Governance and Compliance in Technology Startups: Proposition of Frameworks and Adapted Best Practices

Débora Chaves Faria da Motta Moraes; Guilherme Leite Gaudereto

DOI: 10.22167/2675-6528-202602824

Article derived from a Final Course Work (TCC), with content based on the student’s original work and adapted to the editorial format of the E&S Magazine with the support of the ResumeAI tool, an artificial intelligence solution developed by the Pecege Institute for textual synthesis and organization.

Abstract

The study analyzed governance and compliance practices and barriers in Brazilian technology startups, aiming to propose incremental structuring guidelines compatible with their different maturity stages. It started from the premise that consolidated normative frameworks, such as ISO 37301 and ISO 31000, are difficult to apply in organizations with rapid growth and limited resources. The research adopted a qualitative-quantitative, exploratory, and descriptive approach, through field survey and bibliographic and documentary research. The results (n=21) revealed recognition of the relevance of governance, but with incipient implementation of formal structures. The main barriers identified were lack of time and prioritization, limitation of financial resources, and lack of technical knowledge. Based on this evidence and the theoretical framework, the Incremental Governance Framework for Technology Startups (FGIST) was proposed, structured in four maturity levels and five dimensions. The FGIST is guiding and adaptive, offering minimum viable practices per stage, reconciling organizational agility with integrity and regulatory compliance. It represents an accessible roadmap for founders and managers and a due diligence reference for investors.

Keywords: Adaptive compliance; Innovation ecosystem; Risk management; Institutional legitimacy; Organizational maturity.

1. Introduction

The technology startup ecosystem has established itself as a crucial engine of innovation, economic dynamism, and value generation, both in Brazil and globally. These organizations are distinguished by their scalability, intense application of technology, and business models focused on accelerated growth, often operating in scenarios of high uncertainty and competitiveness. In the Brazilian context, recent sectoral reports indicate continuous expansion in the number of startups and investment volume, underscoring the relevance of this sector for economic development and digital transformation (ABStartups, 2023; BID Invest, 2022).

However, this environment conducive to innovation and agility also exposes startups to considerable risks of an operational, legal, reputational, and financial nature. The organizational culture, often summarized by the maxim “grow first, structure later,” tends to postpone the implementation of formal governance and compliance practices (IBGC, 2022; Treviño and Nelson, 2020). This approach clashes with the expectations of investors, regulators, and other stakeholders, who demand greater transparency, integrity, and predictability in business management.

Recent studies indicate that governance fragility is among the main factors restricting access to capital and compromising the sustainability of startups in more advanced growth stages (IDB, 2022; PwC Brazil, 2023). Widely recognized governance, compliance, and risk management frameworks, such as ISO 37301, ISO 31000, and the Global Reporting Initiative (GRI) standards, were originally designed for medium and large organizations with mature structures and robust resources (ISO, 2018; ISO, 2021; Ramalho, 2019). The direct application of these models to technology startups is often unfeasible or perceived as excessively bureaucratic, incompatible with the flexibility and speed of decision-making required by these companies. This inadequacy creates a significant gap, leaving founders and managers without clear benchmarks for establishing minimum governance practices from the initial stages.

From the perspective of Institutional Theory, startups are susceptible to coercive, mimetic, and normative pressures that, at different times, drive them to adopt governance practices to achieve legitimacy and access to resources (DiMaggio and Powell, 1983). Additionally, the literature on ESG (Environmental, Social, and Governance) emphasizes governance as a strategic component capable of generating shared value, mitigating risks, and strengthening stakeholder trust (Carroll, 1991; Freeman, 1984; Porter and Kramer, 2011).

Given the complexity and operational constraints of technology startups, and the gap in adapted references, the present research is justified by the need to offer a practical and progressive guide. This study seeks to fill this gap by proposing an incremental governance framework for technology startups, which analyzes traditional frameworks in light of the specificities of these organizations, empirically maps the practices adopted by Brazilian startups at different maturity stages, and offers structuring guidelines compatible with their operational constraints.

