Most startup board members don’t realize what they’re signing up for: → 3 risks no one warns you about (+ how to avoid them).

I’ve been a board member and president in multiple tech companies for over 20 years.

This year, I decided to step back and do a training with Startup Board Academy.

Great Experience!

– Lots of case studies on legal, financial and crisis management + due diligence.

– Excellent trainers.

– Cool other participants.

What came up over and over again: The naivety of startup board members.

Here are three common topics startup board members risk to run in:

𝟭. 𝗘𝘃𝗲𝗿𝘆 𝘀𝘁𝗮𝗿𝘁𝘂𝗽 𝗶𝘀 𝗮 𝘀𝗲𝗿𝗶𝗲𝘀 𝗼𝗳 𝗰𝗿𝗶𝘀𝗲𝘀.

Whether it’s a financial crisis, market crisis, leadership crisis…or all at once, one thing is for sure:

You will run into a crisis.

As a board member, this is when your job actually starts. You don’t just sit back and “advise” while the founders scramble. You step in, hands-on.

⁠→ Benedict Stalder put it into a simple rule:

If you’re not willing or capable to go to the edge and ultimately take over full operational responsibility for a while, don’t take the board seat.

𝟮. 𝗬𝗼𝘂 𝗮𝗿𝗲 𝗼𝗯𝗹𝗶𝗴𝗲𝗱 𝘁𝗼 𝗮𝗰𝘁 𝗶𝗻 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆. 𝗡𝗼𝘁 𝗶𝗻 𝘆𝗼𝘂𝗿𝘀. 𝗡𝗼𝘁 𝗶𝗻 𝘁𝗵𝗲 𝗼𝗻𝗲 𝗼𝗳 𝘁𝗵𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗼𝗿 𝘆𝗼𝘂 𝗿𝗲𝗽𝗿𝗲𝘀𝗲𝗻𝘁.

Board members oftentimes wear multiple hats. They represent investors. Or act as founders and execs.

This is where things get messy. Roles get mixed up. Conflicts arise.

We came across an interesting case where a board member had to vote *against* the investor he represented. Because it was in the company’s best interest.

Would you have the balls to do so, if the case arises?

A good practice: Start every board meeting by reminding everyone to act in the company’s best interest. Then, ask each member explicitly:

“Does anyone have a conflict of interest with the proposed agenda?”

𝟯. 𝗧𝗵𝗲 𝗿𝗶𝘀𝗸 𝗼𝗳 𝗳𝗮𝗶𝗹𝘂𝗿𝗲 𝗶𝘀𝗻’𝘁 𝗷𝘂𝘀𝘁 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆. 𝗜𝘁’𝘀 𝘆𝗼𝘂𝗿 𝗽𝗲𝗿𝘀𝗼𝗻𝗮𝗹 𝗿𝗶𝘀𝗸 𝘁𝗼𝗼.

Board members carry personal liability for what happens under their watch.

You can’t push that risk onto the company or an investor you represent.

While most board members realise this, if you ask them to list or monitor those risks, the ice gets thin.

Here’s what you’re personally on the hook for (especially in Switzerland):

– Insolvency & bankruptcy – If you act too late, you’re liable.

– Unpaid taxes & social security fees – If the company fails to pay, you cover it.

– Delegation of tasks – and taking back the delegation if leadership fails.

– Financial oversight – If the accounts, audits, or planning aren’t solid, you take the fall.

Do you regularly track these risks? E.g. how do you ensure the social security fees is paid?