Inside the Boardroom: How VCs Actually Deal with Fraud & "Bad Faith" Founders - E690

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Why is governance critical for startup growth and investor confidence?

Jecky Pelaez 0:00
You're a startup, what's important to you is really growth and profitability, right? But the reality is that there is this aspect of governance because yeah, we all operate in a system. We all operate in jurisdictions that have certain requirements that we have to meet. You still have to keep the founders motivated. At the end of the day, if you believe in the founders, you trust the founders. Right. You said like they're good faith. founders they're as important to the business as the capital you bring in because the business doesn't move without Right.
Jeremy Au 0:31
I've heard from founders frustrations about several dynamics, right? One of course is that the speed of incorporation in Singapore is much faster than that of the Philippines. A second thing has been very much like taxation. So in Singapore companies are taxed based on the amount of profit they make, versus in the Philippines people are being taxed on the amount of revenue they make. Which is pretty bad for startups occurring losses for the first uh five years of your life.
Jecky Pelaez 0:56
There have been improvements with incorporation a lot there's online now. So we we have seen that. But it's really the number of government agencies that you have to deal with. Um and they all seemingly don't communicate with each other. It gets so daunting.
Jeremy Au 1:14
Welcome to Brave. Learn from Southeast Asia's best tech leaders. Build the future, learn from our past, and stay human in between. No BS on success. I'm Jeremy Al, Venture Capitalist, Sierra Founder, Harvard MBA, Science Fiction Nerd, and Dad of Two Daughters. Every week, we debate startup news, interview change makers, answer listener questions, and share personal insights. Join our movement of over 40,000 members and get transcripts, resources, and community at www.bravesea.com. Mm. Stay well and stay brave.
Jecky Pelaez 1:57
Hey Jackie, excited to have you on the show. Jeremy, thank you for having me. Very happy to be here.
Jeremy Au 2:02
Yeah. I mean, you know, you're the expert on all things legal, governance, compliance here in the Philippines and venture capital attack. Such an important topic, uh, and I'm excited to learn from you as well. Could you introduce yourself?
Jecky Pelaez 2:14
Yeah, happy to. So I'm Jackie Palaez. I'm a partner at Kickstarter Ventures. I mainly head the legal department, but I do a little bit of a hybrid role where I do both legal investments. So it's part of legal, we deal with like the administrative part of legal, like making sure that the fund is up and running. Okay. Uh we're all fully compliant. And when you start to look at the investments, like all our legal, the the entire legal aspect of doing deals is covered, right? Great, so So that's from the start to doing diligence on a company all the way to, you know, doing documentation, closing, and even after, just making sure that when you do your checkups on them, our portfolio companies are also uh compliant with whatever regulations that they have to be compliant with.
Jeremy Au 2:56
Fantastic. And uh your colleagues, uh Joanne, Yao, as well as Mike, have previously been on the podcast as well. So fantastic to hear a little bit more. And I think Kickstarter is one of the top VCs in Philippines. So really excited to see some of the learnings and, you know, uh permutations that you've seen over the years. But, you know, let's go all the way back to the beginning. Like, why did you decide to be a lawyer out of uh, you know, all jobs and professions?
Jecky Pelaez 3:19
Yeah, uh w we do have a family history of lawyers as well. So my grandfather on my my dad's side, uh, he was a lawyer. Yeah. But you know, I I actually first started out working at a bank right after college. You know, I was uh doing like commercial banking function. Like, you know, the time it didn't feel as it was right for me. And I was I was trying to figure out like my my next step in life and I figured I was pretty interested in in law at the time. I figured it would be quite useful because it's very useful because you kinda touch everything, you know, it it kinda makes remember about this this line from like the devil's advocate. Uh I don't know if you remember that old Al Pacino film.

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