After considerable effort and even greater stress, the entrepreneur has successfully prospected for potential investors, thrown her best pitches, negotiated carefully, and closed on a round of venture capital financing. The documents are put away. The entrepreneur is recovering from the late‐night staff party celebrating both solvency and living another day. The check has cleared, the lawyers have been paid, and outstanding payables and back bills have been cleared up, paying off not only impatient creditors, but also the more patient and trusting ones. For the moment, immediate cash flow problems are in the rearview mirror.
Don't get too comfortable. The real work is now just beginning—building the company, as well as keeping the newly won, most important customers, the venture capitalist investors, content.
Now You Answer to a Higher Authority—a Board of Directors
The agreement you've just struck with the venture capitalists generally requires a formal board of directors if the company has not yet established one, or may call for changes in the composition of an already‐existing board. A well‐prepared entrepreneur will likely have a board in place even before the venture capital financing. Such a board often includes the technical founder, the chief executive officer, a director with strong industry experience in the company's major domain, and perhaps an attorney.
Generally the first‐round venture capital ...