Julia Elliott Brown, one of our trusted and expert Funding Accelerator mentors, recently led a workshop which introduced the concepts of formal and advisory boards to our startup founders, and how having a board can help raise investment. Here Julia summarises the key points to help you demystify what an advisory board is, why they are important, and how to set them up for success.
Building a high performing board can feel like one more thing to add to your overflowing ‘to-do’ list as a founder. It can feel like a big task to bring together the right people, and make sure your board really adds value. But the reality is, having a great board can add significant value for you as the founder, and make a big difference as you go out to secure funding.
So what are the top line things you need to know about advisory boards?
- There are two types of boards – an advisory board or a formal company board. In the early stages of a startup, a less formal advisory board can offer invaluable guidance without the legal responsibilities of a formal board.
- Formal boards on the other hand, are often established post-institutional investment, and comprise non-executive directors who hold legal obligations and voting rights in business decision-making.
- Establishing an advisory board early is important, as it lays the foundation for future growth and investment readiness. By proactively assembling a team of trusted advisors, startups can show foresight and strategic planning to potential investors, and send a clear message that the founding team benefits from expert guidance and industry insights, setting the stage for success.
- Your board needs to be more than just superficial names on a pitch deck; it should be a structured and deliberate meeting of minds with a regular cadence and clear expectations.
- As your start-up grows, you might look to create a formal board with non-executive directors. This shows your commitment to sound governance and effective decision-making, and again further reinforces your startup’s investment appeal to future investors.
- When you’re focused on securing investment and getting funds into the business, it’s easy to overlook how the board will look post-investment. This is a common challenge, and often leads to dysfunctional board dynamics – and informal advisory board offers you more flexibility.
- It’s important to have diverse perspectives and expertise on your board. Founders will be part of the board, and often investors will request to have a board seat particularly if they’re leading an investment round. But be mindful that they don’t always have the qualities it takes to make great board members.
- Independent professionals are incredibly valuable additions to the board as they bring diversity to discussions, and add depth and impartiality to board discussions. As the founder you can be deliberate about their appointment and ensure they bring what you need to support your business in achieving its potential.
- The role of the board chair is often overlooked but is extremely important for productive board meetings. A strong, independent chair is essential for steering discussions, ensuring equitable participation, and maintaining focus on strategic objectives.
