128icg Re Boards

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Tips on building and working with a board of directors in an entrepreneurial company

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128icg Re Boards

  1. 1. RM L Building a World-Class Board Advice for the Entrepreneur Richard M. Lucash 128icg October 9, 2009
  2. 2. RML Background  B. Sc. MIT, Physics  J.D., Cornell Law School  Founder, “boutique” law firm focused on tech companies  Partner in national firm  Founder, LaunchPad angel group  Now: Consultant, Advisor, Director
  3. 3. RML What’s a Board? Board of Directors Legal entity Power; responsibility Fiduciary duty; liability Board of Advisors Not “legal” Sense of responsibility No legal power No liability (yet . . .)
  4. 4. RML Why a Board?  Legal requirement to have one  May be the founders/shareholders  Some investors will be added  “Outside” directors
  5. 5. RML Why You Want Independent Directors No one knows everything or everyone they need to  Expertise  Supervision  Guidance  Reality Checks  Rolodex
  6. 6. RML Recruiting Determine what the company needs Skills Experience in related field(s) Marketing Customer side Company side Connections Variety of all 3 – 5 year time horizon
  7. 7. RML Recruiting Personal Interview Not family members Not the company’s lawyer, accountant Not multiple founders
  8. 8. RML Investors as Directors One or more may be mandatory Quality should be a factor in selecting investors
  9. 9. RML “Independent” Director Often a requirement of investment deal Pay attention to the selection Could be the tie-breaking vote on your job!
  10. 10. RML Finding Outside Directors Your network Networking groups: 128icg Investors’ rolodexes Other Directors’ rolodexes Advisors’ networks – use your attorneys, accountants etc.
  11. 11. RML Other Requirements Available Mentor orientation Will work for equity Will move aside when company evolves
  12. 12. RML Compensation Equity Equity Equity Vest 2 – 4 years Restricted Stock or “Reverse Vesting” options
  13. 13. RML Compensation 10% of company after last pre-venture round 1.5 – 2.5% per director 2x that for active outside chairman
  14. 14. RML Working with the Board Managing Upwards Be the chairman Regular meeting schedule Advance draft agenda; request comments Advance info packet
  15. 15. RML Working with the Board Regular communication between meetings Email In person Form Committees – e.g. compensation Honesty; Full Disclosure Periodic Evaluation and Board/Member self-evaluation
  16. 16. RML Discussion [See MHT July 25-31 p. 14 for article]
  17. 17. RM L Richard M. Lucash Lawrence Associates 396 Washington Street Wellesley, MA 02481 Phone: 781-237-9044 E-mail: rlucash@lawrenceassociates.com

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