2. Material and Methods

This study was characterized as an exploratory and descriptive research, according to Gil (2017), seeking to understand and detail the implementation of governance, compliance, and risk management practices in technology startups. A qualitative-quantitative, or mixed, methodological approach was adopted, which, according to Creswell and Creswell (2018), confers greater analytical robustness by combining the measurement of patterns with the interpretation of meanings. The research design was configured as a field survey, complemented by bibliographic and documentary research, a suitable procedure for investigating the characteristics and behaviors of a specific population (Marconi and Lakatos, 2017).

The bibliographic and documentary research stage was fundamental for the construction of the study’s theoretical framework. Academic literature, technical standards, and consolidated governance, compliance, and risk management frameworks were analyzed. These included ISO 37301 (ISO, 2021) and ISO 31000 (ISO, 2018) standards, the Global Reporting Initiative (GRI, 2021) standards, and the Brazilian Corporate Governance Institute (IBGC, 2022) guidelines. This analysis supported the understanding of existing models and guided the development of the primary data collection instrument.

In the empirical stage, a structured questionnaire was applied in an electronic format, using the Google Forms platform. This instrument was designed for the collection of primary data, allowing for the standardization of responses and subsequent statistical treatment, as recommended by Vergara (2016). The research, of an applied nature, aimed to identify challenges, perceptions, and levels of organizational maturity related to governance, compliance, and risk management practices in technology startups.

The questionnaire was developed based on the theoretical-normative references studied and organized into six thematic blocks. These blocks addressed: (i) startup characterization; (ii) governance and decision-making; (iii) compliance and minimum controls; (iv) risk management; (v) governance from an ESG perspective; and (vi) challenges, barriers, and perceived maturity. The instrument totaled 19 questions, with 9 of them on a five-point Likert scale, 7 multiple-choice, and 3 short open-ended questions. A formal pre-test of the instrument was not conducted.

The study population was composed of founders, partners, CEOs, and managers of technology startups. The sample was defined by convenience and accessibility, in accordance with CNS Resolution nº 510/2016 (art. 1º, I). Data collection occurred between January 23 and 30, 2026, resulting in 21 valid responses. The questionnaire was distributed through professional networks such as LinkedIn, WhatsApp groups of startup and entrepreneurship communities, as well as direct contacts from the researcher. At the beginning of the form, a free and informed consent form was provided, ensuring the voluntariness of participation and the exclusive use of data for academic purposes.

The participating startups were located in seven Brazilian states, with one international startup. For analysis and framework construction purposes, the startups’ development stages were categorized according to the widely adopted classification in the innovation ecosystem: Ideation/pre-seed, Seed, Traction, and Series A or higher. This categorization guided the development of the data collection instrument and the subsequent proposition of the levels of the Incremental Governance Framework for Technology Startups (FGIST). The organizational profile of the sample was predominantly small-sized, with most companies having up to ten employees and no external investment raised.

The collected data were treated through descriptive statistical analysis, which included the calculation of frequencies, percentages, and means for the Likert scale questions. The open-ended responses, in turn, were subjected to thematic content analysis, according to the methodology proposed by Bardin (2011). These techniques allowed for the organization and synthesis of the obtained information, preparing it for the discussion and framework proposition stage.

The proposition of the Incremental Governance Framework for Technology Startups (FGIST) resulted from the integration of empirical findings from the field survey with the theoretical-normative framework. The FGIST construction process occurred in three distinct stages. Firstly, priority dimensions were identified from implementation gaps evidenced by lower Likert means and barriers declared by respondents. Next, recommended practices were mapped by stage, based on reference normative frameworks (ISO 37301, ISO 31000, IBGC, and GRI), adapting them to observed operational constraints. Finally, the framework was structured into four progressive levels, aligned with the maturity stages identified in the sample, following the principle of progressive isomorphism (DiMaggio and Powell, 1983). The FGIST was conceived with a guiding and adaptive character.

3. Results and Discussion

The analysis of the collected data allowed for an in-depth understanding of the governance and compliance practices in technology startups, as well as the barriers faced by these organizations. The research sample, composed of twenty-one startups, revealed a predominantly young profile, with 71.5% of the companies in operation for up to three years. This concentration in early stages, with 38.1% in ideation/pre-seed and 28.6% in seed, totaling 66.7%, is crucial for the study, as it is precisely these organizations that most need practical and accessible governance frameworks, given the inadequacy of traditional models.

