What do I need to know about board meetings now that we're funded?
Takeaway: If an investor takes a board seat in a financing, chances are they will want to have regular board meetings - typically quarterly. Founders will need to prepare for these board meetings including by assembling a board deck with company updates and priorities.
After securing venture capital funding, startups face new governance requirements, including holding board meetings with their investors. This can be an adjustment for founders who may not have extensive experience with formal board meetings. In this post, we will discuss key aspects of board meetings, including frequency, best practices, and typical agendas, to help founders navigate this essential aspect of corporate governance.
How often should I have Board meetings?
The frequency of board meetings may vary depending on the company's stage, investor preferences, and specific circumstances. However, a common practice is to hold board meetings quarterly. Some investors may prefer more frequent meetings, especially in the early stages of a company's growth, while others may be comfortable with less frequent meetings as the company matures. It is essential to maintain open communication with your investors and establish a meeting schedule that meets the needs of all parties.
What are some best practices for Board meetings?
Preparation: Ensure that all board members receive relevant materials, such as financial statements, operational updates, and meeting agendas, well in advance of the meeting. This allows board members to review the information and come prepared with questions and insights. Board members typically do not like receiving decks immediately before a meeting and this will make it harder to have a productive meeting.
Time management: Establish a clear start and end time for your meetings, and stick to the schedule. This demonstrates respect for the board members' time and ensures that discussions remain focused and productive.
Engage board members: Encourage active participation from all board members by inviting their input on key issues and fostering an open and inclusive environment for discussion.
Keep accurate minutes: Document the key points discussed and any decisions made during the meeting. Accurate minutes serve as a valuable record of the board's actions and can be useful for future reference. Typically, the company’s lawyer will attend the board meeting to take minutes and be available should any legal questions arise.
After the meeting, it is generally good practice to review and assign action items identified during the meeting, and confirm the date and time for the next board meeting.
What is a typical agenda for a Board meeting?
A standard board meeting agenda may include the following items:
Call to order and establishment of a quorum: Begin the meeting by formally calling it to order and confirming that a quorum of board members is present.
Approval of previous meeting minutes: Review and approve the minutes from the previous board meeting.
Financial and operational updates: Present updates on the company's financial performance, including key financial metrics, budget variances, and projections. Discuss any operational updates, such as progress on strategic initiatives, product development, and market trends.
Strategic discussion: Engage the board in a discussion of key strategic issues, such as market opportunities, competitive threats, and potential partnerships or acquisitions.
Committee reports: If your board has established committees (most haven’t), such as audit or compensation committees, receive updates from the committee chairs on their activities and any recommendations.
Executive session: Sometimes, investor directors will want to hold an executive session during which the management team leaves the room (or Zoom), allowing the investor board members to discuss any sensitive issues privately.
Conclusion
Board meetings are a critical component of corporate governance for startups that have received venture capital funding. By understanding best practices and establishing a well-structured agenda, founders can ensure that their board meetings are productive, informative, and ultimately contribute to the company's success. Open communication and active engagement with board members will foster a strong working relationship that benefits both the company and its investors.