Startups are vital engines of innovation and value creation, holding the promise to revolutionise markets. But they face daunting odds, and the low startup success rates reflect this reality.
As startups transit into the scale-up phase, founders often trade some control of the business in exchange for additional resources to fuel future growth for the company. As a result, they reduce ownership stakes and collaborate with structured official boards including external directors acting as proxies of venture capitalists .
One reason is the potential conflict of interest between founders and external directors, who are representing diverse groups of owners as the startups progress into successive funding rounds. Others like serial entrepreneur Yann Lechelle, said that startups wait too long to bring in independent board members and should consider independent directors as early as Series A or even seed funding rounds.
The value of independent directors therefore lies in providing complementary resources to enhance startup performance and monitor conformance from a broader stakeholder perspective.