Why do startups need board packs?
So, you’ve raised capital from seed VC’s, and you have fresh money in the bank. Congratulations! You also have new investors on your cap table and a board with new directors. Depending on your investors, this can either be a blessing or a curse. But assuming you chose well, you could have yourself a real asset on your hands. The question is now: how do you make the most of your new directors?
If you have value-add investors, chances are that they will be helpful to you in between board meetings. But even if you speak with them on a weekly or bi-weekly basis, the board meeting can provide a helpful platform for getting your investor-directors to add value to what you do. The question then becomes, how do you prepare for a good board meeting for a Seed stage B2B SaaS company? A key tool in your kit bag is the board pack.
What is the purpose of the board meeting?
The main purpose of the board is to help you and your business succeed. The board also has a governance role (which is a fancy way to say “checks-and-balances”). But if your company doesn’t succeed, there won’t be anything to govern. So really, it’s all about making sure that you and the company succeed.
What might be a helpful way to use board meetings at this stage? Some people feel that board meetings are a distraction and that founders should just be left “to get on with things”. In some circumstances, that may be valid. Especially if the founders have a lot more experience in building tech companies than their investors and board members. However, that begs the question: if your board can’t add any value, did you find the right investors and get the right board directors for your company?
Assuming that you have a board with people and knowledge who are there to help you win, what’s the best way to prepare for the meeting?
There are different views on what is helpful, but in my experience, the best board meetings are spent discussing the big challenges facing the company. Those where getting the decision right can really move the needle and help accelerate the evolution of your business.
And the recipe for getting board meetings to be just that is surprisingly easy. Select good, value-add investors and non-execs / advisers to your board. And then prepare your board pack so that the “big issues” are front and centre. I discuss the role of the board and directors in more detail here.
The structure of the pack
One way to start the pack is simply with a page as follows:
- What are the biggest issues you are facing as a business right now, and
- What are some options to address this (feel free to indicate the “preferred” or “suggested” way)?
Discussing the “big issues” is really the key topic for any board meeting. Rather than getting stuck in the weeds, better to focus your board’s energy on strategic issues.
Some founders (encouraged by some investors-directors) feel they have to “report” to the board in a similar way to what they might do with a corporate boss. “Look — here is a long list of all the activities we are undertaking”. Listing activities might be helpful for context, but you can put that in the back of the deck. The board’s purpose is not to second guess every marketing campaign you are running, but to provide mainly strategic coaching and support.¹
So feel free to use a simple board template with big questions up front and then the remainder of the deck being a series of appendices with raw data.
So back to “the big issue(s)”. What are those things? How do you determine what “the biggest issue” is? Strategic analysis can help you here:
- What is your current mission?
- What is the next milestone?
- What are the challenges standing in the way of reaching the milestone?
And once you have mapped out the challenges, you can also list the options you have available to overcome the challenges.
The important part of this pack is to outline the challenges. Spend some time really thinking about what they are. If you get this right, you help yourself, your leadership team, and the board focus all their energy on how best to solve what’s most important. And solving the most important issues affect your business outcome disproportionately relative to everything else you do.
Here is a useful framework on how to develop a strategy for a Seed Stage B2B Startup if you want to dive deeper: Business Strategy for Startups
In addition to the key strategic issue, it can be helpful to have a rotating set of “deep dives” where you look more deeply at a certain part of the business. This can help uncover “problem areas” or even opportunities you might not have been thinking of. For instance, you can rotate between:
- product roadmap
- team / hiring
- GTM playbook and strategy
The rest of your pack
The rest of your pack can be a series of appendices
- A time series of your MRR and CMRR data. More on CMRR here.
- A time series of your North Star Metric. Don’t have one yet? Work with your team and your board to develop one.
Sales are vital to business success. The most successful businesses have both great products and great sales operations, but it’s possible to succeed with less than stellar products if you have a good sales approach. And sadly for many great product companies, it is also possible to lose to an inferior product, if your sales and marketing aren’t quite right.
