Excessive governance around companies in the early stage, or the ones that are still in the $2-7 million revenue range, will stifle some innovation and they will move slower than they should, Shailendra Singh of Peak XV, the VC firm that backs companies like BharatPe, Byju’s and others, said while speaking at the CNBC-TV18 and Moneycontrol Global AI conclave.

“Startups are so chaotic, they grow very fast, especially when they’re attempting very audacious goals so when one adds a lot of process burden, they slow them down and make life difficult for them,” Singh said.

“Governance has to be more stage appropriate. There's a better need for recognising that once companies get to scale, they’re a few billions worth, have triple digit million revenues, or are important to society in some manner, then it’s the right thing for them to have governance. That will actually help make them enduring and create the path for the 20 year success journey,” he added.

Singh’s comments come after Peak XV Partners (earlier Sequoia Capital India) reportedly made changes in governance practices last year. The investor reflected on certain incidents and eventually imposed stricter checks and requirements at the startups it funds.

In June, Peak XV gave up its board seat at Byju’s, the embattled edtech startup, after it said there was lack of transparency from the company’s founders. The episode at Byju’s was preceded by corporate governance lapses at other companies from Peak XV’s portfolio.

In January, GoMechanic, another startup that counted Peak XV as an investor, also admitted to financial wrongdoing. Last year, Zilingo shut shop after a management tiff. Back home, the current management of fintech unicorn, BharatPe, continues to lock horns with the ousted executives.

Peak XV Partners is one of the most active investors in the country. It backs more than 50 unicorns and several portfolio companies have gone public.

During the discussion, Singh even said that unicorns, or startups that are valued at $1 billion or more, are like adolescents who have demonstrated their potential but haven’t built their full muscle yet and still have to discover some things about the world.