British International Investment
10 November 2021

Business integrity guidance for venture capital fund managers

Strong corporate governance and business integrity standards are critical to the success of any business. Minimising exposure to business integrity risks by building risk management capability helps businesses become more resilient and responsible. In turn this can increase financial returns as meeting globally recognised business integrity standards supports commercial value, helps to attract international investment and drives exits and IPOs. Robust risk management also leads to improved impact outcomes as strategy execution risks are minimised.

Fund managers play a crucial role in driving good business integrity performance within their portfolios and promoting best practice. For venture capital (VC) fund managers investing in early-stage companies, managing business integrity risks can be challenging given resource constraints and the fact that risks and regulation associated with start-ups and tech-enabled businesses is still emerging and evolving. For these reasons, venture capital fund managers face distinct risks compared to private equity investors targeting mature and established companies.

In early-stage companies, business integrity risks and opportunities may be perceived to be lower but, as these companies grow in size and market presence, their risk profiles evolve and business integrity risks may increase in magnitude and scope.

For example, heightened risks may relate to new strategies, sectors, markets and customer types. Furthermore, with successive fundraising rounds the shareholding and related influence and legal leverage that a venture capital investor has in relation to portfolio companies will change too.

These evolving circumstances require fund managers to take a phased and proportionate approach to business integrity risk management at the portfolio level. Fund managers need to develop adequate risk management and monitoring frameworks that match and mitigate the additional levels of risks as the portfolio evolves.

This guidance aims to introduce VC fund managers to typical business integrity risks inherent in their markets, strategies and investor bases, and to provide an overview on how to proactively – and proportionally – manage these risks at both the fund manager and portfolio levels.

CDC supports its investee partners to adopt globally recognised standards to ensure they can successfully operate on a national and international stage. We do this through post-investment action plans, case-by-case advisory support, workshops and sharing of risk management tools. To find out more visit

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