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

"Governance can sometimes be put on the back burner because the priority for a startup is growth and profitability. However, the reality is that governance is essential because we all operate within systems and jurisdictions that have specific requirements we must meet. Beyond just legal requirements, it is about the actual board dynamics—ensuring that your directors and advisors actually know what is going on, can add true value, and ensure that the company follows its shareholders' agreements rather than just operating in a 'loosey-goosey' manner." - Jecky Pelaez, Partner at Kickstart Ventures

"You have to keep the founders motivated. At the end of the day, if you believe in the founders and you trust them as good faith partners, they are as important to the business as the capital you bring in—perhaps even more so—because the business simply doesn't move without them. When we try to structure deals, especially during difficult times, we find ways to keep them whole through milestone-based awards or ESOPs, because if a founder is demotivated or disillusioned, no one is going to want to buy that company anyway." - Jecky Pelaez, Partner at Kickstart Ventures

"There are significant differences in how jurisdictions like Singapore and the Philippines support startups. In Singapore, companies are taxed based on the net profit they make, whereas in the Philippines, businesses can be taxed on their total revenue—which is incredibly difficult for startups incurring losses in their early years. Additionally, while incorporation has moved online in the Philippines, the sheer number of government agencies that don't communicate with each other makes the annual compliance and permitting process very daunting for new founders." - Jecky Pelaez, Partner at Kickstart Ventures

Jecky Pelaez, Partner at Kickstart Ventures, joins Jeremy Au to discuss the critical intersection of law, governance, and venture capital in the Philippines and the broader Southeast Asian ecosystem. As the lead of the legal department at one of the Philippines' top VC firms, Jecky provides a "behind-the-scenes" look at how deals are structured, the importance of maintaining founder motivation during market corrections, and why governance has moved from a "back burner" issue to a top priority following recent regional fraud cases.

They explore the evolution of the market from the "frothy" high-valuation days of 2021 to the current 2026 climate focused on profitability, bridge rounds, and complex "pay-to-play" negotiations. Jecky also sheds light on the unique operational hurdles of doing business in the Philippines—from taxation nuances to bureaucratic silos—and shares a deeply personal reflection on bravery as the daily courage to move forward through life's challenges.

00:00 Introduction to Jecky Pelaez and the role of Kickstart Ventures.

03:53 From Banking to Law: Choosing to be in "the room where it happens."

08:13 A Day in the Life: Managing fund compliance, deal diligence, and "putting out fires."

11:40 The Governance Shift: Addressing fraud and the "chilling effect" in Southeast Asia.

16:53 Navigating the Mess: The complexity of bridge rounds and aligning investor interests.

22:15 Market Correction: Transitioning from growth-at-all-costs to sustainable profitability.

26:34 The Legal Fine Print: Why math equations beat English words in cap table negotiations.

31:11 Protecting the Founders: Balancing downside protections with founder incentives.

35:15 Doing Business in the Philippines: Navigating taxation, audits, and agency silos.

38:21 Defining Bravery: The practice of courage and moving forward through grief.

Watch on YouTube: https://www.youtube.com/watch?v=HKfWEm4b9ps&list=PLl9u6ECOP8_7scb97PE3whKu4yJVizIOd

Listen on Spotify: https://open.spotify.com/episode/0ytmzUmyc81inyD26Roh6c

Keywords: Philippines Startups, Venture Capital Law, Corporate Governance, Startup Taxation Philippines, Southeast Asia Tech, Founder Dilution, Bridge Rounds, Profitability vs Growth, Venture Capital Philippines, Legal Compliance for Startups