Many start-ups are rightly absorbed in technological and product development, protection of innovation, hiring, market research and– oh yes, money to survive.  Although CEOs abstractly admit that having an experienced  board of directors could indeed be very helpful, as a practical matter the building of a robust early board often get short shrift.  It takes time, wooing people, and finding some mode of compensation for the time cost and assumed risks to fiduciary board members.

Many start-up boards thus include founders and a very early seed-level financial backer who is rightly concerned with how a new enterprise takes care of their money.  Sometimes scientists, doctors or others with domain expertise find their way onto a non-fiduciary advisory board, in exchange for modest amounts of equity which accrue over time; these advisory folks often are important links to satisfy inquiries and concerns of early stage investors who want someone other than the CEO or CTO to explain in detail the proposed performance of the product or service contemplated, but are not privy typically to the nuts and bolts operational decisions that get considered by a full board.

Lawyers will tell entrepreneurs that they are nonetheless wise to spend the effort to add experienced expertise to the board.  There is nothing like advice from someone who has been there and done that, and has the time (and corporate duty) to do deep dives into the myriad decisions that are of mixed content: finance, domain and investor expertise.  This advice is of course echoed by the “directorship community” as witnessed by an article in the current magazine of the National Association of Corporate Directors (confession: this writer is a member of the NACD New England Chapter).

In furtherance of this viewpoint, I respectfully refer you to the immediately prior post to this blog site, which makes clear that current  Federal Administration policy will make entrepreneurship more difficult in many ways; investors and acquirers are going to be more cautious in making investments in new ventures of any sort, and the presence of a senior person who is neither a founder (whose enthusiasm is vital but indeed viewed with caution) nor an early stage investor (whose experience and vision can be skewed to a narrower view with a weather eye on the burn rate eating up initial investments) can be of comfort to future investors who are concerned about the experience level of management in many start-up enterprises.