« How Can An Entrepreneur Fundraise Without Getting In Trouble With the SEC? | The Next 20 Hires »

The Role of an Early Stage Board of Directors

I have 57 unanswered questions in my “AsktheVC” folder.  There are 77 days left in 2007.  That’s less than one a day.  I should be able to get the folder to 0 by the end of 2007.  Nothing like a little goal.  Of course, that assumes no new questions which you – fair reader – would probably assert is a bad assumption.  Oh well. 

Q: For a very early stage company (pre-funding), what role should the board of directors play?

A: (Brad).  We’ve written about this a lot in the past.  See the Board of Directors category on AsktheVC, the Board of Directors category on Feld Thoughts, and an article I wrote in the late 1990’s titled Boards That Are Not Bored

Your early stage board can cover a wide variety of roles, but fundamentally you want them to be strong advocates and support for what you are doing and what you are trying to create.  They will help you with fundraising, recruiting, strategy, early founder issues, business partnerships, and a variety of other tactical things. 

While there is a governance role with every board, the founders of an early stage company should not simply defer to the board.  In all cases the founders should also be members of the board and collectively should view the board as a constructive group that is working together, rather than one where there are two separate entities (e.g. “the board” and “the founders”).  In addition, the “board” shouldn’t be anthropomorphized (as in “the board wants me to do this”) – your early stage board consists of people that each likely have a point of view, will contribute, but shouldn’t “dictate.”

I went back and reread Boards That Are Not Bored and continue to think it’s one of the better articles I’ve ever written about boards.  The construct of a Working Board still resonates with me, especially for a very early stage company.

These are boards that role up their sleeves and help the founders and management team of the company get the job done. They meet frequently, have animated, engaged discussions, and offer significant ongoing support and help to the key owners and managers of the company.

As a company grows and takes funding, these dynamics will change.  A post funding board is different than a very early stage / pre-funding board.  Both can be powerful, have huge impact (positive and negative), and are important.  But – they are different.

56 to go.

October 14th, 2007 by     Categories: Board of Directors