Most startups are building on quicksand.
But with the right foundations, yours doesn’t have to be one of them. Our startup ecosystem is full of passion, but passion without structure is a double-edged sword.
If you’re not fully committed to navigating the frustrations and disappointments of our challenging environment, you’ll burn out and quit before making any real impact. Governance and sustainability are often viewed as costly, secondary concerns. But the truth is, what’s truly expensive is the absence of governance and a sustainable plan.
In my last piece, I emphasised the necessity of establishing a solid legal foundation for your startup. It’s like giving a newborn all the required immunisations — if you miss those early vaccines, you’re left dealing with preventable diseases later on.
Today, let’s go a step further and explore governance and long-term sustainability. These are the cornerstones of any enduring business, yet many founders are so caught up in their immediate goals — scaling, securing funding, or reaching an exit — that they overlook what it takes to keep their company viable for the long haul.
The governance gap
In this part of the world, strong institutions are rare. Our system glorifies the “strong man” rather than the strong institution, which leaves us vulnerable when leadership changes hands. Think of the tech industry here. It’s vibrant, yes, but also volatile.
A lot of founders run their businesses as if they’re temporary, waiting for the perfect buyout offer. That’s all well and good, but what if the exit doesn’t come, or if it’s not the exit you envisioned? Then you’re left with a shaky foundation, struggling to adapt because you never built the systems required for long-term operation.
Corporate governance isn’t just a nice-to-have; it’s essential. If you build a startup with the mindset of “exit or bust,” you’re putting the cart before the horse. Exiting shouldn’t mean the death of your company.
In fact, you’re not really a startup founder if your entire focus is on exiting without considering what’s left behind. Imagine if Steve Jobs had treated Apple as a project he could sell to the highest bidder. Would Apple still be the powerhouse it is today?
Written by seasoned experts, who have over 16 years of experience in Free Zones development. Learn more.
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Passion meets structure
I once described passion as the fuel for any startup founder, but passion without structure is like a fire without a fireplace — it’ll burn everything in sight. Real sustainability involves going beyond passion and implementing disciplined governance structures. This means building a data room from day one, establishing internal controls, drafting comprehensive legal agreements, and documenting every partnership and collaboration.
Most founders think they’re too small to worry about this kind of structure, but by the time they realise they need it, they’re usually in the middle of a crisis.
They’ve scaled, taken on investors, and suddenly, everyone wants to see the paperwork. And it’s not just investors — good governance builds a brand that commands respect. It’s your way of saying, “I’m here to play the long game.” It’s what keeps you in control and enables you to demand a seat at the table.
Key pillars you don’t want to miss
I went through CB Insights’ list of why startups fail and realised several issues could be prevented by a proper governance structure.
When thinking about corporate governance, I’m not talking about just the contracts and papers you sign and get over with. It touches on diverse pillars ranging from regulatory issues to business models to setting up the right team.
Flawed business model (19% of startup failure)
A great idea is not enough; it’s about creating a structure that supports the idea in the long term. Governance plays a crucial role here by forcing founders to evaluate, refine, and stress-test their business models.
With a well-defined governance framework, you’re constructing a foundation that can adapt to tomorrow’s challenges. You’re constantly checking that your business model is viable, scalable, and resilient.
Regulatory/legal challenges (18% of startup failure)
Navigating legal and regulatory hurdles is one of the top reasons startups fail, yet it’s often overlooked in the early stages. A robust legal foundation established early on doesn’t just shield your startup from compliance issues; it allows you to operate confidently within the framework of the law.
With legal foresight, your startup can avoid costly setbacks and stay focused on growth rather than crisis management.
Not the right team (14%)
Building a sustainable company starts with building the right team. Governance ensures the startup has the right people in place and the systems to assess and adjust as needed. A governance framework that emphasises talent management allows a startup to continuously evaluate the skills it has and the skills it needs.
It’s not enough to have passionate founders; you need a team capable of executing the vision and navigating complex challenges. Strong governance ensures that the startup isn’t held back by team weaknesses but empowered by collective strength.
Disharmony among team/investors (7%)
Team and investor conflicts are a silent killer in the startup world. Governance structures that establish clear roles, responsibilities, and lines of communication can reduce these issues significantly. Good governance fosters transparency and alignment, ensuring that everyone is on the same page regarding the company’s vision and goals.
When the groundwork is laid for collaboration and accountability, it creates a culture where team members and investors can focus on building rather than battling. This alignment is essential for a startup to grow sustainably.
Building for collaboration and legacy
Every successful startup I’ve seen in this ecosystem has heavily leveraged collaboration. They’ve recognised that no one builds alone. Building strong partnerships isn’t a sign of weakness; it’s a mark of wisdom.
The likes of Flutterwave have succeeded because they understood the value of connecting with traditional financial institutions. These companies are now beyond mere tech startups—they’ve embedded themselves in the very fabric of our economy.
So, if you’re serious about sustainability, collaboration must be at the core of your strategy. Find partners who share your vision, and work closely with them. Invest time in understanding their needs and, more importantly, in aligning their goals with yours.
You’ll find that this creates a stronger, more resilient ecosystem, one that isn’t just centred in Lagos or Abuja but reaches into the rural areas, developing talent and spreading innovation across the country.
True path to legacy
I get it — no one talks about governance at startup events. It’s not sexy, and it doesn’t fit the romanticised narrative of the scrappy entrepreneur. But if you truly want to make an impact, governance is the only way forward. It’s what separates those who build for themselves from those who build for the next generation.
If we want to stop exporting our brightest minds and our most innovative products overseas, we need to focus on sustainability. We need to build startups that can thrive beyond their founders, and that require a commitment to governance.
The path to sustainability isn’t easy. It’s filled with hurdles and requires patience, collaboration, and a willingness to look beyond the immediate payoff. But if you ask me, it’s the only path worth taking.
