Select your board member wisely

5:31 AM Suvir Sujan 0 Comments

I think it is as important for a start up entrepreneur to be selective about his or her investor representative board members as it is for the investors to be selective about the entrepreneur. Often times, the entrepreneur is only focused on raising money at the early stage and forgets that they will have to deal with soemone from the investor side at the board level if they have given that investor that right.

Having been an entrepreneur who has dealt with investor board members and now an investor who participates on boards of companies we invest in, board members come in all shapes and sizes. Here are a few common examples :

1. The "friend" - Wants to look good and avoid conflict of any sort. Doesn't want to stir the pot in any way. Doesnt ask tough questoins at the board. Completely hands off.

2. The "operator" - Thinks he or she knows it all. Tries to tell the founders how to run their company at the granular level. Likes to get into the operations. Likes to interview candidates that the founders are hiring.

3. The "doubter" - Always questioning the market and execution of the founders? Do you really think you will meet your numbers? Why cannot you execute faster, better?

4. The "big picture guy" - Discusses the big picture only. The market size is so big, therefore we should enter this space. Somebody else executed an initiative, so we should also do it.

5. The "coach" - Likes to give advice on how the founder can do his job better. Constantly advising the founders how to improve at various levels.

6. The "shrink" - Is a sounding board for a founder when he or she is in distress. Helps the founders cope with the emotional rollercoater of a startup.

I personally think that a good board member of a startup has a blend of all of the above characteristics. I would strongly recommend that entrepreneurs do their homework on the board representative before signing on an investor at the early stage as it is a relationship that will last from inception to exit and be an important influence in shaping the direction of the company. I have seen many companies fail solely due to dsyfunctional or ineffective boards.