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Before becoming a VC, I cofounded OnVista, a German finance portal. In my role as CEO I was once talking to a client and told him, “I’ve got to go now because I have a board meeting.” He said: “Poor you. In board meetings, I always feel like I am examined and fail.” I was surprised and said, “I love our board meetings because I always learn something new and leave better informed and with a clearer view on my business.” Truth is, I always enjoyed the attitude and support provided by our board members.

Since then I’ve been serving on several boards. And not all of them have been a pleasure. If the boards were big ones, often a majority of board members were not adding value but mainly consuming air. A lack of trust complicated things even more. Here’s how to make the best out of your board experience and how to avoid the worst:

Be prepared to bare it all

Use your board as a trusted sparring partner. There is no startup without issues between founders – strategic direction, organizational issues, priorities, etc. Many founders would consider it a weakness to bring up these topics in board meetings. I call it sovereignty. The core idea is to move your company in the best possible direction. If there are issues you haven’t solved among the founders, you lose time and, in worst cases, even the full game. Bring up the issues that need to be resolved. You need to create trust between you and your board members — trust both in capabilities and in character.

Keep it small

Ideally a board has no more than 3-5 non exec directors. Big boards are not functional. Members will not feel responsible. Too often you will have no meaningful discussion and too many irrelevant comments. If you can’t reduce the size, then create small teams not only for remuneration and finance issues, but ideally also for strategic discussions. If you can’t trust all members, take one or two board members who you trust and talk to them about critical issues first before bringing them up in the big round. If you don’t have anyone you trust, go and find an independent chairman or at least an independent member of the board. Bringing in an independent board member becomes even more salient two or three years before an IPO when a company is on the eve of growing its shareholder base.

Alignment is key

When taking a new investor on board, ask for references and check with other startups that the VC is invested in. Always ensure alignment between the new investor, yourself, and the existing investors. If there is no alignment, don’t take the new investor on board. If the situation is not clear, carefully question the alignment beforehand. Don’t align just in order to get the money. The time thereafter will be a nightmare if the alignment doesn’t reflect true beliefs.

Look for people with the following qualities:

  • Willingness and ability to challenge strategy and major decisions
  • Power to push the team for more courage if needed and stop them if their path appears to be too hazardous
  • Smart, engaged, and challenging rather than comfortably silent
  • Ready to take decisions
  • Understanding that founders are busy and therefore pragmatic in their requests
  • Operational experience or industry expertise
  • Are not and will not be invested in competitors
  • Good listeners
  • Easy to reach when you need their support
  • Read documents when asked to and provide feedback in time
  • Keep secrets confidential
  • Provide personal feedback one-to-one and not in board meetings

Do not sugar-coat

A successful board also depends on you. You need to be open and transparent with your board. This is easy as long as there is sunshine. But if things are not running well, which is sooner or later inevitably going to be the case, you need an honest discussion with your board. Your board typically sees the problem as well. And if you don´t talk about it, then the board thinks either you are not transparent, or even worse, that you are not aware of the situation. Either one is not good for you or for the company. So even if it may be annoying, talk! Not talking about it will just make the problems grow. It’s always better to find a solution together than to be forced into a solution. Be willing to take advice. Show that advice is welcome and appreciated. Then you will get more of it.

Preparation is half the battle won

On a more practical level, prepare your board meetings with an agenda and a clear executive summary at the beginning telling everyone what you expect from today´s meeting: What kind of decisions do you need? Which topics would you just like to inform about? And where do you need feedback? Make sure the most important topics are dealt with first and that there is enough time for them. Don’t prepare decks of 80 or more pages. This guarantees frustration as you will discuss too much about details, get carried away, or will not be able to finish the presentation.

In times of sunshine a bad board is cumbersome, in a crisis it’s dangerous. So put in a lot of effort into making board meetings events that you are looking forward to.

Fritz Oidtmann is Managing Partner at Venture Capital firm Acton Capital Partners.

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