What are 4 important points when choosing to join the BOD of a startup?
Hai H Nguyen
Fundraising Coach | Board Of Directors | Top 1 Venture Capital Linkedin Vietnam 02/2025 by Favikon | Welcome to work with Seed to Series B Investors
Yesterday, I declined an invitation to join the Board of Directors (BOD) of a US-based technology startup with an annual revenue of $20 million.
Just like on average every month, I turn down about 10 invitations to join the BOD of other startups.
You might wonder why I turn down these good opportunities?
Here are 4 points to consider when choosing to join the BOD of a startup:
1)Founders
i) Are the founders coachable?
Many founders are stuck in old mindsets, and when a coach joins the BOD to guide them, they resist other instructions.
By doing things half-heartedly and doubting, they fail to achieve the desired results, leading to conflicts.
ii) Do the founders fairly distribute ownership rights?
The startup failure rate is high, with 10 startups having 1 successful one.
This rate is even higher, 99%, for startups founded by first-time entrepreneurs.
Fairly distribute ownership among co-founders and advisors to avoid initial mistakes and save time for focusing on the startup's core tasks.
iii) Do the founders have a visionary outlook?
A good founder's core is the ability to inspire oneself, the team, customers, and investors about the vision.
If you can't engage talents in your journey, the likelihood of failure is high.
Example:
When joining the BOD of VinCSS , a cybersecurity company, I found the founder intriguing.
They had experience, kept up with tech trends, transparently shared responsibilities
And had a grand vision for the company's long-term development, taking passwordless technology from Vietnam to the world.
With this vision, VinCSS created patented products, certified by leading global organizations, and collaborated with global partners for product distribution.
2)Market Size
If the market size is too small, your startup won't grow significantly, and investors won't see an exit strategy.
Investors prefer markets worth billions of dollars, so entering a smaller market makes it hard to raise funds.
You have to choose between a team of geniuses, excellent products, a small market
And an ordinary team, with average products, but a large market.
Investors typically prefer the latter.
Example:
When joining the BOD of DigiArt Academy, an Edtech startup for Art and Design,
I saw the growing Edtech market, especially in Southeast Asia.
No Edtech company dominated the entire market like Grab in ride-hailing or Amazon in e-commerce
Presenting a growth opportunity for DigiArt Academy with a high chance of exiting.
3)Startup Structure
I was previously CEO of Viewzz, a socially responsible 3D Animation company.
Despite profitability and a leading position in Vietnam
It struggled to raise funds or attract talents due to its social enterprise structure.
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All profits were reinvested in Reach, funding low-cost vocational courses for underprivileged children.
This social model deterred investors and talents seeking financial gains, diminishing the chance of selling the company or issuing dividends.
4)Personal Interest
Joining a startup's BOD is an honor and a huge responsibility.
If you're not interested in the field or what the startup does,
You'll eventually lose motivation, contributing less value, and diminishing your confidence and reputation.
Example:
The US company mentioned at the beginning invited me to join its BOD.
Despite its established revenue, competent founders, and a large market in IT workforce training,
I lacked interest in its model, leading to my decision not to commit time without enthusiasm.
Conclusion:
Consider these 4 points when choosing to join a startup's BOD:
1) With a small budget:
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President & CEO at Cali Bank, N.A.
10 个月Great info, thanks for sharing