The board of directors is the statutory governing body of a corporation, elected by shareholders to hire and supervise executives and approve fundamental corporate actions.

How it works

Early-stage boards may be two founders. Post-Series A, typical composition is two founders, one or two investor directors, and optionally an independent industry expert — exact splits vary by term sheet. The board meets quarterly, approves budgets, equity grants, and financings via /glossary/board-consent, and evaluates CEO performance.

Directors owe fiduciary duties of care and loyalty to the corporation and all shareholders, not only the fund that appointed them — though conflicts arise in practice. Committees (audit, compensation) appear as companies mature toward IPO readiness.

Shareholders retain voting power on charter changes and mergers; the board runs ongoing oversight between meetings. Early boards should adopt written consent procedures and D&O insurance before disputes arise — not after the first down round or acquisition talk leaks.

Why it matters

• Founders: Negotiate board size and independence before giving multiple veto seats. Understand when the board can replace the CEO.
• Investors: Board seats are primary governance tool; director liability insurance is standard in D&O packages.
• Operators: Major contracts and hires above threshold need board awareness per company policy.

Common mistake

Treating the board as an advisory group with no teeth. Investor directors approve down rounds, M&A, and executive changes that reshape founder outcomes.

Related ideas

/glossary/board-seat, /glossary/board-observer, fiduciary duty, and protective provisions.