Tips for how to succeed in earning and what is expected of you.

Peggy Wallace
Managing Partner, Golden Seeds

A board is often a key to early startup successif chosen correctly. And a company will seek board members with particular expertise. If you have been approached to sit on a board, or would like to, your professional experience may be just what they need. Before committing, however, you need to consider the role of directors, which is corporate governance.

You are there to guide managers, and your responsibility is to help ensure the company’s long-term success on behalf of employees, customers, partners – even its role in society.

The composition of boards has changed. Like the recent one updated Spencer Stuart US Board Index shows, S&P 500 boards are recruiting board members with new skills and new perspectives. It is a trend we can confirm. On Golden seedswhere we have invested in over 100 women-led companies, our investors have been appointed to just over 100 board and board observer positions, of which 90 of these positions are held by women.

Regardless, it’s important to know what you’re getting yourself into and how your skills match the company’s needs – or not. It can be a demanding yet fulfilling role. The following tips can help you make the most of your board appointment, successfully onboard and carry out your duties effectively.

Are you suitable to get involved?

You want to be able to meet the expectations of a board. Knowing what is required of you and the time commitment you need to make is critical to ensuring mutually beneficial success.

“Board members are often coaches and mentors to the leadership of early-stage companies, providing guidance in countless ways,” said Gail Hoffman, board member of Groupize, a Golden Seeds company that develops technology for businesses to effectively manage events and meetings.

A board seat usually involves a commitment of two to six years. For start-ups, meetings are frequent and will likely remain so until the board has established its culture and the company reaches a point where less time is required. You will meet throughout the year, possibly travel, and maybe chair a committee or two. Should a crisis arise, you are expected to be available. Remember that small businesses often have many ups and downs. They rely heavily on their board members.

These are the “table stakes” when it comes time. Be sure you can ante up.

If possible, take a course to learn the basics of board governance so you can get up to speed on your fiduciary responsibilities. This will not only help you understand obligations and responsibilities, but will also give you a clearer idea of ​​whether it is a commitment you will be able to keep.

Understand what you are getting yourself into

Before you agree to join a board, make sure you are protected. This means verifying that the company has liability insurance for board members and officers. This is known as a D&O policy and covers costs and losses resulting from legal action against directors and senior staff of the company.

Be familiar with documentation that applies to board members. This typically includes such items as safeguards, voting agreements, required consents and waivers. There will often be decisions that you will be involved in making and the votes you cast should reflect the terms of those documents.

Realize that there may be times when you disagree with a company’s actions. For example, while all organizations want to have transparent relationships with investors, many fail at some point. Investors have different opinions, some of which will differ from the company’s. You may know these people, and when relationships become adversarial, it can be the most difficult challenge a board member faces.

Know your role

The best functioning boards generally have an odd number of directors to avoid deadlock in making decisions. Five members is a good amount, which can include a founder, CEO, two investors and an independent board member with a specialized skill set that the company needs. You will want to develop a close working relationship with these peers, so be prepared for many phone calls and emails.

You can join a board at the invitation of the founder, as an appointed investor or as an independent board member possessing the desired skills. Regardless of how you will hold the seat, it is imperative that you always act as a fiduciary in the interests of all shareholders – that is your mantra.

Always remind yourself that you are there to advise management, not to run the company, and it is important to understand the differences. You will guide the strategy, ensure the finances are in order and help the management to set the metrics to meet. It’s all about the playoffs, and it’s important to know your place and keep your ego in check.

Ultimately, funded startups must exit to make a return. A board must focus on the path to this, while ensuring that milestones are met so that the startup becomes an attractive acquisition or IPO candidate and meets this goal.

A board is never boring

Sitting on the board of a startup can be exciting. You will live the experience together with your board colleagues and will have the opportunity to provide business-shaping guidance and support.

Sheri Anderson, a longtime board member of Little Passports, an educational company that inspires children to learn about the world, says, “You never know what opportunities and challenges a business may have, but by being on the board, you can take the journey with the entrepreneurs.”

It can be exciting to play this role and participate in a company’s success. Along the way, you will learn and build your credentials. Networking will also present valuable new relationships and market insights.

Yes, you will be busy, but the experience is invaluable and can open up new exciting opportunities.