My top three advice to Founders on to board composition, multiple investment rounds and smooth operations
The board: Having superstar investors, all claiming board seats could be quite a predicament. As much as a celebrity board gives you power and an audience, it could also be difficult for you to handle. Is everyone really adding value in the board room? I always advise founders to think about the board as an organism. One organism. The role of the Chairman has become even more complex lately. It takes skill to manage a headstrong, heavily diverse board. Another barrier could be time. The more influential people you have on your board, the more difficult it could be to get the board to convene. My advice is to dare to go against the herd mentality of optics. Optics have failed us before. I would advise you to go with a mixed smaller board that has both the skills and the time to support you and your team.
The rounds: It must be an amazing feeling when cash finally starts to pour in. The million-dollar question, however, is when to stop. I have met founders that are always fundraising. Which raises a few questions at my end. Is the cash injection need to have or nice to have? Increased capital injections dilute your shares, and multiple owners and a cluttered cap-table can grow into a nightmare over time. A second cause of concern is the expectations that cash will keep coming. Just because money is flowing in, doesn’t mean that you should abandon the boot strap mentality you started off with. Why? The answer is rapidly changing macroeconomics, and geopolitical tension. Things can hit the fan in a heartbeat. Future rounds that were basically “in the bag” might evaporate in a matter of hours. Then what are you going to do? We all remember covid, right?
The operations: When building your team, I see a lot of start-ups solely focusing on experts. A group of super talented persons in each field. Don’t get me wrong, this is great! I would love to work with amazing people myself. Young, driven, willing to burn the midnight oil when needed. But what is missing more often than not is a seasoned executive leading operations. The founder can still be the visionary CEO, but the key to success is to have a structured COO, or Chief of Staff. What you get if you lack leadership in operations, is a bunch of driven talents running around like headless chickens. The iteration process of this running around might be interesting, but having someone that can set boundaries, help prioritize and make sure that people don’t burn the candle from both ends simultaneously is essential for long term growth and prosperity. I am talking about someone with real life experience. A seasoned leader, that can see the big picture, but just as easily break it down and get busy with the nitty gritty if needed. This comes with experience. Don’t neglect this. Working hard is not necessarily the key to long term success, working smart is.
