By Kris Steen, Managing Partner at Stevenson Search Partners
For early-stage private companies, building a strong board of directors, including identifying the right independent directors early in the process, is a strategic imperative. Having guided numerous organizations through this critical process, I've observed firsthand how the right board can dramatically influence an early-stage company's trajectory. Delaying the formation of a complete board often leads to stagnation, while acting early sets the stage for sustainable success.
Understanding Where the Gaps Are
Crafting a high-performing board starts with intentionality. Begin by assessing the current board’s skillsets, envisioning where the company aims to be in 12–24 months, and identifying the capabilities needed to bridge that gap. A board matrix is a simple yet effective tool to pinpoint skill gaps quickly. From there, take a systematic approach to identify potential independent directors. Adding a board member with operating experience not only complements investor perspectives but also provides the CEO with practical operational support—ensuring a well-rounded, high-functioning board.
Some of the critical areas to consider in a board matrix include:
- Operational leadership background
- Dealmaking and capital fund raising experience
- Therapeutic specific knowledge
- Strategic planning capabilities
- Early-stage company building experience
Reaching Beyond the Current Network
Leaders and investors of early-stage private companies often turn to their professional networks for board recruitment. While these networks can be valuable, they often fall short in providing access to diverse perspectives and experiences.
A professional search process, on the other hand, uncovers strong candidates who might otherwise go unnoticed—individuals who bring fresh viewpoints and challenge existing thought patterns—essential elements for robust board dynamics. A professional search process also supports building diversity across multiple dimensions, including professional backgrounds, industry expertise, thinking styles, problem-solving approaches, and gender and racial representation. By embracing this broader perspective, companies can cultivate a board that is not only diverse but also primed for innovation and growth.
Understanding the Private Board Challenge
Private board formation comes with unique challenges, particularly around compensation. Unlike public boards, private company board compensation can vary significantly, and companies often need to get creative with their compensation packages. This reality can surprise candidates coming from public board backgrounds.
Another misconception is that forming a private board is a quick and easy process. In reality, private board searches often take longer than public board searches, requiring more time for relationship building and alignment of expectations and time commitment.
The Value of Independent Review
Having an independent perspective during the board formation process is invaluable. External advisors can uncover blind spots that internal teams might overlook and provide access to a broader network of investors and executives. Their expertise in scaling companies and decision making at inflection points can help navigate the complexities of private board formation.
Looking Ahead
As businesses face increasingly complex challenges, establishing a strong board early is more critical than ever. The right board members bring not just expertise and oversight, but also serve as strategic partners helping companies navigate growth, challenges, and opportunities.
Organizations that prioritize early board development, embrace diversity, and adopt a systematic approach to board composition position themselves for stronger governance and better long-term outcomes. In today's competitive landscape, this isn't just good practice—it's a strategic necessity.