The sectoral diversity of the sample also proved relevant, with highlights in Information Technology/Software/SaaS (28.6%), Healthtech/Health (14.3%), and Industry/Manufacturing (14.3%). This breadth suggests that the identified governance gaps are not exclusive to a single segment, giving a generalist character to the proposed Incremental Governance Framework for Technology Startups (FGIST). Geographically, the startups were distributed across seven Brazilian states, with the majority in Rio Grande do Sul (38.1%), São Paulo (19.0%), and Rio de Janeiro (14.3%). Most companies (95.2%) had up to ten employees, and 66.7% had not raised external investment, reinforcing the profile of organizations with limited resources.

Governance and Decision-Making

The results on governance and decision-making indicated that the definition of roles and responsibilities among partners is the most consolidated practice, achieving the highest average among the evaluated blocks, with 3.90. Furthermore, 66.7% of respondents classified this practice at levels 4 or 5 of the Likert scale, indicating consistent or total implementation. This finding suggests that the delimitation of functions is a naturalized practice in the startup ecosystem, likely due to its direct link with partnership agreements and the initial organizational structure itself.

However, a less robust implementation was observed in other areas. Formal decision-making forums obtained an average of 3.24, while strategic documentation registered only 2.90, with 52.4% of respondents at level 3 (partially implemented). This pattern is consistent with the concept of institutional decoupling, as described by Meyer and Rowan (1977). Startups recognize governance as a legitimate value, but face difficulties in fully integrating it into daily decision-making processes, evidencing a gap between the perception of the need for documentation and the systematic implementation of this practice.

Compliance and Minimum Controls

Regarding compliance and minimum controls, the formalization of codes of conduct obtained an average of 2.95, with 28.6% of respondents indicating complete non-existence (level 1). The analysis of formalized policies revealed a distinct pattern: 66.7% of startups had data protection policies (LGPD), while only 33.3% had anti-corruption policies. Conflict of interest policies were adopted by 47.6% of companies, and 28.6% had no formalized policies at all.

This contrast reflects a predominantly coercive response to the regulatory environment, especially driven by the effectiveness of the LGPD since 2020 and the risk of associated sanctions. This reactive adoption contrasts with a proactive integrity culture, as discussed by Treviño and Nelson (2020). The absence of anti-corruption and conflict of interest policies in a significant portion of startups represents a considerable operational risk, particularly in phases of investment fundraising and the establishment of strategic partnerships. Responsibility for compliance was exercised in a cumulative manner in 52.4% of cases, with only 4.8% having a dedicated function and 42.9% having no formal responsible party.

Risk Management

Risk management emerged as one of the most critical indicators of the study. Risk registration and monitoring obtained the lowest average among all evaluated blocks, with 2.57, while risk identification reached only 3.00. ISO 31000 advocates for the continuous integration of risk management into decision-making processes; however, the data revealed that this integration is incipient or irregular in most participating startups, suggesting a “growth trap”.

The pressure for accelerated expansion, inherent in the startup business model, makes risk management essential, but paradoxically hinders its formal implementation. This is due to the opportunity cost perceived by founders, who prioritize growth over the structuring of risk processes. This gap in risk management can compromise long-term sustainability and the ability to attract investment, exposing organizations to significant vulnerabilities.

ESG – Governance Dimension

The perception of governance as a relevant factor for attracting investments obtained the second highest individual average in the survey, with 3.71, being surpassed only by the definition of roles and responsibilities. In the group of seed-stage startups, this average reached 4.50, indicating a recognition of the importance of governance for external credibility. However, the effective monitoring of governance indicators reached only 2.62, revealing a significant mismatch between perception and practice.

