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Episode Date: March 12, 2021
https://youtu.be/qv89RVYF0lM
Top Insights
- In a standard board meeting, keep the details in your minutes at a minimum. This will protect you from issues in the future. In board meetings that are specific to events that may result in litigation, it's critical to beef up your minutes with as many details as possible so you can build your case.
- Share pre-proposed resolutions in the pre-brief documents with your board before the meeting and keep your agenda tight. This will make getting approvals much easier.
- The purpose of a board meeting is good corporate governance. The board is driving the direction of the company, setting the strategic plan of the company, and is in charge of a lot of responsibilities. That's why the board needs to meet on a regular basis. This is important especially for early-stage companies because the board meetings are a great place to discuss challenges with people who have experience in your industry and often they can help you figure it out.
- The board reflects on the performance of the company and what the company's going-forward plan is. It discusses the big picture as well as housekeeping items.
- Private corporations are not legally required to have board meetings. There are certain things the board has to approve, which you can do by meeting or unanimous written consent.
- A board meeting once a quarter is enough for a seed-stage company. You can increase that frequency when you're running out of cash and you haven't found a new investor. You may need to check in with your board more frequently to help you find funds before you run out of cash.
- 2 common seats (company) and 1 preferred board seat (investors) are sufficient in the early stages.
- Observer seat: You get invited to the meetings, you have access to the materials, but you have no vote.
- Director seat: You get invited to the meetings, you have access to the materials, and your vote counts. You also have fiduciary duties that determine how you're supposed to vote.
- For seed and series A, it's usually not until someone acquires 10-15% of your company or you raise ~$2.5million from them — that they get a board seat.
- Jason has seen that when someone owns 5-10% of a company, they typically take an observer seat, while someone with 10-20% will take a director seat.