Too few startups have independent board members — and that’s a big problem.
Mahi Sall, Advisor, Fintech-Bank Partnerships, Payments and Financial Inclusivity
January 25th, 2023
Mahi Sall is the CEO & Founder of FinXpair, a Berlin-based strategic advisory boutique firm focu[...]
Is your startup board in need of a shake-up?
Sifted | Aline Eibl | Sep 2020
Too few startups have independent board members — and that’s a big problem.
When I entered the startup world as an investor, I saw boards composed of founders, management and all-male investors. The topics on the table were only about money: figures, KPIs and growth. Where I expected a guiding light for diversity, ESG, values, purpose — you name it — there was money-talk. Even the corporate world left that behind years ago.
Investors are mostly capable and experienced people, but rarely do they meet the main criteria for a board member: relevant, diverse and independent. The best board members are strategically engaged but operationally and financially distant without a conflict of interests.
Independence: Zero
From Silicon Valley to Europe, independent board members remain an exception. An Australian survey showed that only a quarter of startups have independent directors. By definition, board members should have the company’s best interests at heart. But all too often, investors are thinking about their return on investment.
See: Startup Genome: Canada Ranks 14th in The Global Startup Ecosystem Report 2021
Independent advice is critical — to deepen perspectives and find new ones, for conflict resolution and building bridges, mentoring and, most importantly, bringing in a set of diverse viewpoints. Boards that bring in the right balance of expertise fill in gaps of knowledge and experience, offer access to global networks and can help founders build higher-performing startups.
Diversity: Get rid of your blind spots
Bringing diverse and independent opinions around a table has proven to be an effective remedy against biased and overly speedy decision making in the boardroom. Diversity is not only about gender, but goes far beyond, addressing age, ethnicity, background, experience, industry, sexual orientation and focus topics. On the majority of startup boards, diversity fails at the first point (despite this having an impact on financial performance).
See: Culture and Diversity Leadership: Tale of Two Doors
The “secret sauce” of a successful board process is reaching out for different opinions and exploring blind spots. Having a variety of voices around the table that reflect the company’s strategic goals, and a diverse range of customers and stakeholders is the only way to go. Startups with professional boards have shown to be more resilient — and can be more attractive to VCs and private equity investors. Internally, professional boards add value by giving a vision and a purpose-value compass which helps attract and enthuse talent.
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