This misalignment between discursive recognition and operational commitment reflects the need for concrete accountability structures and processes, which are still incipient in most of the analyzed startups, according to the perspective of Carroll (1991) and Freeman (1984) on corporate responsibility. The synthesis of Likert means by thematic block showed that “roles and responsibilities” and “governance for attracting investments” presented the highest average values, while “risk registration and monitoring” and “governance indicators monitoring” exhibited the lowest, evidencing an asymmetry between the aspiration for governance and its practical implementation.

The progression of averages by development stage and evaluated dimension revealed distinct patterns. Startups in ideation/pre-seed presented predominantly low to medium values, with a negative highlight for indicator monitoring, which registered the lowest average in the sample, at 1.75. At the seed stage, a relevant leap in investment governance was observed, reaching 4.50, confirming that external fundraising acts as a catalyst for the adoption of governance practices.

In the traction stage, a relative setback was observed in strategic documentation, with an average of 2.40, in contrast to 3.17 in the seed stage. This data suggests that the operational pressure of accelerated growth may negatively impact documentary routines. On the other hand, startups in Series A or higher stages presented averages close to 5.0 in compliance and risk management, indicating a natural convergence towards the demands of traditional frameworks. This empirical progression directly underpinned the four-level structure of the FGIST.

Barriers and Adequacy of Frameworks

The main barriers to the implementation of governance and compliance identified were lack of time and prioritization (61.9%), limitation of financial resources (57.1%), and lack of technical knowledge (23.8%). Other barriers included organizational culture (9.5%) and perception of bureaucracy (4.8%). The predominance of responses related to time and financial resources, in contrast to the low incidence of the perception of bureaucracy, indicates that respondents do not reject governance itself, but lack practical conditions to implement it.

This finding validates the concept of Minimum Viable Governance Product (MVGP) proposed in the FGIST, which seeks to offer progressive structuring with low initial cost and without bureaucratic overhead. Regarding the adequacy of traditional frameworks, 61.9% of respondents considered them only partially compatible with the reality of startups, and 33.3% rated them as inadequate. Only 4.8% of participants, in the ideation/pre-seed stage, judged them fully adequate, which demonstrates the rarity of this perception in the sample.

The result that 95.2% of respondents do not consider traditional frameworks fully adequate for the reality of startups is the central empirical evidence that justifies the proposition of FGIST. This demand is not to replace existing models, but for a transition framework that makes the governance journey accessible from the initial stages. The self-assessment of the governance maturity level reinforced this diagnosis: 19.0% declared a very low level, 23.8% low, and 28.6% medium, totaling 71.4% below the high level. No respondent declared a very high level, consolidating the scenario that motivated the proposition of FGIST.

Proposition of the Incremental Governance Framework for Technology Startups (FGIST)

Foundations and guiding principles

Based on the integration of empirical findings from the survey and the theoretical-normative framework, the Incremental Governance Framework for Technology Startups (IGFTS) was proposed. This framework is guiding and adaptive, not rigidly prescriptive, and its empirical validation in different contexts constitutes an agenda for future research. The model does not aim to replace existing normative frameworks, but to act as a transitional structure, allowing organizations to progressively advance towards these models as their maturity and resources develop.

The construction of the FGIST was directly subsidized by empirical results. The five dimensions were defined from the categories with the highest implementation variance identified in the survey – structural governance, compliance, risk management, documentation, and ESG –, which correspond to the blocks with lower averages and greater dispersion between stages. The four maturity levels were aligned with the development stages of the sample (ideation/pre-seed, seed, traction, and Series A), as the data demonstrated distinct and progressive adoption patterns by stage.

The best practices at each level were calibrated to respond to the most cited barriers by respondents – time, resources, and perception of bureaucracy –, ensuring that the minimum set of practices for each level is implementable without the need for dedicated infrastructure. The model is based on three premises: governance is a continuous and progressive process, not a binary state; the adoption of governance practices should be calibrated to the startup’s maturity stage, respecting its operational constraints; and the value of governance for startups lies in the ability to reduce uncertainties, attract resources, and build trust with stakeholders, which DiMaggio and Powell (1983) call institutional legitimacy. The FGIST incorporates the concept of Minimum Viable Governance Product (MVGP), which establishes the minimum set of practices to operate with integrity and reduce critical risks at each stage.

