In partnership with Female Founders Alliance, Denali CEO Rebecca Lovell and COO/CFO Jennifer Edson hosted a roundtable on “Your Startup’s First Board.” Below, we share highlights from the discussion on board of directors and advisory board best practices.
Why Form a Board?
Well, it’s actually a matter of legality. In order to do the basics like issue stock, fundraise, or get a loan, you’ve got to have a board (even if it’s just a party of one that consists of the CEO).
The two technical responsibilities of a board are duty of care (to show up and fulfill their responsibilities) and duty of loyalty (to always act in the best interest of the organization).
Technical duties aside, there are quite a few advantages to having a board too:
- Provides long-term vision and strategic guidance
- Allows for non-emotionally invested perspectives
- Keeps senior management accountable
- Lends support for navigating tough waters
When Should I Form a Board?
Technically, you should already have a board of at least one person. But as the company grows and starts to receive outside investment, a more formalized board becomes necessary. In the earlier stages of your company, you may, however, opt for a board of advisors rather than a board of directors. A board of advisors doesn’t actually have control on important business decisions but provide input and advice from their own experiences, which presents a great opportunity to expand your expertise.
Who Should Be on the Board?
First and foremost, aim for a diverse group of individuals with varied experience and unique backgrounds.
They should have plenty of relevant experience in your company’s industry, as well as proven operational expertise. Selecting members who complement the CEO’s skillset and have connections in the community are also valuable characteristics.
Perhaps the most important factors in selecting board members are the aptitude and attributes (or “soft skills”) they possess. Namely, choosing someone who has a clear vision for the company and knows how to execute on a plan. They check their ego at the door and have the ability to achieve consensus, leading with integrity and empathy.
Board Meetings 101
Once you’ve actually formed a board, there are a few things to keep in mind while planning the meetings:
- Cadence – Generally speaking, holding quarterly formal meetings are common, though, depending on your company’s circumstances, more frequent check ins may be required. Remember to be cognizant of when your financials will be ready to share during the month and schedule accordingly.
- Agenda – Always have an agenda prepared that outlines what should be covered in the meeting. Be sure to share it with members ahead of time. Even better, share the whole deck ahead of time so you don’t waste precious time focused on merely digesting the information.
- Have a Goal – Express what is to come for the business with tangible milestones and KPIs that will paint what success looks like and help the board keep leadership accountable.
- Communicate Between Meetings – Especially if meetings are months apart, communicate with board members as relevant company matters arise. No one likes to be surprised! So don’t save big news for the formal board meetings.
To hear about common board mistakes, success factors, and real-world examples of rants & raves from board members, listen to Rebecca and Jennifer’s full session below: