Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors

A comprehensive guide on creating, growing, and leveraging a board of directors written for CEOs, board members, and people seeking board roles. The first time many founders see the inside of a board room is when they step in to lead their board. But how do boards work? How should they be structured, managed, and leveraged so that startups can grow, avoid pitfalls, and get the best out of their boards? Authors Brad Feld, Mahendra Ramsinghani, and Matt Blumberg have collectively served on hundreds of startup and scaleup boards over the past 30 years, attended thousands of board meetings, encountered multiple personalities and situations, and seen the good, bad, and ugly of boards. In Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors, the authors provide seasoned advice and guidance to CEOs, board members, investors, and anyone aspiring to serve on a board. This comprehensive book covers a wide range of topics with relevant tips, tactics, and best practices, including: Board fundamentals such as the board's purpose, legal characteristics, and roles and functions of board members; Creating a board including size, composition, roles of VCs and independent directors, what to look for in a director, and how to recruit directors; Compensating, onboarding, removing directors, and suggestions on building a diverse board; Preparing for and running board meetings; The board's role in transactions including selling a company, buying a company, going public, and going out of business; Advice for independent and aspiring directors. Startup Boards draws on the authors' experience and includes stories from board members, startup founders, executives, and investors. Any CEO, board member, investor, or executive interested in creating an active, involved, and engaged board should read this book—and keep it handy for reference.

Table of Contents:
Foreword xiii Prefacex vii Section 1: Board Fundamentals 1 Chapter 1: Introduction 3 What’s New in the Second Edition 4 Who This Book Is For 6 Magic Words, Phrases, Abbreviations, and Style 7 Note 9 Chapter 2 : The Board’s Purpose 11 Accountability 12 General Responsibilities 12 Chapter 3: Legal Characteristics 15 A Board Member’s Legal Duties 16 Addressing Conflicting Duties 18 Benefit Corporations and the B Corp Movement 20 Should You Get D&O Insurance? 21 Note 23 Chapter 4: Board Member Roles 25 Chair or Lead Director 25 Executive Chair 28 Should You Be Chair of Your Board? 29 Independent Board Members 30 Board Observers 30 Outside Counsel 32 Note 34 Chapter 5: Board Functions 35 The Role of Board Committees 35 Informal Responsibilities of a Board 36 Control Priorities 37 Being Rich and Queen (or King) 39 Shareholder Rights 40 Economic and Performance Priorities 41 Emotional Priorities: Trust, Judgment, and Transparency 42 Notes 43 Section 2: Creating Your Board 45 Chapter 6: Size and Composition 47 Management 48 Investors 49 Independents 50 Matt’s Rule of 1s 51 Notes 52 Chapter 7: VCs and Boards 53 Notes 56 Chapter 8: Board Evolution 57 Startup Stages 57 Limiting the Number of Investor Board Members 59 Managing Independent Seats 60 Chapter 9: What to Look for in a Director 63 General Skills 63 Fit with Your Existing Board 64 What Does Your Company Need? 65 Experiences 66 Attributes 69 Governance Philosophy 69 Chapter 10: Recruiting and Interviewing Board Members 71 Sourcing 71 The Interview Process 73 Interviewing VCs Before They Join Your Board 76 Chapter 11: Compensation 77 VCs and Management 77 Independent Directors 78 Notes 80 Chapter 12: Board Diversity 81 Unconscious Bias 81 The First Step: Appoint Independent Directors Early 83 The Second Step: Open Your Search to Board- Ready First- Timers 83 Notes 86 Chapter 13: Onboarding Your Directors 87 Using Employee Onboarding as a Guide 87 Onboarding New Directors 88 Interacting with Your Team 89 Chapter 14: Removing a Board Member 91 Removing a Founder Director 92 Removing an Investor Director 92 Removing an Independent Director 93 Getting Rid of the Entire Board 94 Notes 95 Chapter 15: Is an Advisory Board Useful? 97 Board of Directors vs. Advisory Board 98 Attributes of a Useful Advisory Board Member 99 Selecting Advisory Board Members 100 Building an Advisory Board 100 Challenges of Advisory Boards 101 Notes 102 Section 3: Preparing for and Running the Board Meeting 103 Chapter 16: Preparing for the Board Meeting 105 The Value of Preparation 106 The Meeting Agenda 107 Focus on Critical Items 108 The Board Book 109 Creating an Annual Calendar 113 Notes 114 Chapter 17: Meeting Dynamics 115 Seating 115 The Meeting Length 116 Including Your Team in the Board Meeting 117 Slides or No Slides? 118 Discussion or Decision Item? 118 The Executive Session and the Closed Session 119 A Board Call Instead of a Meeting 120 Remote Attendees and Hybrid Meetings 121 The Post- Meeting Survey 123 Post Meeting 124 Notes 125 Chapter 18: Motions and Votes 127 Robert’s Rules of Order 127 Have Your Lawyer at the Meeting 128 The Mechanics of Voting 128 What If You Don’t Agree? 129 Dealing with Formal Items 130 Minutes 131 Unanimous Written Consent 131 Notes 132 Section 4: Between Meetings: Ongoing Work 133 Chapter 19: Managing Ongoing Communication 135 What the Board Expects from a CEO 135 Communicate Both Good and Bad News 136 Note 138 Chapter 20: Committees 139 Committee Meeting Formalities 139 Compensation 140 Audit 141 Nominating 142 CEO Expenses 142 Chapter 21: Mentors and Learning by Doing 145 Mentorship and Vulnerability 145 Learning by Doing 147 Chapter 22: CEO Transitions 149 Situations That Lead to a CEO Change 149 Scale Up with Growth 151 Why Boards Fire CEOs 152 Planning for Healthy Transitions 154 Notes 155 Section 5: Transactions 157 Chapter 23: Financings 159 New Investor- Led Round 159 Insider- Led Round 160 The Down Round and a Rights Offering 161 How Involved Should VCs Be in Financings? 161 Convertible Notes 162 Venture Debt 162 Notes 163 Chapter 24: Stock Option Grants and 409A Valuations 165 Chapter 25: Selling a Company 169 Confidentiality 169 Fiduciary Responsibility 170 Your Outside Counsel’s Role 171 Acquihire 172 Carve- Outs and 280G 173 Shareholder Representative 173 Note 174 Chapter 26: Buying a Company 175 Negotiating and Structuring the Deal 175 Financing an Acquisition 176 Board Approvals 177 Managing Transaction and Post- Deal Integration 178 Chapter 27: Going Public 179 Process 179 Committees 180 Confidentiality 180 Insider Status 181 VCs on Public Company Boards 181 SPACs 182 Chapter 28: Going Out of Business 185 The Zone of Insolvency 185 Responsibility to Creditors 186 Responsibility to Shareholders 187 Liability 188 Chapter 11 188 Chapter 7 189 Assignment for the Benefit of Creditors 189 Section 6: For Independent Directors and Aspiring Board Members 191 Chapter 29: Preparing for Your First Board Role 193 Note 196 Chapter 30: Interviewing for a Board Role 197 The Interview 197 Diligence Items to Explore 198 Chapter 31: Your First Board Meeting 201 Chapter 32: Communicating Effectively 205 Note 208 Chapter 33: How to Be a Great Board Member 209 Chapter 34: Conclusion 213 Acknowledgments 215 Bibliography 217 Index 221

About the Author :
BRAD FELD has invested in startups for over 25 years and co-founded Foundry and Techstars. He is the author of multiple books, including Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist and Startup Communities: Building an Entrepreneurial Ecosystem in Your City. MATT BLUMBERG is the CEO of Bolster, an on-demand talent marketplace that supports startup and scaleup CEOs. He is the author of Startup CEO: A Field Guide to Scaling Up Your Business and Startup CXO: A Field Guide to Scaling Up Your Company’s Critical Functions and Teams. MAHENDRA RAMSINGHANI is the founder of Secure Octane, a cybersecurity seed fund in the San Francisco Bay area. He is the author of The Business of Venture Capital and The Resilient Founder: Lessons in Endurance from Startup Entrepreneurs.