QStream CFO David Stack brings his years of experience working with startups to explaining how a young company should choose a board of directors that can be most effective. Story originally published on David-Stack.com
2. Start early
While establishing a board of
directors is required by law when
startups begin looking to raise
outside capital, it’s a good idea to
build the board framework early on,
because it signals to potential
investors that you’re serious about
“While you’ll often get advice to just
have a ‘board of advisers’ at the
beginning, I’ve found that the
formality of a board of directors is
helpful to the entrepreneur by
creating an additional level of
commitment from the directors.”
3. Think long
Choose advisors whose past
experience can influence where
you’d like your company to be in six
months, a year, two years—you get
the idea. Seek out directors with
experience scaling growth and
revenue, rather than ones who may
have previously only worked with
early stage startups.
4. Leverage your networks
Leverage your investors’ networks, too: like all
relationships, creating a good Board of Directors requires
chemistry that’s best honed in real life, by cultivating
word of mouth recommendations or existing relationships.
Even if your startup is built entirely in the cloud, keep your
feet on the ground with real life advisor relationships that
you can trust.
5. ...by addressing your weaknesses. If
product design or business development
are your strengths, great, but you’d do
well to seek out seasoned experts in
raising capital, advising investors, and
any of the other key factors to startup
success that are not your forte.
Fill your weak spots
PLAY TO YOUR STRENGTHS
6. Consider culture
Not all startups are founded by your
stereotypical jeans and t-shirts
wearing computer genius types.
While many startups embrace a
more laid back work culture, your
board members should create
harmony with the personalities and
values of startup founders.
7. Embrace Change
Successful startups change fast.
Ideally a board of directors keeps
pace with dynamic changes and
continues to advise your startup
accordingly, but realize that
changes to the board are normal in
startup territory. As your startup
grows, so too should your board.
And as your board grows, the
individual stake and voting power of
each member decreases, meaning
it’s essential that every member of
the board act with the company’s
best interests in mind. Board
members might step down as the
company grows in a new direction
or receives new rounds of funding.