Startup Boards: Getting the Most Out of Your Board of Directors

by Brad Feld, Mahendra Ramsinghani

An essential guide to understanding the dynamics of a startup's board of directors Let's face it, as founders and entrepreneurs, you have a lot on your plate—getting to your minimum viable product, developing customer interaction, hiring team members, and managing the accounts/books. Sooner or later, you have a board of directors, three to five (or even seven) Type A personalities who seek your attention and at times will tell you what to do. While you might be hesitant to form a board, establishing an objective outside group is essential for startups, especially to keep you on track, call you out when you flail, and in some cases, save you from yourself.

In Startup Boards, Brad Feld—a Boulder, Colorado-based entrepreneur turned-venture capitalist—shares his experience in this area by talking about the importance of having the right board members on your team and how to manage them well. Along the way, he shares valuable insights on various aspects of the board, including how they can support you, help you understand your startup's milestones and get to them faster, and hold you accountable.

Details the process of choosing board members, including interviewing many people, checking references, and remembering that there should be no fear in rejecting a wrong fit Explores the importance of running great meetings, mixing social time with business time, and much more Recommends being a board member yourself at some other organization so you see the other side of the equation Engaging and informative, Startup Boards is a practical guide to one of the most important pieces of the startup puzzle.

Genres: Business, Startup, Entrepreneurship, Nonfiction, Management, Leadership, Professional Development

308 pages, Kindle Edition

First published December 9, 2013

About the author

Brad Feld has been an early-stage entrepreneur and investor since 1987. He co-founded two venture capital firms, Foundry Group and Mobius Venture Capital, as well as multiple companies, including Techstars. Brad is a writer and speaker on venture capital investing and entrepreneurship and has written several popular books, including Venture Deals and Startup Communities. He runs the Anchor Point Foundation with his wife, Amy Batchelor.

Reviews

[Simona · Rating 4 out of 5]

A straightforward and to-the-point book about startups and their boards.

Reviews and provides answers to questions about how to set up a board, how to select people for the board (VCs, independent members, founders, etc.), what functions the board performs with the CEO / without the CEO, etc.

It offers plenty of useful information and tips on addressing various dynamics and scenarios—from board function in early-stage startups to the revenue generation stage, going public, and even in the case of bankruptcy.

I also appreciated the tables summarizing key information for future reference.

I learned about the role of an advisory board and how it differs from a formal board, as well as the kinds of disputes that can arise and how to approach them productively—for example, conflicts over equity between founders, control issues, and more.

4/5 🌟🌟🌟🌟

[Ryan · Rating 5 out of 5]

This is a good summary of startup boards for executives (and startup founders), although not as useful for boardmembers themselves or counsel. Overall, Scott Kupor's book (https://www.goodreads.com/book/show/4...) is better for "professionals" -- this is a very simplified version for startup founders.

This is missing some of the "soft skills" board management techniques and experiences, and would be better with examples.

[Eric Lunt · Rating 5 out of 5]

I read this book several years ago and I just read it again as a refresher. I've been lucky enough to sit on a couple of boards with Brad (as a co-founder observer and an outside independent) and he's really the best. This book is filled cover-to-cover with practical advice. So if you're just getting your company off the ground, or if you're looking to sit on any startup boards, or even if you're an advisor to a startup, you need to read this book. It is excellent.

[Tim Hughes · Rating 5 out of 5]

Startup Boards is a great background document on how to run a venture capital backed board in the US. (I'm CEO of a self funded business in the UK). It explains the procedures you need to follow, how to work out who should be on the board and the etiquette of meetings. If you are outside of the US then you do need to take the very US centric details with a pinch of salt.

[Petr Bela · Rating 3 out of 5]

I'd probably suggest reading Venture Deals first, and if you're still hungry for more information, or have specific questions about forming a board, continue with this one.

[Danny Hadar · Rating 4 out of 5]

Good overview of the board duties with a lot of comments from past bard members.
I thought that some of the things were a bit repetitive but overall covers the main things

[Pavel Annenkov · Rating 4 out of 5]

Brad Feld, Mahendra Ramsinghani “Startup Boards”

О ЧЕМ КНИГА:
Важный элемент успеха каждого стартапа - это его Совет Директоров и Консультационный Совет. Авторы рассказывают, как должен выглядеть Совет Директоров(СД), функции его участников, а также как их находить и мотивировать.

В книге отлично показан пошаговый сценарий проведения встречи Совета Директоров стартапа.

ГЛАВНАЯ МЫСЛЬ КНИГИ:
СД - это группа людей, которые помогают вам строить вашу компанию. Правильный подбор участников в этот орган управления также важен, как продукт и бизнес-модель вашего бизнеса. Хороший СД может сильно продвинуть вперёд ваш бизнес, а плохой СД может его убить.

