An effective startup board member fuels a young organization's growth. Learn the most important characteristics of a startup board member.
Creating a startup board of directors can be intimidating, especially if you are a first-time founder. You must prioritize members’ characteristics from a sea of options to find the right people to launch your startup to success. Read on to discover the most critical characteristics for startup board members.
What is a Startup Board?
A startup board is a group of people representing the interests of shareholders in a newly established organization. The board’s overall responsibility is to ensure an organization achieves its mission and goals. In other words, a startup board serves the organization’s best interests.
Specific board roles depend on your organization’s needs. Common responsibilities include:
- Hiring or firing senior management, like the CEO
- Approving the organization’s budget and making fundraising decisions
- Adopting internal rules, processes, and policies that govern the organization
Startup boards are crucial. They help early stage startups:
- Create operational strategies
- Recruit the right management team
- Build favorable financial habits
- Avoid compliance issues with government regulations
Composition of a Startup Board
Fill each board seat with motivated, dedicated individuals. Your board needs members who help the organization grow and thrive.
According to Fred Wilson, partner at Union Square Ventures, “a perfect startup board should be comprised of the startup’s CEO (which may or may not be its founder), one financial investor (e.g., an experienced/influential Angel or Vice Chair), and two to three fellow CEOs (peers) who have built or are in the throes of building successful companies of scale.”
In the book “Startup Boards: Getting the Most Out of Your Board of Directors,” author Brad Feld adds that a startup board should include at least one independent director and legal counsel.
When deciding who to include in your startup board, remember that boards evolve in terms of functions, roles, and requirements. For this reason, build your effective startup board as if you’re creating an effective management team.
First, determine how many board member seats are appropriate for your organization. Then, determine the most crucial skills you need to fuel your startup’s growth.
Startup Board Member Characteristics
Many traits matter when selecting the right startup board member, and you want to find a variety of people whose strengths and weaknesses balance each other out. However, the following are the most crucial personality characteristics for effective startup board members.
Most board members tend to be experts in at least one of these areas: finance, operational management, and industry-specific knowledge. But for startup boards, an entrepreneurial skill set is a must-have.
Entrepreneurs bring a lot to the table as board members. They are long-term, strategic thinkers used to building something from the ground up. Startup life comes with lots of starts, stops, and pivots. Entrepreneurs aren’t fazed when something doesn’t work as intended, and use failure as an opportunity to innovate. Without a fear of failure, entrepreneurs are willing to experiment and take risks for your organization.
There’s no time for inexperience on a startup board. Members with board experience draw knowledge from previous situations to make more informed decisions on behalf of their organizations. They also likely bring valuable connections for recruitment and fundraising.
Experienced board members have been exposed to different corporate cultures, leadership styles, and business models. Experience broadens their perspective and trains them to see things from a board-level point of view, which is important for a board’s general success. Seasoned board members help greener members or staff refine their communication and leadership skills.
Having focused board members is key. Highly focused individuals pay attention to board matters and are fully engaged in board meetings, which is crucial for the board’s success. Startups move quickly, making it easy to veer off-track. Focused members help keep the board committed to its strategic goals and mission.
What Changed for Boards in 2021?
Equip Your Startup Board with Board Management Technology
With focus, experience, and an entrepreneurial mind, your board members will help the startup thrive and grow in the industry. The best boards need the best tools to get the job done. After creating a strategic startup board, arm members with OnBoard, a robust board management technology with powerful features that foster collaboration and streamline board governance.
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