The Business of Venture Capital, 3rd Edition

30Board Culture and Orientation

Although in the early stages of a company's evolution, the largest shareholders might dominate the board composition, it is critical to structure the board with expertise necessary for the company's growth. If a board of a venture-backed company has five members — say, three investor representatives and two management team members — investors need to ask if they have the expertise to guide and help grow the company. “The board should have one expert each at the minimum from sales, strategy, industry expertise, and marketing areas. This allows for a balanced contribution, and the CEO can reach different experts as needed,” says Rick Heitzmann of FirstMark Capital.

While board-member orientation is critical, it happens in a fairly ad hoc manner in most venture-backed companies. An orientation is essential to ensure that members understand their role and that they align their agenda with the overall mission. Members may have differing agendas: investors may seek exits at varying times, while the management team may have a desire to build the company.

On-Boarding a New Member

A typical orientation meeting could be one-on-one with the lead director and would include the following:

• Introduction of the current board members, if required
• Key goals and challenges of the company
• Board structure and goals
• Review of materials: handbook, policies, evaluation, and committees
• Attendance and performance expectations

TOWARD A BETTER BOARD CULTURE ...