ЗАЧЕМ ЧИТАТЬ ЭТУ КНИГУ?
Чтобы правильно выстроить в своей компании работу Совета Директоров и Консультационного Совета.

МЫСЛИ И ВЫВОДЫ ИЗ КНИГИ:
- Чем раньше вы создадите СД, тем лучше. Это нужно сделать даже до первого раунда инвестиций.

- Большая часть стартапов умирает от собственных ошибок, а не из-за сильных конкурентов или плохого рынка. СД, как раз, поможет избежать многие из этих ошибок.

- СД - это продолжение вашей команды в бизнесе.

- Для каждого участника СД конечно важен опыт и навыки, но ещё важнее соответствие культуре стартапа. В непростых ситуациях именно cultural fit поможет совместно решить проблему.

- Главная задача СД - это следить за тем, что стартап проходит через все проблемы, выживает и развивается дальше.

- Качества хорошего участника СД:
1. Bold mindset. Настроен решать вопросы и помогать в условиях неопределённости.
2. Предпринимательский опыт.
3. Опыт и связи в отрасли.
4. Полное доверие.
5. Открытость.
6. Responsiveness. Оперативно отвечает и решает вопросы.

- В СД должен быть минимум один независимый участник. Лучшая комбинация: 2 основателя, 2 VC и 3 независимых участника.

- Отличие СД от Консультационного Совета. СД служит акционерам, а КС служит СЕО.

- Главные 4 вопроса при оценке потенциального кандидата в СД(стр.102)

- Никаких денежных компенсаций участникам СД давать не надо, пока компания не вышла на прибыль. Только доля в бизнесе. Размер примерно 0,25-1% компании, которые вестятся от 2 до 4 лет.

ЧТО Я БУДУ ПРИМЕНЯТЬ:
- Включу в term sheet список документов для годовой и квартальной отчетности перед СД(стр.46)

ЕЩЕ НА ЭТУ ТЕМУ:
📗 Brad Feld and Jason Mendelson «Venture Deals»

[Harry Harman · Rating 5 out of 5]

As with every experiment, he did more of what worked, modified and killed what didn’t, tried new things, and measured a lot of stuff.

discuss historical best and worst practices, and give you a clear set of tools for creating and managing an awesome board.

Whether it is building a new product, landing the first customer, raising the initial round of capital, or recruiting early team members

A long-standing cliché in the venture capital world is that VCs provide “adult supervision” to the entrepreneurs.

The most common mistake startups make is not having a board at all.” He points out that research shows a majority of startups fail due to self-inflicted wounds

In a formal sense, the CEO presents the ongoing progress of a company and gives a periodic account of the business operations to the board. It is then the board’s responsibility to establish appropriate procedures, set milestones, and assess performance.

“As soon as you raise money, it’s no longer your company—you are now working for somebody else. If you don’t perform, you will get fired.

Example language from the term sheet is:

The Company will deliver to such Major Investor (i) annual, quarterly, and monthly financial statements, and other information as determined by the Board; (ii) thirty days prior to the end of each fiscal year, a comprehensive operating budget forecasting the Company’s revenues, expenses, and cash position on a month-to-month basis for the upcoming fiscal year; and (iii) promptly following the end of each quarter an up-to-date capitalization table.

the two primary characteristics of every investment are economics and control.

Investors can also have drag-along rights, which compel other shareholders to vote with them in certain situations, as well as conversion rights, which give them control over when they convert their preferred stock into common stock.

If the company makes great progress on milestones but runs out of cash, new or existing investors may propose additional financing at a lower valuation, commonly referred to as a down round. When a board approves a financing at a down round, all of the current shareholders will be impacted.

[Vasco · Rating 5 out of 5]

Great book. Extensive knowledge on board dynamics is presented, structured throughout different chapters touching different topics. The reader is told how to vet board members, how to "coach" them and screen conflicts of interest and others, and much more. Great book.

[Augusto Restrepo · Rating 5 out of 5]

Great read to get quickly up to speed into the roll of board member

Really like how this guys write and describe their different books. This one on startups is no different, really liked it.

Chapters are short and to the point. Becomes a great reference book later.

[Vlejd · Rating 5 out of 5]

This is going straight to my "periodically reread" list. What is inside sounds like a good overview of dynamics with your board and a ton of technical details that are usually not discussed, but can land you in jail.

[stefanddddddd · Rating 3 out of 5]

good overview of the board role versus the management team role. especially in a startup where the main shareholder is also CEO and also board memeber (even chair sometimes). the material is a bit repetitive and a bit light when compared to other more academic sources.

[Laura Papla Ford · Rating 5 out of 5]

A must read for any entrepreneur - even if you do not have to have a formal board.

[Ken Hamner · Rating 5 out of 5]

Excellent book. Very practical and pretty thorough. This whole series of books is great.

