Board seats: who gets a vote on your company's biggest calls.
Your board hires and fires the CEO, approves big decisions and signs off on new rounds. Each priced round can change who sits there.
The short answer
Early boards are usually founders only. A lead in a priced round often asks for one seat. A common post-Series A shape is founders, an investor seat and an independent seat agreed by both sides. Observers attend but do not vote.
How it works
Founding
The founders form the board. Decisions are fast and informal, but keep written consents.
SAFE or note rounds
Usually no board change. Some investors ask to observe.
First priced round
The lead often takes one seat. Founders usually keep a majority or an even split.
Later rounds
New leads may add seats. An independent director often balances founder and investor seats.
Compare the options
Votes
Board director: Yes
Board observer: No
Fiduciary duties
Board director: Yes, to the company and its stockholders
Board observer: Generally no
Sees board materials
Board director: Yes
Board observer: Usually, with confidentiality limits
Typical holder
Board director: Founders, leads, independents
Board observer: Smaller investors, earlier leads
What the board actually decides
The board approves budgets, option grants, new financings and the sale of the company. It appoints and can remove the CEO. Separate protective provisions may also give preferred investors a vote on certain actions, even if they have no board seat.
Keeping the board balanced
Board size and composition are set in the term sheet and charter documents, so negotiate them with the price. Add seats slowly, and agree on how independent directors are chosen. A well-run board with clear updates is easier to keep small.
- How many seats after closing, and who appoints each?
- Do founder seats depend on being employed?
- How is an independent director chosen?
- Who gets observer rights, and with what confidentiality?
Terms to know
Independent director
A board member who is neither a founder nor an investor's appointee.
Board observer
Attends board meetings without a vote.
Fiduciary duty
A director's legal duty to act in the interests of the company.
Would a future board member back your plan?
Leads who join your board read your deck as the plan they will hold you to. Upload it and we tell you where the plan looks thin.
Questions founders ask
Do SAFE investors get a board seat?
Generally no. SAFEs do not carry board rights. Some investors ask for an observer seat or information rights in a side letter.
Can founders lose control of the board?
Yes, over several rounds if investor seats outnumber founder seats. Agree board composition carefully each round, with a lawyer's help.
Sources
Sources: Delaware corporate law norms; industry model venture financing documents. Not legal advice.
Related explainers
Try the calculator
Put it into context
Inside Unicorn Factory
Free account
Investor matching is coming to your free account. Create it now and we will match your round the day it opens. Until then, get an honest read on your deck.