{"id":413716,"date":"2023-08-17T12:19:04","date_gmt":"2023-08-17T11:19:04","guid":{"rendered":"https:\/\/seedlegals.com\/resources\/startup-board-explained\/"},"modified":"2023-08-17T12:19:04","modified_gmt":"2023-08-17T11:19:04","slug":"startup-board-explained","status":"publish","type":"post","link":"https:\/\/seedlegals.com\/us\/resources\/startup-board-explained\/","title":{"rendered":"Startup boards explained and tips to manage your board"},"content":{"rendered":"","protected":false},"excerpt":{"rendered":"

The founder’s guide to creating and managing a startup board. Responsibilities, what to pay and how to ace the admin.<\/p>\n","protected":false},"author":169,"featured_media":413718,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[141,147],"tags":[],"event_tags":[],"class_list":["post-413716","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized-us","category-startup-guides-us"],"acf":{"post_content_width":"default","revision_date":"","has_custom_post_authors":true,"is_expert_reviewed":true,"has_sources":false,"related_posts":false,"custom_post_authors":{"authors":[{"author":{"ID":169,"user_firstname":"Idin","user_lastname":"Sabahipour","nickname":"Idin Sabahipour","user_nicename":"idin-sabahipour","display_name":"Idin Sabahipour","user_email":"idin@seedlegals.com","user_url":"","user_registered":"2024-08-29 09:55:07","user_description":"","user_avatar":""},"role":"Writer"}]},"expert_reviewed":{"heading":"Expert reviewed","tooltip_message":"This article has been fact-checked by a SeedLegals subject matter expert.

Meet our experts<\/a> and learn more about our review process and quality assurance in our editorial policy<\/a>."},"post_content":[{"acf_fc_layout":"text","text":"

Having a strong board of directors on your side can help you as a startup founder. Your board can open doors to new connections and help make company decisions to guide you towards success.<\/p>\n

In this article, we\u2019ll explain how to set up a startup board, understand its responsibilities and what to pay your board members (if anything at all).<\/p>\n"},{"acf_fc_layout":"text","text":"

What is a startup\u2019s board of directors?<\/strong><\/h2>\n

A startup\u2019s board of directors is a group of people who help guide the company\u2019s direction and make key decisions. They oversee corporate governance and support the founders in growing the business. A board of directors ideally has a diverse set of skills, expertise and industry knowledge relevant to the startup.<\/p>\n

Every company must have at least one director \u2013 when you set up a company, you decide who your director(s) will be. If you\u2019re just a solo founder at the moment, don\u2019t worry \u2013 a board can consist of just one director. You can then add to your startup\u2019s board as your company grows.<\/p>\n"},{"acf_fc_layout":"content_highlight","highlight_type":"tip","background_colour":"blue","show_icon":true,"content":"There are two types of directors you can have on your board: executive and non-executive.
\r\n
\r\nExecutive directors are those that are employed by the company, so they\u2019re typically more involved in the company\u2019s daily operations and decision-making.
\r\n
\r\nNon-executive directors aren\u2019t employed by the company \u2013 they\u2019re usually more removed from the company, so they can offer independent guidance and strategic oversight.
\r\n","link":null},{"acf_fc_layout":"text","text":"

Startup boards have to agree on some major company decisions. To reach an agreement, the board of directors can get together and decide on something by majority vote (called a board meeting). Or they can provide written consent without a meeting if they agree on something unanimously.<\/p>\n

You can also give some board duties to a specific director or a group of directors. For example, financial tasks are often handled by the chief financial officer (CFO). If a director is given the power to do something \u2013 like sign supply contracts \u2013 the board of directors doesn\u2019t need to meet or give consent every time the company needs a new contract. The director with the authority can go ahead and make decisions within their assigned role.<\/p>\n

Who should be on a startup\u2019s board of directors?<\/strong><\/h2>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":9383,"id":9383,"title":"","filename":"anthony-rose-250.png","filesize":104165,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","alt":"Anthony Rose","author":"59","description":"","caption":"","name":"419a38269d6040649d0250372f563b3d","status":"inherit","uploaded_to":22998,"date":"2021-07-26 11:05:30","modified":"2023-11-14 13:29:18","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":250,"height":250,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-150x150.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","medium-width":250,"medium-height":250,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","medium_large-width":250,"medium_large-height":250,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","large-width":250,"large-height":250,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-100x100.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","1536x1536-width":250,"1536x1536-height":250,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","2048x2048-width":250,"2048x2048-height":250,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-200x150.png","themosis-width":200,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-small-width":250,"tog-small-height":250,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-medium-width":250,"tog-medium-height":250,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-large-width":250,"tog-large-height":250,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-huge-width":250,"tog-huge-height":250}},"quote":"