[Oli · Rating 4 out of 5]

A walkthrough of startup boards with layperson's language. A nice introductory book to someone interested in VC and startup.

[Duong Tan · Rating 4 out of 5]

Essential book.

[Jimmy · Rating 3 out of 5]

Interesting read. Somewhat shallow and just common sense, while I did find some useful information and it's good to have an introduction upon this.

It's written mostly from a VC's perspective.

[Tomek · Rating 3 out of 5]

Decent, easy to read, but nothing revelatory

[ALEX · Rating 4 out of 5]

This book is a quick read and provides a nice, high-level overview of startup boards.

[Bryan · Rating 4 out of 5]

This is a good overview of startup boards for neophytes with pro tip tactics mixed in for more seasoned entrepreneurial operators. It would be a good read for board members as well.

[Anthony · Rating 4 out of 5]

Useful reading for those entrepreneurs looking to navigate venture funding or from investors briefly. I'd pair this with the partnership charter book.

[Ryan Morton · Rating 4 out of 5]

A very nuanced read for a particular type of person, namely entrepreneurs, investors, or would-be board members. I read this as an aspiring entrepreneur, and it was fantastic. I have some of my own ideas for startup boards, and this book both aligned with those ideas, and gave me better strategies to ensure that my company is ahead of the game when it comes to Startup boards. I have read a few of the authors' other books, including venture deals, and this one does not disappoint.

It was simple to read, a challenge for such a complex topic, but also offered specific action items, and ways to think about creating huge value with your board. I strongly suggest this for all entrepreneurs, would be entrepreneurs, startup lawyers, and investors. It's probably actually just a good read for anyone working at a startup, so they understand the role of the board. I will be reading this one and/or using it as a reference.

[WiseB · Rating 4 out of 5]

The book appears to cover matters relating to boards of startup companies, but the information and knowledge about all functions, activities and life cycle about boards (and directors) is also true to established companies. The author's style of having short chapters (around 10 pages) for different subjects makes the reading book with great ease yet keeping the reader focused at the same time. For readers without prior knowledge or experience with boards, the book is a good first step in understanding this domain in the governance side of a company.

[Pete Welter · Rating 3 out of 5]

If you're a startup founder or CEO, or a current or prospective board member, then this book will walk you through both the reasons behind and the mechanics of the board of directors of a startup company. While it will help you understand the responsibilities of the various members of the board, it's true value is in discussing what works, and what doesn't for boards. Because of the authors' extensive experience in the startup arena, they've seen boards of all kinds, and that diversity of their experience comes through. This is not a "this is THE way a Board of Directors functions" type of book. Because the various members of the board may each have their own perspective and angle on the company, managing this tension in a healthy manner is key, and the book provides numerous ideas for doing that.

The part that was most useful for me were the asides where various startup execs and VCs discussed their experiences, both good and bad, and what they learned. It brought the lessons of the book home in a concrete fashion.

[Veve · Rating 2 out of 5]

Maybe more of a 2.5 star. Too much hype, some advices are genuinely nice, some are rather... Well... Not very good plus lot of fluff added. It would be wise for the author to stick to advices in their own fields of expertise rather then providing wrong or misleading information in the book. I would also recommended to be mindful of business culture and compliance of the country(ies) you are operating in if you have decided to reach for this book. I actually dropped the book as I didn't find much value in it for myself and I find the incorrect and misleading information irritating.

[Dzung Nguyen · Rating 4 out of 5]

1. Doanh nghiệp startup cần 1 CEO giỏi chứ không phải "có thể giỏi"
2. Việc điều hành các phiên hợp với các đối tượng tham gia phù hợp để giải quyết vấn đề quan trọng trong BGD, ngoài BGD và các bên liên quan là một nghệ thuật.
3. Một doanh nghiệp hiệu quả cần đa dạng màu sắc, giới tính và không bao giờ hòa hợp hoàn toàn nhưng không gây ảnh hưởng tiêu cực
4. Luôn có các vai: ai là người phụ trách, ai là người ra quyết định và ai là người cuối cùng chịu trách nhiệm về một vấn đề nào đó.

[Pete · Rating 5 out of 5]

Worth reading

This a book I have recommended multiple times. It offers practical advice and insight into the responsibilities and practicalities of setting up and running a startup board. It is also very readable - highly recommended. I wish this had existed 20 years ago.

[Joshua Francia · Rating 4 out of 5]

Very dense, procedural, with key definitions to understand the nuances behind a board of directors. Really useful as a way to really get the importance of running the board as a CEO and to give it the weight it deserves.

[Omar El-Mohri · Rating 5 out of 5]

If you are in any kind of business that is big enough to include a partner, or being an investor of any size you might want to pass through this book, the information that usually only get through experience

[Derek · Rating 5 out of 5]

Appreciate the great, specific info. Would have loved to have the same for a nonprofit since there are so many fundamental differences.