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Startup Boards: Getting the Most Out of Your Board of Directors

ISBN: 978-1-118-44366-8
240 pages
December 2013
Startup Boards: Getting the Most Out of Your Board of Directors (1118443667) cover image

Description

An essential guide to understanding the dynamics of a startup's board of directors

Let's face it, as founders and entrepreneurs, you have a lot on your plate—getting to your minimum viable product, developing customer interaction, hiring team members, and managing the accounts/books. Sooner or later, you have a board of directors, three to five (or even seven) Type A personalities who seek your attention and at times will tell you what to do. While you might be hesitant to form a board, establishing an objective outside group is essential for startups, especially to keep you on track, call you out when you flail, and in some cases, save you from yourself.

In Startup Boards, Brad Feld—a Boulder, Colorado-based entrepreneur turned-venture capitalist—shares his experience in this area by talking about the importance of having the right board members on your team and how to manage them well. Along the way, he shares valuable insights on various aspects of the board, including how they can support you, help you understand your startup's milestones and get to them faster, and hold you accountable.

  • Details the process of choosing board members, including interviewing many people, checking references, and remembering that there should be no fear in rejecting a wrong fit
  • Explores the importance of running great meetings, mixing social time with business time, and much more
  • Recommends being a board member yourself at some other organization so you see the other side of the equation

Engaging and informative, Startup Boards is a practical guide to one of the most important pieces of the startup puzzle.

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Table of Contents

FOREWORD ix

ACKNOWLEDGMENTS xiii

PART ONE: OVERVIEW 1

CHAPTER ONE
Introduction 3

CHAPTER TWO
What Is a Board? 11

PART TWO: BUILDING YOUR BOARD 23

CHAPTER THREE
Creating Your Board 25

CHAPTER FOUR
Recruiting Board Members 49

CHAPTER FIVE
The Formal Structure of the Board 63

CHAPTER SIX
Aligning Your Board 71

CHAPTER SEVEN
Is an Advisory Board Useful? 77

PART THREE: THE BUSINESS OF THE BOARD MEETING 85

CHAPTER EIGHT
The Actual Board Meeting 87

CHAPTER NINE
Motions and Votes 101

CHAPTER TEN
Legal Challenges 111

PART FOUR: COMMUNICATIONS 115

CHAPTER ELEVEN
Managing Ongoing Expectations 117

CHAPTER TWELVE
Trying New Things 131

CHAPTER THIRTEEN
Communication Confl icts 135

CHAPTER FOURTEEN
CEO Transitions 143

PART FIVE: TRANSACTIONS 151

CHAPTER FIFTEEN
Financings 153

CHAPTER SIXTEEN
Selling a Company 157

CHAPTER SEVENTEEN
Going Public 167

CHAPTER EIGHTEEN
Going Out of Business 173

CHAPTER NINTEEN
Conclusion 179

APPENDIX

Checklist 1: Preparing Your Board Package 183

Checklist 2: Conducting Your Board’s Annual Assessment 185

Checklist 3: Question for Your Legal Counsel 187

Checklist 4: Should You Get Directors and Offi cers Insurance? 189

Checklist 5: Stock Option Grants and 409A Valuation 191

NOTES 195

INTERVIEWS 199

BIBLIOGRAPHY 201

ABOUT THE AUTHORS 203

INDEX 205

Excerpt from Startup CEO 211

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Author Information

Brad Feld has been an early-stage investor and entrepreneur for over twenty years. Prior to cofounding Foundry Group—a Boulder, Colorado–based early-stage venture capital fund that invests in information technology companies all over the United States—he cofounded Mobius Venture Capital and, prior to that, founded Intensity Ventures. Feld is also a cofounder of Techstars and has been active with several nonprofit organizations. He is a nationally recognized speaker on the topics of venture capital investing and entrepreneurship.

Mahendra Ramsinghani has over fifteen years of investment and entrepreneurial experience and has led investments in over fifty seed stage companies. He helped draft the underlying legislation for a fund-of-funds for the state of Michigan. For his contributions, Ramsinghani's immigration to the United States was approved under "national interest." He is the author of The Business of Venture Capital (Wiley). His articles and blogs have been published in Forbes, MIT Technology Review, Thomson Reuters, and the Huffington Post. His educational background includes a BE in electronics and MBA in finance and marketing from the University of Pune, India.

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Press Release

January 07, 2014
Brad Feld and Mahendra Ramsinghani’s New Book Explores the Essentials to Understanding the Dynamics of a Startup's Board of Directors

How does an entrepreneur manage this beast called the board, which has many heads, and even more opinions? Indeed, dealing with this aspect of a startup can be tricky for anyone. That’s why Brad Feld, a boulder-Colorado- based entrepreneur turned venture capitalist, and seed investor Mahendra Ramsinghani have written the sixth book of the StartUp Revolution series Startup Boards: Getting the Most Out of Your Board of Directors (WILEY; January 2014; Hardcover & e-book; $29.95; ISBN: 978-1-118-44366-8). In it, they skillfully clarify board dynamics and the inner workings of a boardroom for today’s entrepreneur.

“Let's face it, as founders and entrepreneurs, you have a lot on your plate—getting to your minimum viable product, developing customer interaction, hiring team members, and managing the accounts/books. Sooner or later, you have a board of directors, three to five (or even seven) Type A personalities who seek your attention and at times will tell you what to do,” says Feld. “While you might be hesitant to form a board, establishing an objective outside group is essential for startups, especially to keep you on track, call you out when you flail, and in some cases, save you from yourself.”

In Startup Boards, the authors share their experiences in this area by exploring the importance of having the right board members on a team and how to manage them effectively. Along the way, they share valuable insights on various aspects of the board, including how they can support an entrepreneur, help them understand a startup's milestones and get to them faster, and hold the team accountable. The book also:

  • Details the process of choosing board members, including interviewing many people, checking references, and remembering that there should be no fear in rejecting a wrong fit
  • Explores the importance of running great meetings, mixing social time with business time
  • Recommends being a board member yourself at some other organization so you see the other side of the equation

“When writing this book we decided that in addition to describing the startup board approach that resulted from Brad’s two- year experiment with various boards, it was important to lay groundwork and clearly explain how startup boards worked, how they could be effective, and what the challenges were,” says Ramsinghani. “Brad’s new board approach is built on the traditional board of directors, so rather than throw it out, we use a highly functioning one as the basis for a new, evolved, and much more effective approach to a board of directors.“

Startup Boards explores how to construct the board, lead and manage it, and deal with conflicts when they arise. It will also help entrepreneurs understand how to get the most of their board and how to address things when they aren’t working. While a great board can be a guidepost and a positive catalyst, a bad board can cause angst and frustration, destroy value, and occasionally kill a company.

“While first-time CEOs and founders often have an elevated view of the boardroom, great startup boards aren’t fancy, complex, or pretentious. Instead, a startup board is usually a small group of people trying to help build your company,” adds Feld. “Our goal is to demystify how a board of directors works, discuss historical best and worst practices, and give readers a clear set of tools for creating and managing an awesome board.”

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