Written in collaboration with Investir&+, a long-term investment structure dedicated to entrepreneurs developing projects with strong social or environmental impact, to support them in their growth.
What is at stake?
The board has several roles:
- Representing the interests of the company
- Discussing the company's strategy and key decisions of the business + informing shareholders
- Certain decisions can be submitted to the vote of the board (to be defined in the Shareholders' Agreement)
Why is it important?
As early as the pre-seed stage, thinking about the formation of the Board is of vital importance. Taking the time to assemble an initial committee of about 3 to 5 people with diverse profiles, skills, and experiences is one of the best ways in a startup to prevent certain avoidable mistakes and, therefore, to progress more rapidly. Transparency and trust are the key factors.
3 actions to implement right now
1️⃣ Anticipate the right time to constitute the Board
For SAS, the articles of association are very flexible: there must be at least one president, but the creation of a board of directors is not mandatory. From the moment the startup raises funds, the creation of a board is usually included in the shareholders' agreement, so that one or more representatives of the shareholders can sit on it. However, an advisory board can be established before or without a fundraising.
Attention, formalizing a board too early can risk slowing down the founders' actions with unnecessary administrative formalities at this stage. But forming it too late also deprives the startup of crucial strategic support for the rapid development of the project.
2️⃣ Compose the board ensuring diversity of profiles
- To choose the right profiles representing investors, 2 important elements:
- Human and relational qualities, trust, listening skills
- Competencies, expertise, network
- Ensuring diversity of profiles (experiences, specialties, gender diversity, etc.) is an excellent way to enrich the debate and bring new perspectives on the problems encountered. Objectives can be set from the start to make diversity a central part of the board and thus make it "responsible by design."
- Ensure representation of all aspects of diversity: age, background, experiences, geographical origins, skills...
- A board is not fixed! Adjustments can always be made later if necessary.
3️⃣ Integrate one or more independent members into the board
Choose one or two individuals who have no connections with the company and its founders but have relevant expertise for the startup's growth. They will represent the specific interests of the startup (which may sometimes differ from those of shareholders or founders). In these cases, they can be board observers (with no voting rights) or independent directors (with voting rights).
→ Ensure that the choice of this independent director is supported by both the founders and the investors.
📚 Further Reading
📖 Definition, Formation, and Operation of a Board (Investir&+)
📖 Formation of a Board: Feedback (Investir&+)
📖 The Galion - Guide to the Board
✍️ Contributors to this document
Investir&+ is a long-term investment structure dedicated to entrepreneurs developing projects with strong social or environmental impact, supporting them in their growth.
/w=750,quality=90,fit=scale-down)