Building a board is a very challenging task for a founder. At the same time, a great board can be a fantastic way of setting your roadmap towards success. Irrespective of the stage of the startup, having a sound board of directors will add value to the business!
1. Find a mentor who can be the Chairman
A Chairman should be one who is a coach-cum-mentor to the founders. Someone who has been there, done that. Someone who has the experience, connections, and farsightedness to effectively guide the board. The Chairman can be someone who can suggest plans, find loopholes, offer M&A opportunities, liaise with bankers, warm up the investors, etc. You want a strong and experienced candidate who can have some skin in the game, and whom other stakeholders look up to.
2. Decide on the board size
Too many cooks will spoil the broth. Decide on a size, and stick to it:
3. Restrict the number of Observers
Let's face it, despite the fact that an Observer will be a non-participating and non-voting board member who wants to silently observe, they can inadvertently sway meetings. You do want Observers because that is an engagement of intent rather than being a deadwood. However, limit your Observers to a max of 2 people. If there are a lot of investors who want an Observer seat, ask them to nominate one representative amongst themselves.
4. Avoid people who actively want board seats
Someone who nominates themselves will usually be more interested in their own goals and objectives. You want to choose someone who is an ally, yet is not overly enthusiastic about joining a board. Pick people who are picky about their schedules. This helps in the long run.
5. Look beyond your investors
Remember, your investor syndications should not automatically mean board representations. A board seat is not a right, it is a privilege. Your board should be comprised of people who have built similar successful businesses before, who have a professional edge, and/or someone who is a well-respected professional in the industry.
Building a board requires patience, effort, transparency, and utmost communication! Your board should always have the best interests of the company in mind rather than its representation. In the end, the right board will drive performance and results!