Aim to have people on the board who are truly invested in the success of the company and who will complement the knowledge and experience of the founders. For example, if the founders are mostly technical experts, you should aim to have other directors who can help with financial expertise, business growth, partnerships and sales.<\/p>\n

Remember, the board is about governing the company, not getting advice, and it should be founder-led rather than investor-led. Investors sometimes want a different outcome than the founders, so remain in control of your own company and ensure that you have more of a say in who’s on the board than your investors.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/seedlegals.com\/resources\/author\/anthony\/","target":"_blank"},"role":"Co-founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":"_blank"},"linkedin":"","facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"

Do all founders get a seat on the board of directors?<\/strong><\/h2>\n

At SeedLegals, we recommend that if there are just two or three founders, you all have a seat on the board. Why? Well, because founders are more invested in the running and success of the company than outsiders and usually have more stock than anyone else. When founders are made board directors, they have the ability to shape the company and they\u2019re in the best position to do so because they\u2019re immersed in the day-to-day of the company.<\/p>\n

But, if there are four or more founders, not everyone needs to be part of the board. At that stage, we recommend those founders with the largest stockholding should have a board seat.<\/p>\n"},{"acf_fc_layout":"expert_highlight","expert_highlight":{"":null,"image":{"ID":9383,"id":9383,"title":"","filename":"anthony-rose-250.png","filesize":104165,"url":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","link":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","alt":"Anthony Rose","author":"59","description":"","caption":"","name":"419a38269d6040649d0250372f563b3d","status":"inherit","uploaded_to":22998,"date":"2021-07-26 11:05:30","modified":"2023-11-14 13:29:18","menu_order":0,"mime_type":"image\/png","type":"image","subtype":"png","icon":"https:\/\/seedlegals.com\/wp-includes\/images\/media\/default.png","width":250,"height":250,"sizes":{"thumbnail":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-150x150.png","thumbnail-width":150,"thumbnail-height":150,"medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","medium-width":250,"medium-height":250,"medium_large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","medium_large-width":250,"medium_large-height":250,"large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","large-width":250,"large-height":250,"_themosis_media":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-100x100.png","_themosis_media-width":100,"_themosis_media-height":100,"1536x1536":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","1536x1536-width":250,"1536x1536-height":250,"2048x2048":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","2048x2048-width":250,"2048x2048-height":250,"themosis":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250-200x150.png","themosis-width":200,"themosis-height":150,"tog-small":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-small-width":250,"tog-small-height":250,"tog-medium":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-medium-width":250,"tog-medium-height":250,"tog-large":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-large-width":250,"tog-large-height":250,"tog-huge":"https:\/\/seedlegals.com\/wp-content\/uploads\/2021\/07\/anthony-rose-250.png","tog-huge-width":250,"tog-huge-height":250}},"quote":"

In general, if your company has one to three founders you should all have a seat on the board to remain in control, particularly in the early stages. You can revisit it around the Series B stage, when perhaps your lead investor has more equity than some of the founders.<\/p>\n","name":{"title":"Anthony Rose","url":"https:\/\/www.linkedin.com\/in\/anrose\/","target":""},"role":"Co-Founder & CEO","company":{"title":"SeedLegals","url":"https:\/\/seedlegals.com\/us\/","target":""},"linkedin":"","facebook":"","instagram":"","twitter":"","hide_image":false}},{"acf_fc_layout":"text","text":"

Should investors be on your startup\u2019s board of directors?<\/strong><\/h2>\n

When you raise startup funding from VC investors, the lead investor from your funding round will usually ask for a seat on the board. Investors generally ask for a board seat so that they can have a say in company decisions and the strategic direction of the company. Think carefully when selecting investor directors and consider things like how much value they\u2019ll add, the stage of your company, and the way the board\u2019s set up.<\/p>\n"},{"acf_fc_layout":"text","text":"

What are the board\u2019s responsibilities?<\/strong><\/h2>\n

A board of directors is responsible for governing the company, making decisions and guiding the company\u2019s strategic direction. They must act in the best interests of all the company\u2019s stakeholders (its stockholders, employees, investors, customers, suppliers, community, etc) and uphold high standards of corporate responsibility.<\/p>\n

Their responsibilities are:<\/strong><\/p>\n