Corporate governance is about maximizing shareholder value legally, ethically and on a sustainable basis, while ensuring fairness to every stakeholder – the company’s customers, employees, investors, vendor-partners, the government of the land and the community. Thus, corporate governance is a reflection of a company’s culture, policies, how it deals with its stakeholders, and its commitment to values.
Good corporate governance serves several important objectives. It enhances the performance of corporations, by creating an environment that motivates managers to maximize returns on investment, enhance operational efficiency and ensure long–term productivity growth. Consequently, such corporations attract the best talent on a global basis. It also ensures the conformance of corporations with the interests of investors and society, by creating fairness, transparency and accountability in business activities among employees, management and the board.
In advanced economies, corporate governance is mostly concerned with: dealing with conflicts of interest and providing shareholders with reliable and comprehensive information. These markets face their own challenges of corporate frauds; shift toward ‘hard law’ and greater regulation which the Wall Street Journal defines as “governance at gunpoint”. Regulating every aspect of corporate behaviour is impossible without adversely impacting operational flexibility of a corporation, discouraging risk-taking and penalizing the progress of even honest corporations.
However, the most pressing concerns and needs in many of the developing economies are of a much more basic in nature. Many developing economies are characterized by an environment which is not very conducive to transparency. Economic agents are often discouraged from being transparent for the following reasons:
High tax environment: customs duties, VAT, corporate tax and income tax
Inadequate employment legislation
Legislation which often leaves too much room for interpretation, and does not specifically address corporate governance
Largely cash based economies - leading to sales without invoices and double accounting
A significant number of Indian ventures are still characterized by the following:
Family based structure, from the equity to the staff and Board of Directors;
Highly centralized style of management, where the CEO or owner calls all the shots;
Small size, leading to a plurality of responsibilities, and thus often to incompatibilities;
Inability to attract and retain talent;
Often accommodating, if not non-existent (whenever not legally required) auditors;
Is it a lost battle? No, because while Corporate Governance may be difficult, it is essential and can be achieved through – Greater Transparency. VC investors can play a significant role here to incorporate best practices. For start-ups it’s very important that they walk the talk, before they start to run. Some of the must-haves that enable stronger corporate governance are:
Recognized competence and irreproachable ethics;
Corporate control bodies and ad-hoc committees by reinforcing the Board of Directors with the required industrial expertise; putting in place strategic committees; and remuneration and audit committees.
Implementing reliable information systems;
Introducing independent audits
Harish Gandhi, Executive Director
BharatMatrimony.com, India’s most trusted matrimony portal with over 12 million registered members, launched the world’s first matrimony channel on the internet, BharatMatrimony.tv. The pioneering website features exclusive and exciting videos that will create an engaging, informative and compelling experience for audiences across the globe. BharatMatrimony.tv will also produce capsules covering news, events and developments in the world of marriages. Video clips featuring weddings of topnotch celebrities, fashion, style and bridal wear will also be available.
iYogi, a remote technical services provider from India has signed up GlobalLogic for software product development. GlobalLogic, will assist in the enhancement of iYogi’s service delivery framework by using Web 2.0 tools and applications, in addition to the creation of Generation V technical support platform. This tie-up will facilitate integration with iMantra and global MPLS-based IP transport platform that provides customers with instant deployment of remote access and voice-based support with a single click.
Motionbox.com, a leading personal video sharing and storage site, recently announced the initial closing of its $6 million Series C investment round. Canaan Partners, one of the earlier venture investors also participated in the round. Motionbox enables individuals and families to easily upload, edit, store, and share their personal video memories, including those that have been captured in High Definition. In addition to free membership options on Motionbox.com and via partners, Motionbox provides a subscription-based Premium service featuring HD playback and sharing, unlimited archival storage, and download capabilities.
N-trig, a dual-mode pen and touch input device manufacturer for computers recently announced that it had raised $24 million in financing from Canaan Partners and Microsoft amongst others. N-trig plans to use the cash infusion to further its work with OEMs to develop multi-touch notebooks and convertible computers for the mainstream marketplace. The company’s touch technology is used in Dell’s Latitude XT and was recently launched on HP’s TouchSmart TX2. The company is also planning to announce more OEM design wins in 2009.
Canaan Partners announced several strategic executive promotions in the United States, India and Israel in the month of January 2009. These include, Alok Mittal who was named as a General Partner in the India office. Alok was earlier Managing Director for Canaan’s operations in India. In his new role as General Partner, Alok will expand Canaan’s presence in India and focus on identifying and developing emerging companies in the communications and mobility, digital media, enterprise technology and healthcare sectors.
Alok Mittal, General Partners, Canaan Partners India operations has been named as one of the “Top 50 Hottest Young Executives” in India by Business Today in its annual listings. India’s “Hottest Young Executives” have been identified after a detailed assessment conducted by the best in business – Ma Foi Global Search Services, Stanton Chase India, Accord Group India and Shilputsi. The listing highlights that Alok stands for everything that young Indians dream they can be and strive for - self-made and successful. He led Canaan’s entry into India and has made six-early stage investments including Bharatmatrimony.com.
Deepak Kamra, General Partner at Canaan Partners’ Menlo Park office has been once again named in the Forbes’ Midas List 2009 of top 100 start-up investors. Deepak has been named at the 70th position for big hits including IPOs of Acme Packet and SuccessFactors. He also led Canaan’s early investment in DoubleClick, the Internet’s first and leading online advertising solution; Match.com, the most popular dating site worldwide; and BharatMatrimony, the world’s number-one online matrimony site.
Canaan Partners invests in entrepreneurs and works alongside them to turn visionary ideas into valuable companies. Since 1987, the firm has catalyzed the growth of disruptive technology startups and healthcare companies revolutionizing the practice of medicine. With $3.4 billion under management and more than 95 acquisitions and 55 IPOs to date, Canaan has funded companies such as Acme Packet, Associated Content (acquired by Yahoo), CommerceOne, DoubleClick (acquired by Google), ID Analytics (acquired by LifeLock), Match.com (acquired by IAC), SandForce (acquired by LSI), SuccessFactors (acquired by SAP) and Virsto Software (acquired by VMware), as well as notable healthcare companies such as Advanced BioHealing (acquired by Shire), BiPar Sciences (acquired by Sanofi), Chimerix (NASDAQ: CMRX) and Elevation Pharmaceuticals (acquired by Sunovion). Current technology investments include Blurb, Kabam, Lending Club, Performance Marketing Brands, SOASTA, Tremor Video (TRMR), and Zoosk in the U.S.; BharatMatrimony, Loylty Rewardz and UnitedLex in India; and PrimeSense and LiveU in Israel. The Canaan healthcare portfolio includes emerging leaders such as Liquidia Technologies, Civitas Therapeutics and DICOM Grid. Canaan maintains a presence in the global innovation hubs of Silicon Valley, New York City, India and Israel. For more information visit www.canaan.com or www.facebook.com/canaanpartners. Follow us on Twitter @canaanpartners.
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