Startup Success: The Power of a Strong Board of Directors

SDS 016: Clarifying Board of Directors

Hey! thank you for reading issue 016 of Startup Definition Sunday (SDS).

SDS is the newsletter for founders, bringing you clarity one actionable tip at a time.

SDS arrives every two weeks (you guessed it) on Sundays.

In every issue you can expect:

• 1 Definition of startup jargon

• 1 actionable tip you can implement right away

• 1 article on Africa tech that you should read

• 1 gift for founders

Let's dive in:

(P.S. I'll never sell your information, ever)

Hi - It's always such a pleasure to share each issue with you! If you missed the last issue, you can check it out here.

Before we dive into today's issue, Marge and I started something we think could be useful for founders - bi-weekly office hours to practice your 5-minute pitch.

If you missed the most recent recorded session, you can catch the recording here.

Our Q2 break is over. We are back this Wednesday (July 5) at 5pm WAT / &pm EAT. Join us.

Let's dive into today's issue.

The last year has seen its fair share of scandals in the startup world, many of which can be traced back to failures in board governance (FTX anyone?).

But for early-stage founders, having a board of directors can be a valuable asset, providing expertise, guidance, and accountability. In this issue, we'll explore the benefits of having a board of directors and common pitfalls to avoid.

What is a Board of Directors?

Board of Directors: a group of individuals chosen to provide governance and strategic direction oversight to a company, acting in the best interest of its shareholders.

Benefits of having a Board of Directors

For early-stage founders, the board of directors typically includes experienced founders, investors, and domain experts. The benefits of having a board of directors include:

• Expertise and strategic guidance to help founders make informed decisions

• Accountability to ensure the company stays focused on its goals and pivots when necessary, while maintaining responsible financial and operational management.

• Risk mitigation and crisis management to navigate challenges and make swift decisions to minimize damage and ensure business continuity.

Common pitfalls to avoid:

While the benefits of having a board of directors are crucial to the growth of a startup, they can easily be derailed by these pitfalls:

1. Over-bearing board relationships: Some members of the board may have personal influence on the management team, which can minimize other board members' contributions and divert the company away from its strategic vision.

2. Access to company records, accounts & products: Board members have access to private company records and accounts. Without a clear policy on limits to that access, some founders have experienced misappropriation of funds and theft of product IP.

3. Professional conflicts from other activities: Board members typically serve on more than one board & have varied interests in their sectors of expertise. For founders, it is vital to understand clearly where those conflicts lie and decide to either restrict board members’ access to confidential information or find someone else to sit on the board.

To build a strong Board of Directors, founders should focus on seeking out expertise, promoting diversity, building strong relationships, and setting up clear policies. Although the composition of the Board may change over time, these actions can help ensure that it remains well-balanced and effective.

A well-balanced and effective board of directors can be a significant asset, helping founders navigate the challenges of growing their business and ensuring long-term success.

If you have learned something valuable today, consider joining SDS so you don't miss future editions.

If you only read one thing this week, read this...

After the last issue on no-code tools, I decided to check out which startups today are building their companies on no-code platforms. I found some interesting startups here and here.

Here's why you should read both: The potential for building an MVP in cost-effective and scalable way is more true today than ever. Both of these articles are a glimpse into what could be possible. And, who doesn’t love possibilities?

Founder's Corner

As an investor, I understand that it can be difficult for founders to get on angel investors' radar, especially without the right networks.

That's why I built an inbound form to allow founders to share their decks directly with me. It takes less than 5 minutes to complete. By breaking the mold and providing an alternative way for founders to connect with investors, I hope to help level the playing field.

Thank you for reading to the end of issue 015.

Until we meet again in two weeks, here's how we can stay in touch:

• 🐦 Find me on Twitter

• 💬 Hit me up on Linkedin

• 💌 Email me

• 🚀 Sponsor SDS (Reply to this email)

Let's chat again in two weeks,

Jasiel