The pillars of effective board engagement as an early-stage startup
This is an excerpt from our Startup Board Course where Ashleigh Camm, LUNA’s Startup Board Course Director, interviews the super Rebecca Wendland, an investor at Folklore Ventures, about the practical realities of board reporting and engagement, and how to do this for greatest impact.
Folklore Ventures is an institutional VC fund specialising in investing in pre-seed to Series A tech businesses with about $150m under management.
Prior to Folklore, Bec worked in hedge funds and high-conviction equities before moving into management consulting. A large part of her role as a consultant was about making boards and Investment Committees more effective. Bec then co-founded Emmi, a Carbon Fintech company, which took on three rounds of capital and had an active board, before she exited last year.
We couldn’t ask for a more experienced and well-rounded perspective on the keys to effective management team, board and investor engagement. You’ll find more of our interview with Bec in the Startup Board Course portal, plus if you join an upcoming cohort, you’ll be able to engage directly with Bec for an AMA as part of one of our live sessions. The next cohort kicks off on 5 June - sign up here.
Excerpt:
“Q: In practice, what do you think works best in terms of board engagement and reporting across what we share, how much we share and how often we share, to have impact? What’s a formula for how these things can come together to be most impactful as an early-stage startup?
I’ll start with the high level and then dive into three component parts. Something that bugs me a bit, and you'll find through this conversation that lots of things bug me, is this concept of board engagement and reporting being two separate things.
I see reporting as just a way to engage with the board in a very effective manner, it’s the pre-communication. Unfortunately, board reporting has got this very unattractive label of seeming like it's of no value-add for the founders or the management team to put together - it’s a kind of governance burden that they have to do, but I don't think that's true at all. It can help teams condense down what they know, and build the frameworks and processes to track important elements in real time.
I think of board reporting as board communication and engagement, and when it is done well, it focuses on three key things:
Measuring what matters;
The startup’s ‘sink and swims’;
The board being an extension of your team.
When done well, board reporting is the mechanism to tell the board about what you've done, the things that have worked, and the things that haven't, and then use this information to get your board’s input. I know how valuable our board was to us when we were at Emmi, and I really hope that Folklore as a VC is just as valuable to our portfolio companies: we've been there before, we've done it before, and we've seen hundreds of companies go through their journeys, and we’re here to help our founders from this place of experience.
1. Measuring what matters
It can be quite hard to land on what really matters to your business, but it's really important that you can do that so that you can focus the time of the board on the high impact stuff and things that move the dial. If you don’t, you're just getting distracted by all of the noise that's in the business.
Two things that I think are valuable here is having a strategy on a page. It doesn't have to be complicated, wordsmithed or beautiful. It should be something that anyone can digest with almost no context, setting out what you're trying to achieve for the next 12 to 24 months.
This makes it clear what the business’ focus is, and then the board can challenge and add to that the focus, being clear on what the business is going after and where we think we can have the greatest chance of success. The second part of this is translating this strategy into three or four core objectives with key tangible results.
I really love OKRs, and I think they're really, really valuable. When you have an overall objective, you then detail how you think you’re going to achieve that objective, which again focuses the business and the board. This is not just a valuable exercise for boards, it’s a valuable exercise for businesses too. You can ask yourself for every action, project, whatever, is this having the biggest impact on my main goals.
This sets the baseline to determine how the business is going to achieve its goals, and be able to measure how it is going, and whether these hypotheses are right. Is the business going well? And if it isn't, why isn't it? Which then brings me to the next pillar, which is then really focusing on the sink and swims.
2. The startup’s sink and swims
Again, it can be very easy to get distracted by the noise of running a business, so focusing these conversations on the major metrics and the startup’s runway - or the Achilles heels as I call them - is going to support you to have the conversations that you need to have, and make decisions to pivot any strategies to try and give your startup a greater chance of success.This is where the business and board conversations should be focused - on solving the Achilles heels of the business.
One framework that can help here is the Good, Bad and the Ugly. It’s about being super clear around what went well, what didn’t, and the ugly being, where do you need help?
It can be so overwhelming as a founder or executive in a business, and sometimes you just need a safe space to be able to brainstorm why it isn't working. Often you need someone who understands your business but isn't involved in the everyday to help you sort it through.
This is where building strong relationships with your board comes in. Be clear with your board about what it is that you want from them and know they are there to help you. This will help to have really value-additive and productive conversations at the board level.
No matter what industry you’re in, the common Achilles heel amongst startups is runway, and I can't stress how important it is to not just send the board financials, but to also send the board clear indicators on runway, such as, how many months of cash you have left, so that everyone is across this major sink or swim.
Money is the lifeblood of startups and without knowing when you're going to run out, you're either going to be forced to raise from a position of weakness, or, the business is going to go under and you're not going to be able to manage through it. The number one reason why companies fail is because they run out of money.
It’s really important to understand where you're going and what you're doing with the money that's coming in, and being clear around the value that the business is getting from it.
3. The board as an extension of your team
It can be very scary to do this because the board has a fiduciary responsibility as a director of the business, but really we are, or should be, your biggest champions and how you get reach.
While the board should not be heavily involved in the operational aspects of the business, they should be involved if you're getting stuck and need help, or when you need to increase coverage, whether that be with customers, investors, or others. So I think it's very valuable to engage the board this way, and this is something our board pushed us for at Emmi, was to have a one pager on the business, which meant the directors could share the story and pitch to whoever they connected with and that might further the business. It’s your elevator pitch on a page, it's a great exercise to have this anyway especially when you’re testing and pivoting marketing, sales and product.
This can be super valuable, and even more valuable when you've got strategic and experienced investors on your board who have great networks and can support your business.
Ultimately I think all of this comes together to create really good board engagement which means you can get the most out of your board.”
Whether you’re a founder, operator or ecosystem professional, if you want to know more about how you can set your board up for success, we talk about all of this and more in our Startup Board Course. Our next Cohort kicks off soon - find out more here.
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