Despite the good intentions and great experience in the room, the painful truth is that precious time and energy is frequently squandered by directors and startup CEOs.Jon Callaghan (Let’s Fix Startup Board Meetings)
To create this Holloway Syllabus, we put in more than 20 hours of research and worked with Tom Eisenmann from Harvard Business School and Brian Weisberg from Tidelift to pull together and vet great resources. We believe this is the most comprehensive and authoritative list (over 100 resources!) to help founders, board members, and others understand the basics and nuances startup boards. It covers startup board basics (“what is a board?”) and complex, on-the-ground challenges (“how do I set up different committees as my board grows?”), and everything in between.
A board of directors (or board or BOD) is a group of people who oversee an organization, including by guiding and supervising the organization’s officers, and have legal obligations to act in the organization’s best interest. For a corporate board of directors, this includes ensuring that the company serves the best interests of its shareholders. All corporations are legally required to have a board of directors. The board typically consists of a mix of individuals representing different interests. An inside director is any founder, executive, or individual investor on the board. An outside director is not an employee of or existing investor in the company, and they are recruited to the board to provide specific expertise. Individuals on the board are referred to as board members. A board member is said to have a board seat at the company.
When a company incorporates, the board is usually made up only of one, some, or all of its founders. Under Delaware corporate law, boards have the authority to control the day-to-day matters in a company. You should always defer to your legal counsel when determining what decisions need a board vote, but in our section on protective provisions, we cover the decisions that almost always require a board vote.
It’s rare for an investor to negotiate a board seat at the seed stage unless they’re writing a large check ($750K+). Boards of directors usually meet quarterly for meetings that can be as long as three hours; they’re a big commitment, and investors usually don’t want to sit on too many boards. But at some point beyond the seed stage, you’ll have to give up board seats to investors, and that means you’ll need the support of any investors with a board seat when making major decisions.
The Holloway Guide to Raising Venture Capital has more on the fundamentals of startup boards.
When a startup forms a board of directors, the primary role of the board is to make key strategic and operational decisions for the company. The board typically holds regular three- to four-hour board meetings. These are often held quarterly or every six weeks; when a company is young they could be held monthly. In these meetings, the board discusses progress, goals, challenges, key hires, and all sorts of operational issues. A board meeting is used to align the operations with the interests of the investors and founders. While board meetings are often viewed as a tool for investor oversight, they are very much also about entrepreneurs seeking the board’s counsel and advice.