Dynamic views of startup governance and failure

This chapter explores how corporate governance arrangements evolve across the startup life cycle and are shaped by the venture capital industry's “power law” business model. It builds on foundational literature focused on vertical principal-agent dynamics between venture capitalists and entrepreneurs, while also emphasizing horizontal conflicts among shareholders and startup participants. The chapter examines how governance complexity increases over time with the addition of varied stakeholders and capital sources. It also explores how the power law drives venture capitalist behavior, concentrating attention on high-growth outliers while deprioritizing underperforming portfolio companies. The chapter calls for continued research on the implications of risk-seeking governance, expanded investor participation, and startup failure.