Why You Shouldn't Ignore The Startup Board
Startup board is a familiar term in the entrepreneurial ecosystem. The role of board members goes well beyond accelerating growth and business success. Boards play a hugely important role in helping high growth ventures to navigate the journey from startup to scale up. According to 'The Startup Board Report' compiled by KPMG High Growth Ventures and Think & Grow, many founders lack the experience required to form a board, and currently there isn’t a game plan. The role of a startup board is very different to that of a public organisation. There are various considerations and specialized skills needed among directors.
The report based on in-depth qualitative and quantitative research undertook interviews of over 26 experienced startup board members and founders in Australia, the United States, the United Kingdom and New Zealand.
Lack of Female Representation:
Today, there is a limited pool of individuals who are sitting on startup boards in Australia, and this is not helped by a lack of diversity.
The report states, “Although women-led businesses are one of the fastest growing segments of entrepreneurship, only 38 per cent of startup boards in Australia have female members. This barely hits the diversity quota set by the Australian Institute of Directors in 2016.”
The research shows that women are not being referred to for board roles due to the lack of Women in VC (venture capital) and investment roles. This is something the VC’s are working hard to change and it highlights how vital this is to facilitate a thriving and diverse ecosystem.
“It is also important to remember that diversity extends beyond skills and experience. As globalisation and the shifting demographics of markets and the workforce make startups more dependent on diversity, a board built on homogeneous relationships has the inherent risk of narrowness. What we need to do to support Australian startups is to re-write the playbook – by providing a guide and insight into what best practice should look like. As well as identifying ways to increase diversity, and set benchmarks for governance that enable founders to perform at their best,” the report adds.
Boards that bring in the right balance of expertise, experience and access to senior global networks, can help founders build faster growing and higher performing startups. But one issue that could prevent this happening is a lack of independent advice for founders on Australian boards.
“Just one in four Australian startup survey participants (26%) have independent, non-executive directors (INEDs) on board. According to the AICD (Australian Institute for Company Directors), INEDs have a significant advantage in their independence and objectivity: "their ability to act in the best interests of the company is not compromised". They can also bring an independent perspective, as well as external networks, which are particularly valuable for a startup,” the report says.