Your company’s board can be an invaluable asset in helping set you up for success. But to get the most leverage, you have to be thoughtful about board engagement. Having served on the board for a number of startups, I’ve seen some founders do this better than others.
Here’s a few tips for how to set up a successful relationship with your startup’s board, and get the most benefit for your company.
Sometimes when new founders imagine their board, they imagine a group of stern VCs looking over their shoulders to scrutinize mistakes. While oversight is part of the board’s purpose, it’s reductive to think that it’s the only one.
The main purpose of your startup’s board is actually guidance. Your board brings a collection of experiences, among people that want your startup to succeed. While it’s true that there can be negative consequences for you as a founder in very extreme scenarios – i.e., investors pushing to oust the founders – more often the biggest risk is opportunity cost.
If you’re not engaging thoughtfully with your board, you’re missing the opportunity to get help, feedback, or advice that can make your company better. This could be advice on how other successful startups handled similar challenges, or market-based insights on what is the right path to your next round. It’s in your company’s best interest to fully leverage the board.
The first step to getting the most from your board is to get the right people on it. It’s a good idea to start thinking about this before you even begin to raise money.
To set the board up for success, you’ll want to bring in board members who have expertise in areas that you can benefit from. If your founding team is very strong technically but has little experience in selling, for example, a board member with strong sales expertise can help guide you in developing that part of your business and hire leaders into that function. Board members who have been operators or founders themselves might have advice for you on hiring, and help you decide how to build out your company as it grows.
It’s important to set and align on mutual expectations for the role. Reference check any previous board involvements, so that you have a good understanding of what to expect from the potential board director.
Generally, there are three types of startup board members: founders (you), investors, and independents. Initially, most boards start with just founders, with investors added as the company raises a Series A. At early-stage startups, it’s common for the lead investor of the Series A, Series B, and Series C to get a seat on the board, usually filled by the partner who led the deal. You can also set aside seats for independent members, usually outside experts that you believe will be valuable to the business.
Board composition affects voting dynamics; if the majority of your board seats/votes are founders or founder appointees, then you’ll have more latitude in driving the agenda. However, you’ll also want to get outside perspective and expertise from time-to-time. When planning to compose your board, think carefully about what you’re trying to accomplish, and where you can reap the most benefit. And think long-term: if your company is successful, many of your board members, particularly your lead investors, will be on the board over a multi-decade journey.
Most boards meet quarterly. Sometimes early-stage boards meet annually or monthly, depending on the stage of your company. These meetings have several purposes. One is to ensure that your board members have enough up-to-date context on the business to be helpful when you want feedback. Another is for you to get actionable advice on your high priority initiatives as they occur.
So what can you do to make sure you get the most value out of your startup’s board meetings?
Keep in touch. You’ll want to have an ongoing 1:1 dialogue with your board members, whether that’s a scheduled monthly sync or ad-hoc text messages, so that it’s not a black box between quarters and you can build strong relationships. Some companies host a board dinner or lunch the day prior to the board meeting.
Provide context. As a founder, you’re deep in the company’s day-to-day workings – but your board isn’t. Remember that your board doesn’t necessarily know everything going on inside the business, and that without the right context, they can’t give the right advice. Plan to catch them up on the vision, what’s changing with the business, and what’s evolved since your last board meeting. Try to distill this into a few clear takeaways (e.g. one-slide “CEO Update”). It’s impossible to fully catch up on everything that has transpired over 3 months in 3 hours, so it helps to prioritize!
Think ahead on where you need help. Before you meet with your board, spend some time thinking about the areas where they would have the expertise/context to be helpful and you’d like them to weigh in. Your company likely has a lot of moving parts, and it pays to think through what will most benefit from the board’s insight. If you’re an early-stage startup this might be something like advice on a key hire or large sales deal; for more developed startups this might be something like deciding on the right goals for the year.
Be specific. Remember that the board wants to help you. They can’t do that effectively, however, unless they know where their help is needed. As the person closest to the business, you’ll always have the best idea where the board’s expertise can do the most good. Being concrete and specific with the board on where you want to point their time, and making sure they have the context to understand why, will go a long ways towards getting you what you need.
Here’s a format we found works well for most early-stage startups:
Your board is an important partner in your company’s growth, and a valuable resource in developing your business. By engaging proactively with your board and providing them the information they need, you can help them help you.
Need help preparing your board decks, or analyzing the KPIs your investors will ask about? Pilot’s CFO services team can help.
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