Sample Board Package


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  • In this sample board package, a framework is established to help you prepare for your first board meeting. Note that these are guiding principles as opposed to strict rules. The goal of the first board meeting is to introduce the board members to each other, ensure that the key goals and performance metrics are agreed upon by management and board.Typical time frame of the first board meeting can be longer (as long as 3 to 4 hours) depending on the size of the board and ground that needs to be covered.Board members are expected to read these materials ahead of time, including familiarity with company by-laws, bios of other board members.All board communication should be marked “confidential”.
  • In this outline, attendees know who to expect in the meeting and their affiliations.
  • In any agenda / meeting, typically the most pressing issues and allocated the maximum amount of time, as opposed to a one way communication between a CEO and the Board.For smaller (3 person) boards, the level of formality may be minimal. For larger boards (5 to 7 members, multiple VCs), the meeting will be opened up by the Lead Director / Chairperson.Most boards open with a few minutes of informal conversations (warm-up, small talk, last night’s football game or snowstorm)Its prudent to ask the board to come prepared with their thoughts on business goals, metrics and resource allocation. At the minimum, they should have read these materials.
  • After the Lead Director lays out the agenda, the CEO can start with an update on the Business.
  • Your board is a good judge of resource-allocation as they see budgets and outcomes across multiple companies. Ask for help and make sure you are not being too conservative or optimistic.
  • The goal of creating a pipeline projection is to help the board understand (a) Types of companies being targeted (b) Typical price points and (c) Competitive pressures on pricing and finally, the board gets a strong awareness of projected revenues. One of the consistent challenges startups face is the ability to close. Often, in an attempt to impress the board, Startup CEOs or the VP of Sales will add a bunch of names on such a pipeline projection. The problems begin when these names do not move up the sales processor get to a close / purchase order.
  • The budget (assumed for a startup as opposed to a high growth company) is simplistic primarily shows expenses for the next 12 months. Along with these itemized estimates, the timing of next investment, amount to be raised, months of cash at hand as well as amount spent to reach cash-flow positive is projected. These metrics help you and the board to plan for inter-related events such as controlling / reducing the burn if Series A round cannot be raised speedily. As company matures, the three financial statements (Income Statement, Cash Flow Statement and Balance Sheet) become important and need to be included in the board package.
  • Sample Board Package

    1. 1. Startup BoardsPreparing your board packageWhy we created this frame-workTo help founders / CEOs • Understand what information should be covered in a board-meeting • Think objectively on how investor board-members assesses your startup’s progress • Balance the flow of information and stimulate a honest discussion • Understand how decisions are made By: Mahendra Ramsinghani Mahendra is the author of “The Business of Venture Capital: Insights from Leading Practitioners on the Art of Raising a Fund, Deal Structuring, Value Creation, and Exit Strategies (Wiley Finance).
    2. 2. Startup BoardsBook OverviewAn essential guide to understanding thedynamics of a startups board ofdirectorsAuthors: • Brad Feld, Foundry Group • Mahendra R., First Step FundReleased in Q4 2013.Addresses: • The importance of having the right board members on your team and • How to communicate and engage with the board. • How the board can support you, and hold you accountable.
    3. 3. Startup BoardsEssence of a good board meeting • Information: CEO provides update on business progress • Two-way discussion: CEO and board members are able to address challenges in an open, honest manner • Decisions: Board members make decisions effectively, in the best interests of the company • Time: Meetings are on-time and succinct. No “death by meeting” • Tone: Congenial, yet intellectually honest.
    4. 4. Startup BoardsBefore your first board meeting • Agenda: Develop the agenda with assistance of your lead board member. The meeting could be a general update, or requires decisions / approvals • Attendance: Are all the board members in attendance? Do you have a quorum? • Board Package: Does your board package offer enough level of detail? Is this sent ahead of time so that board-members are prepared? • Takeaways: What is one thing you want to get out of this meeting? Did you ask for help?
