Flutterwave: When corporate governance saved or ruined tech startups

Raising a truckload of funding from investors and securing the spot at the top of the valuation pyramid comes with a lot of expectations. Flutterwave was given a rude awakening in April as it hugged the limelight for the wrong reasons. It was a month its approach to corporate governance was put under severe scrutiny and many have said it was found wanting.

Four stories written by a former employee, an investigative reporter, iAfrica, and Rest of Africa came very close to rocking the boat for the leadership of the company often portrayed as the poster child of fintech success in Africa.

Flutterwave continues to deny the allegations describing them as false, recycled, or have been previously addressed. The company also says it doesn’t comment on specific employee matters as a general policy.

Nonetheless, it says it has recently updated organizational structure and brought in world-class talent across different functions – including Risk, People, and Technology – to ensure we have best-in-class management and execution.

“We will also continue to learn from some of the world’s most exciting companies,” the company told BusinessDay.

A study by Columbia Law School published in 2021 suggests that corporate governance is often a big challenge for big tech companies, particularly called unicorns. In recent years, the number of unicorn companies struggling with poor corporate governance appears to be rising.

Amy Deen Westbrook, the author of the Columbia study predicts that the problem could get worse due to increased private market funding, sustained low-interest rates, the burdens of being a reporting company under the federal securities laws, and changes in those laws that enable some companies to stay private longer, and the number of unicorns rising.

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Yinka David-West, Associate Dean of Lagos Business School says that apart from being a growing pain that every regional tech ecosystem faces, the Nigerian ecosystem is still nascent, hence the struggle is expected.

Here are tech companies that have struggled in the past with corporate governance:

Sequoia Capital

In 2016, Sequoia Capital, a Silicon Valley-based found itself battling a $40 million lawsuit filed by a one-time exotic dancer accusing its then-partner Michael Coguen of sexual abuse and not honouring an agreement to compensate her. The case which lasted for three years was later thrown out by a Superior Judge in California for being proven false and the former employee asked to pay back the $10.25 million she got from Coguen.

Despite the outcome, the scandal rocked the leadership of the company as it led to the exit of Coguen in 2016. Importantly, it exposed the company’s failings in setting good corporate governance.

In March 2022, the co-founder of BharatPe, a portfolio company of Sequoia Capital was forced to resign after an audio clip of him allegedly abusing a Kotak Mahindra Bank employee surfaced.

While Sequoia Capital said it has zero tolerance for abuse and will continue to respond strongly to willful misconduct or fraud, experts say the situation could have been avoided if the VC set a good example and provided early mentorship for its founders.

At a recent Founders and Funders meeting organised by Melon Capital, a Nigerian-based venture capital, Andrew Alli, President and CEO of Africa Finance Corporation said the Nigerian tech ecosystem also needs mentoring to succeed.


WeWork which revolutionised the global coworking market imploded mostly because of poor corporate governance. The startup had soared to a valuation of $47 billion by 2019 on the back of stylish, amenity-rich office spaces and overeager venture capital before things came crashing down.

The company’s plan to go public exposed its underlings from losing a ton of money, and wildly optimistic market projections, to a corporate culture that was completely in pledge to the founder.

“Unicorn governance problems don’t harm only investors; they impose substantial hardships on employees, customers, suppliers, lenders, and local economies in addition to shareholders and creditors. WeWork, for example, ended up firing thousands of employees and shut down businesses ranging from a restaurant co-working company to a school,” Westbrook noted.


Travis Kalanick, former CEO and co-founder of Uber superintended a work environment that was characterised by former employees of the company as a toxic bro culture, mistreatment of gig workers, sexual harassment, and privacy invasions.

The former CEO was reputed to have favoured building Uber by any means necessary. Kalanick aggressively turned the company into the world’s dominant ride-hailing service and upended the transportation industry around the globe. That aggressiveness came at the cost of eroded culture bringing Uber’s brand to disrepute. It was possible that Kalanick was eager to impress the company’s investors as Uber was preparing for an IPO.

David-West says sometimes business malpractices and ethical issues spur from founders eager to meet investors’ targets within set timelines. Hence, business leaders and their board members need to ensure investors’ expectations are in alignment with the company values.

“Companies should properly define the role of the board itself and the role of individual board members. Ideally, investor board members should not be figureheads occupying a board seat. As much as possible, the board composition should represent the interests of all stakeholders in the business–investors, founder(s), employees, and even customers,” she said.

In the case of Uber, the board was quick to respond to the allegations by removing Kalanick and replacing him with Dara Khosrowshahi. David-West says that institutional investors who have a reputation for being hands-on with their portfolio companies can influence the composition of the board of these companies to ensure the board can serve the interests of the founder, the business, and the investors.

In such situations, though a board may take decisive actions against the founder (due to abuse of power), such a decision can be influenced by the investors, especially if they believe the founder is no longer serving the interests of their investment. Steve Jobs was shown the exit as CEO of the company in 1985 by Apple’s board. He later returned to the position in 1997.

David-West says companies should properly define the role of the board and the role of individual board members. The board composition should represent the interests of all stakeholders in the business-investors, founders, employees, and even customers. She also notes that the goal of the board is not just short-term success but longevity and sustainability.

“When these tech companies are in their early stages, it is important they are proactive about governance by ensuring a soundboard of directors is in place before periods of growth and important inflection points occur. In addition, implementation of Nigeria’s Corporate Governance Code and corporate governance capacity building for the founders and executive management is essential,” David-West said.