There is a fundamental rule in machines and similarly in business “power without control turns into chaos“.
In business, Power is the ability to act. It is the ability to –
- raise money,
- hire a team,
- build a product,
- and make decisions quickly.
Control is the framework created by law – rules, systems, records, approvals, and governance.
One creates movement. The other creates direction… (both go hand in hand).
As a VC firm, we have seen this balance evolve in the ecosystem since we started with an SPV model in 2016 and launched our first AIF in 2019.
Through multiple fund cycles, numbers of portfolio companies, and significant changes in the regulatory framework, one lesson has stayed constant: – Growth and control often sit in different rooms, but they must move together..
Control Is What Enables Growth-
Imagine a car with a strong engine but no steering wheel. It may move fast but cannot stay on the road..
Similarly, In business – governance is the steering wheel, compliance is the braking system and records are the dashboard.
As a SEBI-registered Cat-1 Angel Fund and Cat-2 AIF, Auxano operate under a specific set of rules — investment limits, valuation norms, reporting timelines, KYC and AML obligations..
The Reality of Silos
In the startup world, mostly, the people who build power (the founder and team) and the people who manage control (the compliance team) work in different silos.
- The Founder and Team focused on vision, scale, and moving fast.
- The Compliance Team looks on notifications, rules and filings.
Sometimes, these silos feel disconnected. One room talks about “growth,” while the other talks about “filings.” However, these silos are two parts of the same bridge.
Why Small Gaps becomes valuation leaks
Compliance failures are rarely the result of a single day’s mistake. They are the compounding interest of small omissions. A missing trail, a late filing, or a register that was to be updated later seem harmless at first.
Compliance risk is a silent risk. It stays hidden for years until someone asks for proof. The trigger may be a tax audit, a statutory audit, a due diligence review in the next funding round.
Generally, in startup business, small gaps grow because…
-
- Memory Fades, Records Stay – Over time, nobody will remember the ‘why’ behind a verbal approval, however proper records and minutes keep the trail for long.
- Audits Check Evidence, Not Intent – An auditor doesn’t care that you intended to comply. They only care if the paper trail exists.
- Delay Multiplies Cleanup Cost – Cleaning up three years of messy (secretarial records) during an institutional round, costs more than doing it right the first time, and takes longer.
- Trust is Fragile – Investors invest in the business because they trust governance standards. Missing or inconsistent documents can weaken that trust.
How to Prevent Chaos
Discipline is the key to have control over the business activities. Do not wait for an audit to fix problems. Build routine process to keep power and control in sync –
- Close Actions Immediately: High-priority items must be finalized while the context is fresh. Once the rhythm is lost, timelines lapse.
- Daily Agenda and Ownership Matrix: Compliance isn’t just the Finance Teams job. Every day must start with daily action item in the list with defined timelines to ensure the completion and ownership within team.
- Regular Hygiene: Have a regular (monthly/quarterly) business review and documentation hygiene process in place without keeping for the year-end.
Approach –
A business owner has the right to run their business, but the law/regulation defines the framework to stay in the race.
Auxano, manage a SEBI-registered AIF, we have a Fiduciary Duty – as we are managing someone else’s money
As we operate in 2026, the rules for AIFs are more specific than they were in 2016. The “control” is tightening. While some see this as a burden; we see it as a sign of a maturing market..
Chaos is the result of power that thinks it does not need a steering wheel. Success is the result of an engine and a steering wheel working together.
At our firm, we respect the silos, but we ensure they are connected by one goal: building a business that lasts.
Author,
Rakesh Rana
