# 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.