Framework structure: four levels and five dimensions

The FGIST is organized into four maturity levels, aligned with the development stages of the startup ecosystem: Level 1 – Initial (Ideation/pre-seed), Level 2 – Structuring (Seed), Level 3 – Consolidating (Traction), and Level 4 – Advanced (Series A or higher). The choice of these four levels, instead of three or five, stems from the direct correspondence with the most frequently adopted stages by the innovation ecosystem and with the empirically distinct maturity profiles identified in the sample.

The five dimensions of the framework are Governance and Structure, Compliance and Conduct, Risk Management, Documentation and Decisions, and ESG and Transparency. These dimensions were selected because they represent the central normative categories of the reference frameworks, such as ISO 37301, ISO 31000, IBGC, and GRI, and because they correspond to the areas with the largest implementation gap evidenced by the survey. The tiered architecture of the model, the empirical profile by stage, and the matrix of recommended practices detail how startups can progress in adopting governance.

Level 1 – Initial (Ideation/pre-seed)

In the initial stage, startups operate with extremely limited resources, focusing on validating product hypotheses. Empirical averages for this level, such as 3.50 for roles and responsibilities, 2.75 for decision forums, and 1.75 for indicator monitoring – the lowest in the entire sample – reveal that even basic practices are not yet consolidated. The Minimum Viable Governance Product (MVGP) for this level comprises four essential practices, derived from the most critical gaps identified.

Level 1 best practices include: formalization of roles and responsibilities among partners; adoption of a basic data protection policy (LGPD); mapping of the three main business risks; and recording of foundational decisions, either by minutes or simple registration. These practices were designed to be implemented with minimal financial cost, directly addressing the time and resource barriers cited by respondents, allowing the startup to establish a governance foundation without compromising its initial agility.

Level 2 – Under structuring (Seed)

In the seed stage, the startup begins to seek external investment, and the average governance for investments, which reaches 4.50, shows that founders already perceive governance as a credibility requirement. However, gaps persist in areas such as the code of conduct (2.50) and risk monitoring (2.50). The PMVG for this level aims to strengthen the governance structure, preparing the startup for investor demands.

PMVG practices for Level 2 include: drafting a simplified code of conduct, aligned with ISO 37301; establishing a routine of documented strategic meetings; formalizing a conflict of interest policy; and simple risk registration with quarterly review. The designation of a compliance officer, even if in a combined role, is recommended at this stage, as fundraising increases compliance requirements and the need for greater transparency in operations.

Level 3 – Consolidating (Traction)

In the traction stage, the data indicate an advance in the formalization of the code of conduct, with an average of 3.40, and in the monitoring of indicators, which reached 3.20. However, a setback was observed in strategic documentation, with an average of 2.40, compared to 3.17 in the seed stage. This decline is empirical evidence of the operational pressure of accelerated growth on documentary routines, a common challenge in rapidly scaling startups.

The PMVG for Level 3 establishes practices aimed at consolidating governance in an expanding environment. It includes: the designation of a formal compliance officer, ideally in a dedicated role; the integration of risk management into strategic decisions; the adoption of an anti-corruption policy; and the publication of a transparency report for stakeholders. The ESG dimension gains strategic importance at this stage, as the startup positions itself for larger investment rounds and the establishment of corporate partnerships, where integrity and compliance are decisive factors.

Level 4 – Advanced (Series A or higher)

In the advanced stage, the average implementation of governance practices approaches the maximum values on the Likert scale. The code of conduct, risk identification, and risk monitoring reached an average of 5.00, indicating full implementation. The PMVG for this level converges with the requirements of traditional frameworks, demonstrating that governance becomes a concrete competitive advantage, and no longer a perceived obstacle.

Best practices for Level 4 include: structuring an advisory board with internal regulations; implementing a full compliance program, aligned with ISO 37301, with a whistleblowing channel and third-party due diligence; risk management structured according to ISO 31000, with a risk matrix and internal audit; and the preparation of an ESG report aligned with GRI standards. At this stage, alignment with traditional frameworks ceases to be a barrier and becomes a strategic differentiator for the startup.

