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Governance for Start-ups

Richard Hughes-Jones

31st

July 2014

ABOUT ME

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WHAT ARE WE

GOING TO

TALK ABOUT?

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• Setting the scene

• Why do you need a Board?

• How to build a Board

• How to manage a Board

SETTING THE

SCENE

It’s all change in the start-up world...

Are Boards still relevant?

Decision-making hierarchies

are not a new concept

“Boards are important. They might not do the day to day

work of company building but they set the tone at the top”

“The group that the CEO reports

to has a big impact on the CEO’s

mindset which trickles down”

Fred Wilson

Credit: Mark Suster ‘It’s morning in VC’ on slidehare

WHY DO YOU

NEED A

BOARD?

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The functions of an early-stage Board:

• Sparring partner & ratification of key strategic decisions

• Reviewing financial & operational performance

• Mentorship

• Planning and dealing with extra-ordinary events: M&A, fund raising, crises

• Providing introductions, network effects etc

http://www.bothsidesofthetable.com/2014/01/06/how-boards-need-to-evolve-over-time/

BUILDING

YOUR BOARD

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Experience Competence

Personality Network

The

Perfect

Board?

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In the early days:

• Series A – Founder/s / VC/s / Independent

• Nature of Board control / relationships is changing

• Remember you are not just taking investors money

As the business grows:

• More investors

• Sector experts - a CEO from a comparative venture?

• As your company grows so do your Board needs

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• Write a Job Spec:

• What expertise are you looking for – operating / market sales etc?

• Ensure rapport and shared Vision for the business

• What personal value will the Board member bring you?

• Write a long list of potential candidates and filter

• Use your network

• Take your time to get it right – months not weeks

MANAGING A

BOARD

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• Get dates in the diary early

• Produce a clear Board Pack and retain style – not more than 10 slides

(plus Appendices if essential)

• Share content at least 3 days before

• Clearly define the top 3 strategic issues that you want to focus on

• Remember - a Board meeting is NOT an update meeting

BEFORE

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CEO

Update

Financials

Metrics

KPIs

Key

Strategic

Issues

Risk

Review

Wrap-up &

Actions

10% 10% 5% 15% 60%

2-3 hours (max)

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Pre-meet Board Members:

• Walk through your planned agenda & [Draft] Board Pack

• Get reaction to strategic topics you plan to cover

• Any Agenda items they would like to add?

• The Golden Rule of board meetings is no surprises

• The more time you spend educating your Board, the more valuable advice

you get from them

• ‘Managing’ a Board is all-encompassing – not just during the Board Meeting

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• Set a very clear agenda – and own it – you called this meeting remember

• Get feedback on key financials and metrics early in the meeting

• If clarification on numbers is required then take an Action to follow up

• Avoid scope creep and the meeting becoming a talking shop – facilitate

• Don’t let any one Board member dominate

• Don’t leave the most important item to the end

• How you manage your Board is (to them) a reflection of how you manage

your business

• Have a minute taker (great opportunity for rising star team member, if

appropriate) and allows CEO to retain focus

• REMEMBER: a Board Meeting is NOT an update meeting

DURING

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Dealing with difficult topics:

• Express options

• Highlight pros and cons (and associated costs)

• Express your opinion - you're expected to have an opinion

• Bring team members in if complicated / technical issues require summarising

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• Ensure the resources required to service the Board - if you haven't then ask

the Board for advice on how to get it

• Go for dinner afterwards - keep it social

• Frequency - monthly in years 1-2, every 6 weeks in years 2-4, bi-monthly or

quarterly thereafter

MEETING END / AFTER

• Record all important decisions:

• Summarize key decisions and actions agreed before you leave

• Senior individuals will want to see them acted upon by the time of the next

meeting (or if not, why not)

• Important decisions & Actions emailed next day - full minutes within week

TIPS &

TRICKS

Sophisticated investors and senior advisors

are surprisingly simple beings:

• Enough information to make an

informed decision

• Clear & succinct

• What’s the bottom line

• Best / worst case scenario

• Risks / mitigation

Manage expectations

You’re not expected to be an expert:

Individual entrepreneur to leading a team

If you’re not looking forward to your next Board

meeting then you are doing something wrong

THANK YOU

For Founders and C-team members, the

Strategy Workshop provides you with a

clear strategic roadmap for your

business

• Session One: big picture and Vision for the business, and business model canvas

• Session Two: strategic objectives are defined and potential actions identified

• Session Three: all options are ‘filtered’ into actionable and realistic outputs

“I left the [Strategy Workshop] feeling good, with a clear map of all the actions that

I need to be take over the next months... Another Workshop would be valuable pre-

series A, to clarify my thinking and focus”

Strategy Workshop

Founder & CEO, Lexoo: specialist lawyers

for start-ups and SMEs

http://www.firewerks.co/Strategy-

Workshop.html