If you incorporate, you will need a governing board. Boards of directors oversee incorporated businesses to ensure they are run in the best interest of the shareholders. They contribute ideas and may invest in your business. It helps to have some members who can compensate for your weaker areas. Board members are typically paid but may be paid in equity initially. For startups, boards are typically small, with only several members. Boards of directors may be responsible for or review and approve the following:
- Evaluation and replacement of the CEO and other executives
- Strategic decision-making
- Budgeting short- and long-term
- Product development and investment priorities
- Mergers and acquisitions
- Shareholder and other stakeholder accountability
Advisory boards bring experience and influence that the business founders lack, which is helpful for the business’s success. For example, business leaders or experts in clinical development, regulatory requirements, and reimbursement might benefit a company founded by scientists. Advisory board members also may invest in the business. Be clear about deliverables they would provide, such as frequency of advice and contact time. Members are often paid per meeting or in equity initially.
Tips for Working with Boards
- Make sure your board members understand their responsibilities and commit to them. Describe them in writing. Beware of people who want to be on a board without delivering help.
- Develop a good relationship with your board members. They have the power to replace officers in the company.
- Be careful about intellectual property and use non-disclosure agreements.
- When selecting board members, consider being proactive about getting a diverse board.
Biotech Boards. 8 Things to Consider – By Maingi S, CEO & Founder, Kineticos Life Sciences.