👋🏾 Hi friends!
A very happy Diwali to those that were celebrating, a happy Halloween for others and a smokey Guy Fawkes night for anyone in the UK this evening!
The last week has been spent just marvelling at the traction that Nothing Ventured has continued to show with almost 8k subs under our belt on YouTube and some interesting growth happening on other channels as well. Just shows that if you keep showing up, good things can happen 😀
It’s also been spent marvelling at the fact that we are already in November people! And whilst 2024 has been a tough year for many, I’m optimistic about what 2025 holds in store and I’m prepping to get going with a bang!
I’m writing this late on Tuesday 5th November as the US heads into a pretty consequential election and am, as I am sure others are, keen to see which direction the bastion of the democratic world decides to take.
Whatever your politics, this has been arguably one of the most consequential years in recent history here in the UK and over the pond in America. Last week we saw the first female Chancellor release a budget over here, the first black female leader of the Conservative party get voted in and potentially the first black and Asian, female President get elected to lead the free world – maybe. I guess we’ll see within the next few days…
I’m well underway writing about all the things I’ve learned from the last couple of decades as founder, CFO and CEO, so sign up for early access to Off Balance – The Book and feel free to share with anyone else you think might enjoy it 😄.
Now let’s get down to business…
In this weeks Off Balance:
🎙️ Fred Destin, Managing Partner of Stride.VC on Nothing Ventured
👨🏻💼 Things to think about when building out your board
𝗪𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝘁𝗿𝘂𝗲 𝗰𝗿𝗮𝗳𝘁 𝗼𝗳 𝘃𝗲𝗻𝘁𝘂𝗿𝗲?
Fred Destin joins me on the pod this week to explore exactly that 🔥
As we blast through 7k subscribers in just a few weeks (🤯), I could not think of a better guest to have joined me on Nothing Ventured this week to take a step back and truly explore venture and the relationship between investors, founders and how to better think about the interactions between them.
Fred should need no introduction, but for those that don’t know, he is the founder of Stride.VC, a seed fund operating out of London and currently investing out of its second fund.
Their tagline is Dissenters welcome!
Prior to Stride, Fred was a General Partner at Accel and Accomplice VC. He was the lead investor on seven companies that have exited over $1BN in value including Deliveroo, Zoopla (part of Houseful), PillPack (now Amazon health) and others.
In this whopping two part episode, we spoke about:
😤 The level of discontent founders have with VCs right now and why that’s surprising.🪄 Whether operator as a VC is a magic label.
🤝 He asks how many VCs have empathy for the founder journey.
📈 The value of minimalist boards and how VCs can move the needle for the founders they work with.
👀 How VCs can navigate the need to be seen.
👨🏻🎨 Venture as an artisanal occupation.
🔮 Making decisions in a state of uncertainty.
🍀 Living in a world of both skill as well as luck as a VC.
🏷️ How returns come from the pick but also the entry price.
💥 The Cambrian explosion in venture and where we are now.
✨ How you can be a generalist in venture, but you can’t be generic – why emerging managers may want to find their edge.
🫀 VCs as human beings.
👶🏼 How to embrace the beginners mindset.
ℹ️ How to look beyond the information that’s being presented to you.
🧐 How to avoid the trap of lazy thinking.
Listen on YouTube, Spotify, Apple or wherever you get your podcasts!
If you have any feedback on the podcast or the newsletter, just reply to this mail or ping me online!
If you like what I’m putting out, do give me a follow on LinkedIn and Twitter.
(If you are trying to connect with me on LinkedIn, maybe read this post I wrote and make sure to start your request with “Off Balance” and, importantly, tell me why you’d like to connect 💪🏾)
Now let’s get into it.
This edition of Nothing Ventured is brought to you by EmergeOne.
EmergeOne provides fractional CFO support to venture backed tech startups from Seed to Series B and beyond.
Join companies backed by Hoxton, Stride, Octopus, Founders Factory, Outlier, a16z and more, who trust us to help them get the most out of their capital, streamline financials, and manage investor relations so they can focus on scaling.
If you’re a CFO working with venture backed startups and want to join a team of incredible fractional talent, drop us your details here.
If you’re a growing startup that knows it needs that strategic financial knowhow, drop your details here to see how we can support you as you scale 🚀
Off Balance
As a startup founder, one of the most critical decisions you’ll make is constructing your board of directors. A well-designed board can provide invaluable guidance, expertise, and connections that can accelerate your company’s growth.
I’ve seen good and bad boards and board members and, as our guest this week Fred Destin says, you want a board that energises you when you leave the room, not one that feels like it is constantly detracting from your ability to move forward.
Here are some key considerations to keep in mind when building your startup’s board.
Constructing Your Startup’s Board: Key Considerations for Success
Timing and Size
When to form your board and how large it should be are crucial initial decisions. Many startups begin with just the founder as the sole board member, gradually expanding as the company grows and secures funding. Here in the UK it’s typical to see a more formal board be put in place post your first institutional round which is likely at seed or Series A.
As for size, aim for a board of 3-5 directors in the early stages. This provides a good balance of perspectives without becoming unwieldy. A typical composition might include:
↳ The CEO (often the founder)
↳ A financial investor (e.g., an angel or VC)
↳ Independent industry experts, often taking on the Chair role
Identifying Your Needs
Before recruiting board members, clearly define your startup’s needs and the board’s purpose. Identify gaps in your internal resources and consider both immediate needs and long-term goals when selecting advisors.
