Have you just raised your first Series A round, and is your investor asking you to set up a board? Deciding on its composition is a strategic decision that will shape your company’s governance for years to come. A well-composed board isn’t just an administrative burden. It’s a strategic catalyst that helps you gain perspective, benefit from diverse experiences, and structure your thinking.
Here are some practical tips for structuring your first board and understanding how it works.
In France, the board (or board of directors/supervisory board, depending on the structure) is the body that oversees the company’s management and makes major strategic decisions. It is composedof directors who vote on important matters such as the annual budget, fundraising, or key hires.
The board does not manage day-to-day operations; that responsibility remains with the CEO (or the president in an SAS or SA) and their executive team. The board is thus involved solely in strategy, governance, and the company’s overall direction.
Establishing a board structure from the very first funding round helps instill best practices. A professional and disciplined board ensures alignment among its members and saves valuable time during future funding rounds.
The ideal size depends on the maturity of your company:
Three roles must be clearly distinguished within your board:
Your board will consist of three distinct types of directors:
These are members of the executive team who work at the company. In most cases, only the CEO (or president) serves on the board.
Members of management may attend meetings but generally do not have voting rights (with the exception of the CEO) and are therefore not board members. Their role is to present the company’s status, answer questions, and receive strategic guidance from the board. The distinction between a director and a manager is fundamental: the board oversees management; it does not comprise it.
They represent the funds that have financed the company. These institutional investors, such as venture capital firms or business angels, often secure a seat on the board during funding rounds.
According to a study conducted by Seth Levine in the United States, companies with more than three investor directors perform worse than those with three or fewer.
They are neither part of management nor representatives of institutional investors. They have no direct financial interest in a specific class of shares. Independent directors moderate discussions and provide a purely operational perspective, unconnected to valuation issues. Their role as mediators becomes crucial when conflicts arise between founders and investors.
For every investor director, appoint one independent director. This balance ensures healthy debates and prevents any single perspective from dominating discussions. A board composed solely of investors risks prioritizing short-term financial returns at the expense of long-term growth.
These roles structure the board’s work and define how it operates on a day-to-day basis.
The Chair of the Board leads and organizes board meetings, oversees corporate governance, and ensures that the board functions effectively. In France, the Chair of the Board is a formal and mandatory role in SA or SAS structures that have a board of directors.
In early-stage startups, the CEO often serves as Chairperson. This dual role is common and allows the CEO to maintain control over the strategic agenda. However, if your investors prefer a counterbalance to strengthen governance, or if you prefer to focus on day-to-day operations, you can appoint a Lead Independent Director. This role, inspired by the Anglo-Saxon model and optional in France, serves as a counterbalance when the CEO is the Chairman of the Board. The Lead Independent Director represents the independent directors, facilitates a balance between executive management and the board, and can convene meetings without management if necessary. This role is typically entrusted to your lead investor or an experienced independent director.
The board secretary is not always a director. This role may be filled by a member of the management team (often the CFO or General Counsel) or by an external service provider specializing in corporate governance. Their primary role is to ensure the smooth administrative and legal functioning of the board (preparing meetings and minutes, drafting reports, and verifying that all decisions are properly documented).
Compensation for board members varies depending on their profile and role:
The composition of your first board will determine the effectiveness of your governance for years to come. Strive for a balance between investors and independent directors, clarify each person’s roles, and ensure that all members understand their responsibilities. A well-composed board speeds up your decision-making and strengthens your investors’ confidence.