    5. 5. Sample Board Package First Board Meeting Date Venue Conference Call Line: Time: 10:00 am to 12:00 noon
    6. 6. Attendees• Board Members • Name (Title, VC Fund) In Person • Name (Title, Organization) In Person• Observers • Name (Title) Via Conf. Call• Management • Name (Title) In Person• General Counsel • Name (Law Firm) In Person
    7. 7. Agenda• Welcome 10:00 am• Business Goals 10:10 am • Discussion: Performance Metrics• Board Discussion 11:10 am • Alignment of goals • Checks and Balances• Other business 11:40 am• Closed Session 11:45 am • Feedback to CEO
    8. 8. Welcome• Board introductions • Lead Director welcomes / opens the discussion • Each member introduces themselves and touch upon: • Class of shareholders represented {Preferred / Common/ Observer} • Describe their reasons for investing in the company • Potential value they can bring to the company
    9. 9. Business• Start with a brief refresher / overview of the business. • You should describe the stage of development of product, identify key team members, market trends and competitive trends• State facts with minimal usage of flamboyant adjectives. You are no longer selling – treat this as a working session of your key team members.• Pause often – ask “Any questions ? If not, let me move into the next part of our discussion.”• Lead the discussion towards the top 3 goals for the next 12 months
    10. 10. Business: Your goals andmetrics• Your goals should be measurable, simply stated and achievable• Have no more than 3 / 5 goals• Establish clear metrics for each goal. • Baseline and Stretch metrics should be established• Break these down by quarter or month. In a startup, a lot can change in a matter of days.• You should • have the resources (cash and people) • and be able to impact each goal and its metric• Know that the CEO’s performance will be measured against these metrics
    11. 11. Business: Your goals andmetrics• The Lead Director and the CEO should lead any discussion to a satisfactory conclusion• All members have been heard / had their inputs• If necessary, align everyone via “Just to make sure we have everyone’s inputs and agreement on the metrics….”• Stay on schedule – if discussions stretch out, politely remind everyone, “In interest of time, we should lead to a conclusion, or have a separate meeting to address some of these items.”
    12. 12. Business: Resources• You need sufficient resources to meet your goals. • Resources are of three kinds: Cash, People and Time • Cash and People are inversely proportional to Time. Faster to market is only possible when you have adequate cash and people. • Factor in all three resources conservatively – it always takes 2X long and 2X the amount of cash • When new product features are being added, consider costs for product development as well as launch timing. • If your launch dates are pulled ahead, you will need additional people for development, QA, testing and design pivots • If your adoption targets are raised, you will need more cash for customer acquisition• Your board should factor in resources required to meet your goals• Entrepreneurs on your board have more experience and will be realistic. Watch for opportunistic behavior.
    13. 13. Sales and Marketing• Present your sales pipeline (See format in Appendix) • Be Realistic / Conservative • Factor in delays and unforeseen challenges. Stuff happens! • Missteps / delays in revenues can lead to cash challenges • Cash challenges can lead to CEO challenges• Marketing • A measurable marketing plan that demonstrates outcomes • supports sales / lead generation • Brand building / awareness creation • Budget includes expenses for AdWords, PR Firm, Conferences / Trade Shows, Blogs etc. • Outcomes and variances
    14. 14. Your Budget and Financials• Ensure your budget planning factors in your key goals / milestones• In first meeting, present your 12 month budget • Provide details by month (See Sample Annual Budget in Appendix) • Seek inputs / discussion • Board should approve annual budget• In subsequent meetings, provide highlights • Cash at hand will last for XX months • Calculate how long the cash will last before you need to raise additional round of financing • For example, if your burn rate is $50,000 per month and you have $500,000 at hand, you will run out of cash in month #10. Thus, you need to start planning for the next raise at least 4/6 months ahead of time • Describe any unexpected expenditures / variations from budget• Include detailed financials in Appendix • Income Statement, Balance Sheet, Cash Flow Statements
