Do you love, be your own boss, but investors will love it in your company, to?
The venture capital - or even just a few thousand dollars of MOM and dad often comes attached conditions. Are you questions ready for investors for a seat on the Board of Directors -, even if you don't have one yet!
Julia Stamberger, co-founder and President of the go picnic, spoke with me about a round of capital and a new Board of Directors - in their young Chicago food service business. (If you haven't seen it, go sells picnic snack boxes for airlines.) (You've eaten probably their food O'Hare Airport on your last trip by was!)
Julia was lucky, several investors, including becoming angels and VCs. But the Board wanted all of them seats..., even if the company had not yet a Board!
What do they really want?
Code asking for a board seat may be for something else.
What investors usually mean is that she want the right taxes, is used as their money. They want to be consulted the financial reporting, and they want changes in the business plan. What they may not want, is the risk and liability of Board seats (which you all to look at good reason will give your company's insurance).
Should you do it?
I say firmly, Yes! The expertise and the supervision of a Board is provided invaluable. If your investors are Angel, in particular, it is likely that you great advice on a number of issues that you could otherwise to travel.
But hang. There is a difference between a member of the Board and a boss. The control that should give you to an investor include not daily decisions. If you have investor approval for each decision - as if buy paper clips to search! -You are in dangerous territory for the investor and headed the company.
Consider alternative
When granting a board seat fits the situation (or your temperament), tell a friend about Board "Observer status". This avoids liability while retaining the investor "Insider's view" of the operations and financial performance.
Or to avoid the whole Board experience by entering into a simple contractual relationship with investors. It is possible that an investor money to take and use it for "Project Finance" or a small "joint venture" between you and the investors to create. These solutions could give an investor some control over only a piece of the company and let you free to be your own boss.
Go picnic granted two Board sit Julia to their investors. And she is glad that she did. Reported a Board to each quarter their concentrated has kept up on results. "Financial reporting them for [is] not by a different part of your business", she said. "It is great to have the discipline [of reporting to a board]." "It prioritizes the things that are important for your business."
Devilish details
Investors make the best Board participants, because its aims are to work closely with your Alighned. As a bonus, they are offset often only by gains on their investments instead of salaries or fees. Such information is important. Make sure that every aspect of their participation fees on voting rights to negotiate when sessions will take place. Clear expectations to the front with save you a lot of future headaches.
Flexibility and efficiency are also concerns about the Board of Directors. The most effective cards mix investors, founders and pure outsider. Decisions blocked three, five or seven members, avoiding. A small, balanced Board offers the agility and skill necessary to contribute to a growing company.
I think that almost any company from the Board can benefit. They take careful planning and a little work, but they can click directly on rapid growth. So if an investor requests a board seat, smile you and welcome you aboard!
Dedicated to their profits.
David Worrell
PS: I am the owner of a company just like you. I'm also a fundraiser and social network Maven! If you are looking for money for your company, please visit my site where readers of AllBusiness.com have a special page and exclusive access to business finance resourcesfreely. If you write like me, leave a comment below or contact mewhat please.
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