“Now picture if you will a bunch of business men
Stuffed in the boardroom like pigs in a pen”
The Lonely Island, “Boombox“
Note to startup founders: you have options when it comes to your startup’s board members. Considering that a company’s board greatly influences — or, even dictates — major decisions, entrepreneurs should take a deliberate and strategic approach to forming the board.
In general, the ideal board consists of members with expertise and experience in a multitude of areas that are strategic to your startup. Great board members are also available to interview key employees, assist with sales, make key business development and financing introductions, etc.
So if you’re a startup founder, how do you build a winning board? Consider the suggestions below.
1) Choose Your VC Like You Would Your Spouse
Typically, a startup’s board includes one or more individuals from its investments firms. Remember this when choosing your VC. A good VC is always available to the CEO, not just at board meetings. Good VCs are happy to provide support and advice; at the same time, they have faith in the CEO to make independent decisions. Watch out for VCs that don’t take the time to understand your business. Assess whether a potential VC will be supportive (financially or otherwise) when the company goes through a rough patch (most do, at one point). In some cases, VCs can be so overbearing that they consume valuable CEO time and force ill-suited opinions on the company.
2) Call Me…Promise?
Only one out of ten entrepreneurs have requested references in a potential investment deal with IDG Ventures. Hopefully, this is because our reputation is well-known, or these entrepreneurs have done their research and homework. But really, there is no better homework than speaking with a VC’s current and past CEOs. In these discussions, be sure to ask the following questions:
- How active was the VC?
- Did the VC understand your business?
- What specifically did the VC do to help/harm your business?
3) Size Matters
Keep the board small and manageable. Too many people around the table will take away the intimacy needed to share the thoughts needed to be effective. The ideal size IMHO is five board members. Even though it is tough, consider asking earlier VCs to step off the Board if you have too many VCs in the room. The easiest way to do this is to address it years in advance, ideally at the time of investment.
4) No Place For Family Ties
Please please please don’t have relatives on the board. It looks bad, and it is bad. Often times, it is hard for relatives to be objective. I’ve been there, and it sucks.
5) Independence Day
Find a local independent director or two that can add value. Since they are getting equity (they should), make them work for it. If you bring on a chief product officer of another company, involve them in company offsites and use them as a resource for your own head of product Independent directors are critical for corporate governance, especially when your financial investors are conflicted. It is important for you to bring them on in advance so they are up to speed when a situation arises.
6) What to Expect When You’re Expecting
Make sure your board members know what to expect before they join in terms of frequency and value-add. End your board meetings with a to-do list that you recap, e.g., “Phil, you are going to make an introduction to TenCent and spend some time this week with our CFO to walk through our debt financing options between SVB and Comerica. John, you are going to…”
Remember, it is NOT easy to change your board. I have seen CEOs talk to partnerships and make a switch. However, it’s almost as difficult and painful as reversing a vasectomy. So set up your company for success and be smart from the beginning about your board.
This is an old post that I had saved years ago, but just stumbled upon it while browsing my favorited posts.
As the founder of an extremely early stage venture, I found this blog post to be very very timely and insightful.
As I move through the lean startup accelerator program that I am involved in, I will refer back to this post as I begin the process of building the board.
I was particularly enlightened by the idea of not having family on the board.
Grateful for your willingness to share your experience with the startup ecosystem!
LikeLiked by 1 person
whoah this weblog is great i love reading your articles.
Stay up the good work! You realize, lots of individuals are looking
around for this information, you can aid them greatly.
LikeLike
Aw, this was an extremely good post. Taking the time and actual effort to produce a superb article… but
what can I say… I put things off a lot and don’t seem
to get anything done.
LikeLike
Very informative, give me inspiration!
LikeLike
great publish, very informative. I wonder why the opposite experts off this sector don’t understand
this. You must proceed your writing. I’m confident, you’ve a great readers’ base already!
LikeLike
You actually make it seem so easy with your
presentation but I find this topic to be actually something which
I think I would never understand. It seems too complicated
and extremely broad for me. I’m looking forward for your next post,
I will try to get the hang of it!
LikeLike
Hey I am so excited I found your site, I really ound yyou by accident,
while I was browsing on Digg for something else, Anyhow I am here now and
would just like to say thank you for a tremendous post and a
all round entertaining blig (I also love the theme/design), I don’t have time
to read iit all at the moment but I have boojmarked it and also included
your RSS feeds, so when I have time I will bee back to read a great deal more,
Please do keep up the awesome work.
LikeLike
Hi tɦere it’s me, Ӏ аm alsο visiting thiѕ site
on a reguular basis, tɦis website is genuinely nice and
tɦe visitors arе genuinely sharing nice thߋughts.
LikeLike
My brother suggested I might like this web site. He was
totally right. This submit truly made my day. You can not believe just how so much time I had spent for this info!
Thank you!
LikeLike
Glad it was useful! Thanks for commenting!
LikeLike
Hey! This is my first visit to your blog! We are a team of volunteers and starting a new project in a community in the same niche.
Your blog provided us beneficial information to work on. You have done a extraordinary job!
LikeLike
Pretty section of content. I just stumbled upon your site and
iin accession capital to aesert that I acquire actually enjoyed account your blog posts.
Anyway I’ll be subscribing to yourr feeds aand even I achievement you access consistently fast.
LikeLike
This website was… how do I say it? Relevant!!
Finally I’ve found something which helped me. Thanks!
LikeLike
I have read so many posts regarding the blogger lovers
but this paragraph is in fact a fastidious
post, keep it up.
LikeLike
Good day I am so glad I found your webpage, I really found you by mistake,
while I was browsing on Google for something else, Nonetheless I am here now and would just like to
say cheers for a tremendous post and a all round thrilling blog (I also love the
theme/design), I don’t have time to browse it all at the minute but I have bookmarked it and also included your RSS feeds,
so when I have time I will be back to read much more, Please do
keep up the excellent work.
LikeLike