Who Controls the Board

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Founders who take on funding start the process of transferring control of the company to the investors.

As the funding moves from Seed to Series A, the investors increase their control.

Most seed-stage companies have no board of directors.

Instead, they often have a board of advisors who can provide advice and direction.

At the Series A, the board of directors is often formalized with two from the investor side, two from the company side, and one independent who brings industry knowledge.

As the company takes on additional funding, it brings new investors onto the board.

Most board positions last two to three years.

As new investors come on the cap table, they take the place of previous investors on the board.

There are exceptions, as some founders are able to maintain control of their board.

This is rare, as most founders lose their influence as their strength lies in establishing and growing the startup.

At some point, the influence shifts to board members who bring new skills, such as scaling and working towards an exit.

Founders should know that funding brings a change of control, even if it's a little bit at a time.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.