprehensive playbook on corporate governance tailored for tech startups. Anchored in the Indonesian General Guidelines for Corporate Governance, the playbook offers actional advice on accountability, transparency, sustainability, and ethical behavior as essential pillars to ensure a company’s enduring resilience and success in an unpredictable business climate.

Today’s investor landscape is rapidly shifting toward a keen focus on environmental, social, and governance (ESG) metrics. Given PwC’s revealing data—one point in 2022 exposing that a staggering 80% of investors are cautious of “greenwashing” and another in 2023 highlighting that 70% of consumers lean toward sustainable products—it has become evident that startups must attune themselves to these changing dynamics if they hope to raise capital and succeed in the market.

Central to the playbook’s guidance is the ‘Three Lines Model.’ This robust framework consists of the Front Line, dedicated to managing daily operations and imminent risks; Risk & Compliance, which lends itself to oversight and other crucial components; and the Internal Audit, responsible for independent verification. With insights derived from PwC’s extensive research, startups are encouraged to foster collaboration between these lines within their organizations. Such strategic structures, especially within nimble organizational setups, can be game-changers, ensuring startups adeptly circumvent challenges that may inevitably arise.

The guide offers in-depth insights into the roles and responsibilities of Boards of Directors (BOD) and Boards of Commissioners (BOC). While the BOD takes the helm in defining strategy, ensuring financial health, and aligning with shareholder interests, the BOC serves as a moral compass, endorsing and proposing best ethical practices, prioritizing sustainability, and ensuring compliance with legal mandates.

In an age when business methodologies are in constant flux, the playbook articulates the pressing need for startups to innovate their board and management approaches. Traditional oversight remains paramount, but there’s also vast potential awaiting those who venture into novel oversight processes.

From a financial standpoint, the playbook zeroes in on essential strategies. Startups are advised to maintain a prudent two-year funding buffer, channel efforts toward profitability, and wisely manage cash flow and capital investments, ensuring alignment with their overarching growth aspirations.

The playbook drills into the importance of meticulous financial reporting. It advocates for precision, comprehensive clarity, and timeliness in all financial disclosures, emphasizing fundamentals such as accurate asset valuation and complete disclosure.

For startups set on integrating ESG principles, the playbook lays down a pragmatic roadmap. This involves consistent internal upskilling, fostering stakeholder dialogues, ensuring ESG criteria are integral in partner and vendor evaluations, leveraging technological advancements, nurturing collaborations, and championing transparency in all ESG-centric reports.

As a guide, the playbook underscores the pivotal role of boards in overseeing such ESG strategies. This is buttressed by a PwC Global Investor Survey, which found that a remarkable 79% of investors view ESG as central to their investment calculus today.

Further, the playbook shines a spotlight on industry giants setting the gold standard in ESG: Salesforce’s resolute commitment to environmental conservation and Patagonia’s deep-seated ethos of environmental stewardship stand out.

Looking ahead, the convergence of corporate governance with key tenets of accountability, transparency, sustainability, and ethics is undeniable. With investors leaning heavily into ESG nuance, transparent reporting has become non-negotiable, directly impacting a company’s growth and longevity.

In this landmark playbook, AC Ventures and PwC give startups with an arsenal of actionable corporate governance strategies. From crafting formidable boards to optimizing technology for risk management and compliance, this guide aims to be an invaluable compass for tech startups navigating tumultuous terrains, pointing them toward a horizon of sustainable growth and boundless potential.

Michael Soerijadji, Founder and Managing Partner at AC Ventures, explained, “This playbook underscores the importance of foresight and proactive measures. While tech startups in Indonesia, including our portfolio companies, consistently exhibit a vibrant entrepreneurial spirit, certain observable challenges and notable case studies serve as cautionary tales. These scenarios emphasize the significance of preventive strategies. With that in mind, AC Ventures and PwC Indonesia offer our combined expertise to guide founders in building solid structures, making informed decisions, and avoiding common pitfalls related to corporate governance.”

Yuliana Sudjonno, Partner at PwC Indonesia remarked, “Robust corporate governance is essential today. This playbook and our partnership with AC Ventures underscores our commitment to ushering startups into a future defined by integrity, agility, and unparalleled success.”

Download the full playbook via: https://acv.vc/resources/corporate-governance-for-tech-startups/

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