What is the role of the board of directors in an early-stage startup? Startup founders regularly ask me about the responsibilities of a board of directors. In an early-stage startup, a board of directors can be a valuable asset. Strategy, People, Image, Finance, and Systems for Compliance, or “SPIFS,” is a framework for how it might assist your firm in succeeds.
The company’s governance is aided by the board of directors. Any firm in the United States required law to have one, albeit the size not specified. The board of directors, by definition, is made up of shareholders who have been elected by the shareholders. The governing body oversees the company and assists in the formulation of corporate policies and strategy.
Commentators and observers frequently draw a direct relationship between the Ant Group IPO last year, Chinese entrepreneur Jack Ma’s subsequent fall from favor, and the newest news from the Chinese Communist Party’s (CCP) regulatory authorities. That appears to be reasonable. Things are changing in China, and the regulatory environment for tech work will never be the same again.
Founders are frequently asked about their board of directors by investors for two reasons. To begin with, it reveals a great deal about their character, judgment, and readiness to challenge. Typically, the entrepreneur can determine who is on their board of directors (via careful selection of investors and advisers) and negotiate a board structure that suits them. A healthy board will often have a solid balance of common shareholders, preferred shareholders, and independent directors. It also aids investors and analysts in determining who will ask vital questions and provide crucial recommendations to the company’s executive management, especially when times are rough (as they always are!).
After 20 years as a venture capitalist and board member, I have distilled the value of a board into five major components, which I refer to as SPIFS: Strategy, People, Image, Finance, and Compliance Systems. One of the key ways the board assists founders, especially if it is their first time operating a business, is by developing a business strategy. It is a great way to make sure you have done your homework on the market and have the correct strategy in place to develop your product and attract clients.