Much has been written about the governance of public companies, and both Nasdaq and NYSE have explicit rules regarding the requirements for and number of independent supervisory board members on boards and board committees.
Venture capital funded startups are private companies which have no such requirements unless and until they go public. The boards of these startups are often dominated by the representatives of the venture capital firms, but the best boards are independent. Yet, independent director positions are often left vacant and only 40% of Series B boards have an independent director. Founders should add external, independent board members as early as Series A.
The CEO relationship is the basis for the independent director’s role. An independent director helps build a strong relationship between the CEO and the board and facilitates boardroom communication.
Great independent board members add relevant experience in addition to being ’neutral’. Picking and appointing an independent board member is at least as important as hiring key executives.
More about what founders of VC funded startups should look for and how to go about it
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This article was first published on LinkedIn on August 8, 2023
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