What investors look for in a board before a Series A

Because an investor is buying a governance structure as well as a business. A Series A lead is committing capital for five to ten years, usually with a board seat and reserved matters. What they are assessing is whether decisions in that room will be taken properly when things go wrong — not whether they will be taken well when things go well.

A board that has never had an independent voice has no evidence of that. Every decision to date has been taken by people with a direct interest in the outcome. That is not a criticism of the founders; it is an absence of the thing the investor is being asked to rely on.

Count the people in the room and ask how many are neither a founder nor a shareholder representative. If the answer is zero, this is the finding.

Independence has a working meaning: no employment relationship, no material shareholding acquired as compensation, no relationship with a fund invested in the company, and no other connection that would reasonably be seen to affect their judgement. An investing non-executive who bought shares at the round price is generally still regarded as independent, because the holding is aligned with all shareholders rather than with one fund.

Section 172 of the Companies Act 2006 applies to every director, including investor directors. But an investor director exercises that duty while also answering to a fund with its own lifecycle and entry price. An independent director does not.

Investors ask for the last four board packs. They are looking for packs circulated in advance, ideally five working days, rather than handed out in the meeting; consistent management information, with the same metrics period on period and variance explained against the same plan; decisions recorded in minutes with owners and dates rather than pages of narrative; a risk register that has actually changed between meetings; and evidence of challenge.

That last one carries more weight than founders expect. A set of minutes in which the board has never disagreed reads as a board that does not function. And a three-person board running proper meetings inspires more confidence than a five-person board that meets to be presented to.

By Series B, an investor expects to see committee structures forming and someone capable of chairing audit. That means a director with genuine financial literacy — able to interrogate management accounts, not just read them.

Investors also look at succession: what happens if the chair leaves, and whether the board would still hold together.

No independent director — the headline one. Board packs assembled the night before, or not at all. No minutes, or minutes that record discussion rather than decisions. Undeclared conflicts, such as a director with an interest in a supplier that has never been recorded.

No D&O cover, which reads as a board that has not thought about risk and deters strong candidates. And adviser equity granted years ago and never revisited: a cap table carrying dormant advisory grants is a lawyer's first find.

Each is fixable in weeks. Together they take a quarter, which is why they are worth fixing before a process rather than during one.

Appoint the independent director — five ranked candidates in 21 days is achievable, and the appointment itself takes another few weeks. Fix the pack: three consistent months of proper packs is more persuasive than one impressive one. Write up the minutes you should already have.

Buy D&O cover, often a few hundred pounds a year for £1 million at small-company scale. And tidy the cap table, cancelling unvested adviser grants where the relationship has ended.

For timing, see when to appoint your first independent director. For the mechanics of the meetings investors will ask to see, how to run your first board meeting.