When we think of the term “board of directors” we may envision a room of men and women dressed in suits around a conference room table. It’s understandable as this scene is often portrayed in a company’s annual report brochure that is mailed out to stakeholders. However, the primary role of the board of directors is much more important than this traditional image.
In recent years, there has been an uptick in entrepreneurial startups and more investors are taking an interest in early stage companies. One of the things that founders often have the most concern over is whom they should have on their board. Having knowledgeable board members can be transformative in the early stages, as this group can provide key advice and can also help attract other expert team members.
In many cases, board members have a vested interest in the company, work in upper management, or are independent of the company but are known for their business expertise. Whatever the case, board representatives have a strong influence on how startups perform and a responsibility to protect the shareholders’ assets.
Brian Paes-Braga is a modern entrepreneur, experienced investor, and merchant banking executive. Currently, he sits on the Board of Directors of two major shareholder/portfolio companies, DeepGreen Metals and Thunderbird Entertainment, where he advises management teams by providing constructive feedback on strategic decisions and identifying ways investors can help the company with its business.
“While expertise matters, I believe having in-depth experience acting as a board member and interacting with team members is the most important,” says Paes-Braga. “We come together to offer guidance from both personal experience and very successful VCs.”
Paes-Braga goes on to explain that serving on a board of directors also provides the company with insight and assistance with upcoming deals.
“There is an opportunity for founders to solicit strategic advice from investors and business people who know how to identify and close in on a lucrative deal,” he says.
Lisa Suennen has served on over 20 boards of directors. She agrees on the importance of electing a knowledgeable board as the backbone of a startup.
She gives this additional advice: “If it’s the CEO who’s a board member, I would advise them to learn how to really listen, not just talk, but truly listen. Work on stepping back from yourself and taking the advice of others who’ve been there and done that and who’ve seen it before. Their thoughts may or may not be correct, but at least synthesize it into your thinking, and if you disagree, fine. Be a sponge, not Teflon.”
Suennen also reiterates the importance of building personal relationships with the management team.
“As far as new board members who are not on the management team, my advice to them is to build personal relationships with each board member. Talk to other directors offline, meet them in person, create a rapport, because when the s**t ultimately hits the fan, and it will at some point, then you have a basis for negotiation and collaboration that is not just a quarterly forced march into a room. It’s important to build relationships with the colleagues you have around you, so you act like a team when you need to.”
The most important takeaway to becoming a valuable member of the board is to be proactive – get involved, network and offer support. It is with this guidance, after all, that can transform a startup into an exceptional company with great leaders and brilliant people who have the ideas to move forward.