What’s the board’s role in an early-stage startup? – TechCrunch

1 Mins read

What’s the board’s role in an early-stage startup? Startup founders frequently ask me about the part of a board of directors. A commission can be a crucial asset in an early-stage startup.

Here’s a framework for how it can help drive success at your company: Strategy, People, Image, Finance, and Systems for compliance, or “SPIFFS.”

What is a board of directors, anyway?

The board of directors helps with the governance of the company. U.S. law requires that any company have one, though it does not need how big it should be. By generic definition, the board of directors consists of elected individuals that represent shareholders. It is the governing body that provides company oversight and helps set business policy and strategy.

On a more practical level and in a startup environment, the board can aid in creating a successful business strategy, put together the right management team, develop branding, build good financial habits, and avoid legal and compliance issues. The needs and composition of the board will change depending on the startup’s stage, management, and financing history (e.g., if there are preferred shareholders, investors that require a board seat, and more).

Investors often ask founders about their board for two reasons. First, it says a lot about their character, judgment, and willingness to be challenged. The founder can typically choose who is on their board (through careful selection of investors and advisers) and negotiate a preferred board structure.

Typically, a healthy board will balance common shareholders, preferred shareholders, and independents. It also helps investors and analysts understand who will ask critical questions and give important advice to its executive management, especially when the going gets tough (it inevitably does!).

What exactly can a board help you do?

After 20 years as a venture capitalist and board member, I boiled down the value of a board into five main pieces under the acronym SPIFS: Strategy, People, Image, Finance, and Systems for compliance.

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About author
Tristan McCue is a 26-year-old junior programmer who enjoys reading, binge-watching boxed sets, and appearing in the background on TV. He is smart and friendly, but can also be very evil and a bit lazy.He is an Australian Christian. He has a post-graduate degree in computing.
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