Progression conditions between levels

Progression between FGIST levels should not be automatic nor exclusively linked to the startup’s time in existence. The framework proposes that the transition to the next level occurs when the organization has implemented at least 80% of the current level’s practices. This verification can be carried out through a semi-annual self-assessment, using the research instrument of this study as a diagnostic tool, allowing for an objective evaluation of progress.

It is essential to reiterate that FGIST has an orienting and adaptive nature. Startups operating in regulated sectors, such as fintechs and healthtechs, may require Level 3 or 4 practices from the seed stage, due to specific regulatory requirements. Similarly, startups with institutional investors from the early stages may be pressured to adopt more advanced structures early on. The framework should be interpreted as a reference for the progressive development of governance maturity, and not as a linear protocol of sequential obligation, allowing flexibility to adapt to the particularities of each organization.

In summary, the research results revealed that, although technology startups recognize the importance of governance, the implementation of formal structures is still incipient, especially in the early stages. The main barriers identified, such as lack of time, financial resources, and technical knowledge, demonstrate the need for an adapted model. The Incremental Governance Framework for Technology Startups (IGFTS) emerges as a response to this gap, offering a progressive roadmap of practices that reconcile the inherent agility of these organizations with the growing demand for integrity and regulatory compliance, directly responding to the objective of proposing incremental structuring guidelines compatible with their different stages of maturity.

4. Conclusion

The study sought to propose an incremental governance framework for technology startups, adapted to their specificities and operational constraints. It was found that, although startups recognize the relevance of governance, the implementation of formal structures is incipient, especially in the early stages. It was identified that the lack of time, limited financial resources, and lack of technical knowledge constitute the main barriers. It was also observed that traditional governance frameworks are perceived as partially compatible or inadequate to the reality of these organizations. Given this scenario, the Incremental Governance Framework for Technology Startups (FGIST) was proposed, a guiding and adaptive roadmap, structured in four maturity levels and five dimensions, which offers minimum viable practices per stage, reconciling organizational agility with the need for integrity and regulatory compliance.

The main practical contribution of the FGIST lies in offering founders and managers an accessible path for the progressive structuring of governance, and to investors, a due diligence framework adapted to the risk profile of each stage. Academically, the study advanced the characterization of institutional decoupling in startups, demonstrating that the recognition of governance as legitimate value does not always translate into effective adoption, and provided a diagnostic instrument for governance maturity. However, the research presents limitations, such as the convenience sample of 21 respondents, which restricts the generalization of the findings, and the absence of a formal pre-test of the collection instrument, which may have compromised the face validity of some questions. For future studies, it is suggested the empirical validation of the FGIST through multiple case studies, the expansion of the sample with probabilistic methods, and the investigation of the relationship between the adoption of the framework and organizational performance indicators.

Bibliographic References

ASSOCIAÇÃO BRASILEIRA DE STARTUPS (ABStartups). Relatórios e estudos sobre o ecossistema de startups no Brasil. São Paulo: ABStartups, 2023. Disponível em: https://abstartups.com.br. Acesso em: 5 jul. 2025.

BANCO INTERAMERICANO DE DESENVOLVIMENTO (BID). Por que a governança é importante para as startups? Blog do BID, 2022. Disponível em: https://blogs.iadb.org/brasil/pt-br/porque-a-governanca-e-importante-para-as-startups/. Acesso em: 6 jul.

BID INVEST. Startups & scale-ups: maturidade em governança. Washington, DC: BID Invest, 2022. Disponível em: https://idbinvest.org. Acesso em: 20 jul. 2025.

INSTITUTO BRASILEIRO DE GOVERNANÇA CORPORATIVA (IBGC). Startups dialoga: desafios e tendências de governança em startups. São Paulo: IBGC, 2022. Disponível em: https://www.ibgc.org.br. Acesso em: 9 ago. 2025.

TREVIÑO, L. K.; NELSON, K. A. Managing Business Ethics: Straight Talk About How to Do It Right. 7. ed. Hoboken: Wiley, 2020.

Article originating from the Final Course Work of the Specialization in Compliance and ESG of the MBA USP/Esalq

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