    15. 15. Top Challenges• Be prepared to discuss your startups top 2/3 challenges • If you don’t have any challenges, you are not thinking hard enough • Your board may not necessarily know all your challenges – make no assumptions • State these challenges without being defensive – every business has challenges. Your board knows that ! • Come prepared with some possible solutions to these challenges. The board cannot do ALL the work but can guide • Stimulate a healthy debate, welcome opposing views• Ask for help – your board members WANT to help • Finding experts to help explore solutions • Accessing some potential customers • Attracting key team members
    16. 16. Board Action Items• Formal Portion • Chairman moves a motion • All in favor say “Aye” – any discussion? • Motion “seconded by” and “approved”• Board approval may be needed for: • Your 12 month budget and operating plan / metrics • Option Pool / 409A Procedures • Appointment of Independent Director• Minutes are recorded by Counsel / Secretary & approved in next meeting
    17. 17. Board AlignmentMake sure all your board members are aligned on • Business • Agreement on 12 month goals • Agreement on Key metrics • Mitigating top 3 challenges • Board Related Matters • D & O Coverage • Decision making process: Options grant / 409A Valuations • Board Meetings / Communication • Lead Director role • Frequency of meetings • Format of communication • Annual CEO performance review • Annual board performance review
    18. 18. Close the meeting• Thank everyone • Remind them of next meeting date / time / venue • List your follow up action items • De-compress, chillax and take some time to reflect of key discussions and your board dynamics • Productive discussions and clear outcomes • Board members willing to roll up their sleeves • Healthy participation / 2 way communication • Team spirit/ collegial environment
    19. 19. Post-meeting actions• Talk to the lead director and ask for feedback • Quality of meeting • Quality of information / board package • Areas of improvement• After each meeting, ask yourself if: • Board members believe in the CEO’s leadership • Are energized about the future potential of the company • Are convinced they made a good investment decision
    20. 20. Conduct a post-mortem• A good board meeting • Covered relevant information / progress updates • Stimulated healthy discussion on key challenges • Board members were prepared, engaged and willing to help • Non-defensive, open discussions • Honest – No pandering or “false emergencies” • Team spirit/ collegial environment • Adhered to time
    21. 21. Appendix: Sales PipelineCompany Current Status PO Value Target Probability Closing DateCompany A Approved for 200 users. In $250,000 March 30, 90% legal / contractual 2014 department.Company B In financial negotiations. $1,500,000 March 30, 50% Strong competitive 2014 overturesCompany C Completed demo. Need to $500,000 June 30, 50% develop specific technical 2014 module for usersCompany Initiated contact. Awaiting $50,000 Oct 30, 20%D demo date confirmation 2014
    22. 22. Appendix: 12 month budget Revenue Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Total Ad Revenues $0 $0 $0 $0 $0 $2,491 $4,507 $12,096 $16,006 $21,870 $30,348 $27,297 $114,615 Subscriptions $25 $75 $150 $300 $600 $1,200 $2,400 $4,800 $7,200 $10,800 $16,200 $22,680 $66,430 Sponsorships $0 $0 $2,700 $2,510 $1,450 $3,172 $3,945 $4,826 $7,411 $16,750 $22,480 $26,165 $91,409 TOTAL $25 $75 $2,850 $2,810 $2,050 $6,863 $10,853 $21,722 $30,616 $49,420 $69,028 $76,142 $272,454 Expenses Development $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 IT $2,858 $2,763 $2,763 $2,953 $2,953 $3,511 $4,050 $4,708 $5,671 $7,081 $7,989 $8,818 $56,114 Marketing $2,000 $2,000 $2,000 $2,000 $2,000 $7,950 $13,985 $15,072 $15,962 $11,892 $13,853 $14,564 $103,278 SG&A $21,066 $21,232 $21,407 $21,591 $21,783 $25,516 $25,728 $25,950 $26,183 $26,427 $30,413 $30,682 $297,977 Rent $2,050 $1,854 $1,863 $2,288 $2,299 $2,520 $2,954 $2,968 $7,021 $7,038 $7,885 $8,320 $49,060 Salaries $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $27,000 $324,000 Support $0 $0 $0 $0 $0 $0 $4,840 $4,840 $9,680 $4,840 $4,840 $5,950 $34,990 TOTAL $57,674 $61,215 $61,672 $62,457 $62,567 $78,233 $90,420 $92,587 $104,477 $98,321 $106,517 $110,506 $986,646 Series A Investment $2,500,000 Total Spend toCash Flow Positive $806,085 Cash on Hand $298,918 $241,269 $180,129 $121,307 $2,561,660 $2,501,142 $2,429,773 $2,350,206 $2,279,340 $2,205,479 $2,156,578 $2,119,090Months of cash at hand 5 4 3 2 42 35 31 33 31 45 58 62