Key areas where board members can supplement your team’s abilities include:
↳ Product development
↳ Customer / market development
↳ Business model development
↳ Team building
↳ Fundraising
↳ Diversity and Expertise
As Fred mentioned in the podcast, it’s important that individuals on the board understand what skills they bring to the table. Some will be more strategic, others more operational. The point is that you should strive for a diverse board with a range of skills, backgrounds, and perspectives. This diversity enhances creativity, decision-making, and understanding of various viewpoints. Look for members with expertise in areas crucial to your startup’s success, such as:
↳ Finance
↳ Marketing
↳ Sales
↳ Product development
↳ Industry-specific knowledge
Roles and Responsibilities
As I say above, it is really important to clearly define the roles and responsibilities of each board member. This includes outlining individual duties, setting expectations for participation, and establishing the board’s overall purpose. Some key responsibilities of a startup board include:
↳ Setting long-term objectives
↳ Ensuring alignment with company mission and goals
↳ Creating growth opportunities
↳ Mitigating risks
↳ Advising the executive team
↳ Holding management accountable
↳ Making decisions on executive compensation and share options
↳ Ensuring legal and ethical compliance
Independence and Objectivity
While it’s tempting to fill your board with friends and family, this can lead to massive conflicts of interest and a lack of objectivity. Instead, prioritize independent directors who can provide unbiased advice and who are willing to challenge your thinking when necessary.
Commitment and Engagement
Look for board members who are willing and able to commit the necessary time and energy to your startup. Typically, startup boards meet quarterly, but more frequent meetings may be beneficial in the early stages or during significant events like financing events, expansion or acquisitions.
Trust and Communication
Establishing and maintaining trust between board members, founders, and the management team is crucial and where I see real problems arise if not managed well. Foster open communication and transparency to keep all issues and interests open for discussion. This helps maintain alignment among all stakeholders. Again, on the podcast, Fred talks about keeping things as simple as possible, using the same information used by management to inform the board of the key successes, issues, challenges and opportunities.
Compensation and Equity
Determine how you’ll compensate your board members. While some may serve for free, especially in very early stages and especially if they are investor directors, it’s common to offer equity or a combination of cash and equity. Be prepared to discuss compensation expectations with potential board members.
Legal Considerations
Ensure you understand the legal requirements for board formation and management in your jurisdiction. This includes:
↳ Proper documentation of board decisions
↳ Filing annual confirmation statements
↳ Understanding director liabilities and responsibilities
Fiduciary duties sit at the core of governance and this means acting in the best interests of the company and its shareholders. It is worth considering that even if a director is not officially registered at Companies House, if they are acting in the capacity of, or fullfilling the role of a director, they will have the same liabilities and responsibilities as formally appointed board members.
Board Dynamics
Pay attention to the interpersonal dynamics of your board. Look for members who can work well together while still providing diverse perspectives. Avoid “yes men” and seek out individuals who will challenge you constructively. In the podcast Fred talked about a board member who intentionally berated a new executive to the point that they almost left. You really want to ensure that the board is constructive and interacts well as (and I can attest to this) a toxic board will do more harm than good.
Chairperson Selection
Choose a strong chairperson who can lead discussions effectively and manage relationships between board members. This role is crucial in ensuring productive meetings and balanced decision-making.
Future-Focused Approach
When selecting board members, consider both your medium and long-term goals. Choose individuals who can contribute to your company’s growth trajectory and help shape your long-term vision.
Continuous Improvement
Implement regular board evaluations to assess individual and collective performance4. Use these insights to identify areas for improvement and develop tailored plans for board development.
Flexibility and Agility
While structure is important, maintain flexibility in your board operations. Encourage agile decision-making to respond swiftly to opportunities and challenges as the death of startups can be decision paralysis.
Balancing Control and Guidance
As a founder, strike a balance between maintaining control of your company and leveraging your board’s expertise. Be open to guidance while ensuring the board’s actions align with your vision for the company. At the end of the day, you are responsible for running the company. I remember someone describing it to me as the need for your board to be noses in but fingers out – i.e. that they need to understand the business enough to ask insightful and valuable questions but should not be trying to run the business themselves.
Network Expansion
Leverage your board members’ networks to open doors for partnerships, funding opportunities, and talent acquisition. A well-connected board can significantly accelerate growth. But beware of choosing your board with solely this in mind. If they are not able to add value beyond their relationships, you may end up with an ineffective or feeble board because 90% of the time your problems scaling a startup will not be around how to build relationships, but rather how to build the business itself!
Conclusion
I am very clear that constructing an effective board for your startup can be a critical step in setting your company up for success.
By carefully considering all the above factors, you can build a board that provides the guidance, expertise, and support that you need to navigate the challenges of scaling.
It is also important to remember that your board should evolve as your company does, so you should be prepared to reassess and adjust its composition as your needs change.
With the right board in place, you’ll have a powerful asset to help drive your business towards its goals a great board will at times challenge but mostly support your strategy as you scale.
As always, my office hours are open, if you’d like to chat about this or anything else, just grab some time 😊.
I hope you found Off Balance #56 useful. As always, I’d love to get your feedback and understand the sort of topics you would love to hear about.
Just hit reply to this mail or drop me a line at [email protected] and let me know 😊
🚀And that’s a wrap for this edition of Off Balance – I’d appreciate your feedback so just reply to this email if you’ve got something you’d like to say.
📨 And if you think someone else might love this, please forward it on to them,
🎧 Finally, if you’re a fan of the Nothing Ventured podcast, please don’t forget to like, rate and subscribe wherever you get your pods – it really helps us spread the word.
That’s it from me so until next time…
Stay liquid 🙂
Aarish
