If you incorporate, you will need a governing board. Boards of Directors oversee incorporated businesses to make sure they are being 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. Being a board member is typically a paid position but may be paid in equity initially. For start-ups, boards are typically small with only several members. Actions Boards of Directors may be responsible for or review/approve include:
- Advise, evaluate, and replace the CEO and other executives.
- Strategic decision-making.
- Budgeting short and long-term.
- Plan product development and set investment priorities.
- Mergers and acquisitions.
- Shareholder and other stakeholder accountability.
Related: Advisory Boards
Advisory boards bring experience and influence that the business founders lack that is helpful for the businesses success. For example, business leaders or experts in clinical development, regulatory requirements, and reimbursement might be helpful for a company founded by scientists. Board members also may invest in the business. Be clear about deliverables they would provide, such as frequency of contact or 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 just want to be on a board and do not deliver help.
- Develop a good relationship with your board members. They have the power to replace officers in the company.
- Be careful about IP 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.