Board of Directors

Quick Definition

The governing body responsible for major company decisions, composed of founders, investors, and independent members.

What is the Board?

The board of directors oversees company strategy, hires and fires the CEO, approves major transactions, and represents shareholder interests. Board composition changes as companies raise money.

Board Structure Evolution

• Pre-seed: Often just founders.
• Seed: Might add one investor seat.
• Series A: Typically 5 seats (2 founders, 2 investors, 1 independent).
• Later stages: More investor and independent seats.

Board Control

Control matters for major decisions: selling the company, raising money, hiring executives. Founders should try to maintain board control through Series A, but often lose it by Series B.

Formula

Common board structures:

• Seed: 3 seats (2 founders + 1 investor)
• Series A: 5 seats (2 common + 2 preferred + 1 independent)
• Series B+: 7 seats (2 common + 3 preferred + 2 independent)

Example

Series A board composition:

• Seat 1: CEO/Founder (common)
• Seat 2: Co-founder (common)
• Seat 3: Lead investor partner (preferred)
• Seat 4: Second investor (preferred)
• Seat 5: Independent director (mutually agreed)

Founders + independent = majority control if independent is aligned.

Related Terms

[Protective Provisions]

Veto rights given to preferred shareholders over specific major company decisions.

[Liquidation Preference]

The right of preferred shareholders to receive their investment back before common shareholders in a sale or liquidation.

[Pro Rata Rights]

The right for existing investors to participate in future funding rounds to maintain their ownership percentage.

Learn More About Board of Directors

[Board Reporting That Builds Trust (Instead of Just Checking a Box)]

Learn investor update best practices and board deck templates for Seed to Series A startups. Build trust through transparent reporting that strengthens investor relationships.