What is Board of Directors Composition?
Nexa Consultancy | Startup & Finance Glossary
The Board of Directors is the governing body of a corporation, elected by shareholders to oversee the management and make major strategic decisions. Its composition (who is on the board) is a key aspect of corporate governance.
Base Term for Startups: In the early days, the board may just consist of the founders. After a seed or Series A round, the lead investor will typically take a board seat. The ideal board size for a startup is small, usually 3 to 5 members.
Structure: A typical Series A startup board might have: 2 founders, 1 lead investor, and 1 independent director (a neutral industry expert). This provides a balance of founder control, investor oversight, and external expertise.
Base Term Example: A startup's term sheet specifies that upon closing the investment, the board will be reconstituted to consist of two founders and one director appointed by the new lead investor.