On the positive side, initial sales traction can be the thing that allows you to raise more cash to improve your product. Make sales excellence a core competence in your B2B SaaS organisation, and you’ll have taken an important step on the way to succees.
- List of wins and losses since the last meeting. Ideally, you’ll know why deals were lost. If so, include a small description.
- Overview of sales funnel. If you sell to enterprise and you have a limited number of opportunities, include a view of your opportunity Kanban with opportunities and deal values listed in the relevant sales stages.
- ARR Bookings, including expansion and churn data (David Skok has a great chart that you can see here).
- Meetings booked and pipeline added.
- Sales forecast (which should be split into commit and best case). Forecast quarterly bookings at least once a month. By the last month of the quarter, start forecasting the next quarter (so for June, do the first forecast for Q3 alongside the final Q2 forecast). You should do the sales forecast as a time series so you can see how it changes month-on-month. This will help your organisation get much better at forecasting sales – a critical ability for fast-growing SaaS companies. Accurate forecasting may be tricky at first, but it will get much easier as soon as you hire your first head of sales. S/he can also report on opportunity conversion ratio, which you can measure on a cohort basis, by month.
Cash & finances
When companies run out of cash, they typically fail. Therefore, the first commandment of startup building is “thou shall never run out of cash”. Put the following in your pack:
- A forecast with an expected cash-out date
- Monthly burn-rate — (ideally as a time-series)
- Monthly management accounts and a balance sheet
Include your team slide and show us where you are planning to hire. It doesn’t need to be fancy — but salaries are likely to be your biggest expense, and a team slide helps align everyone on where the money is really going.
Include a one-slide product roadmap (just include what you use internally). To make it extra useful, tie it back to your “biggest issues” from the strategic session. It will help your board understand your priorities and help your internal team better link their priorities to the company strategy.
Cadence is the rhythm or “beat” that makes a crew of rowers all pull as one team. That can also be a helpful analogy when you think about the “heartbeat” of your company.
As your team grows, you’ll start doing regular reviews with your senior leadership team (head of sales, head of marketing, head of product etc.). A helpful cadence can be to do monthly reviews with your whole team, where you have each team-lead prepare a section for you to review as a group. You can then reuse those same slides with the board (in the appendix) for a meeting the week after. This cuts down on board prep time and means that everyone from your reports to the board works off the same data.
One cadence that is popular is as follows:
- Week 1 — close monthly books. Develop product KPIs. Senior Leadership Team meeting (founders and other key company leaders)
- Week 2 — board meeting. Review progress. Discuss obstacles and any tweaks needed to strategy
- Weeks 3–4 — iterate and execute
There is no one-size-fits-all, but it’s helpful to have a regular rhythm to the way your company works, to help everyone move rapidly forward.
It takes a bit of time to produce a good board pack, especially in the beginning, where you are working through the best way to capture the information that’s critical to your company. Your board can help, so don’t hesitate to get their input on the format.
Ideally, your pack contains mainly content that you already use to run your company, and a lot of this will be produced by your functional leaders as per above. This has the double benefit of saving time and improving transparency.
Do’s and don’t
Some people prefer to put lots of data up front in the pack. Personally, I don’t think that’s necessary. You should never feel like you have to walk the board through a lot of slides to bring them “up to speed”. To make the most of the meeting, circulate the deck at least 2 days in advance and assume that everyone has read the deck.
We see founders that make incredible board packs, almost like investor (or customer!) pitches. While we appreciate all the hard work that goes into these, my advice is clear: don’t do it! You shouldn’t be marketing to your board. Every hour you spend making beautiful decks for us is an hour not focused on improving your product, building your team and winning customers.
Board reporting is a key topic as start-ups think about how best to engage their investors and other stakeholders. With a bit of investment, good board packs can form valuable tools both for internal audiences and also for your board and investors. It’s easy to go overboard and spend too much time on reporting. Still, in general, a group of start-up founders should probably spend at least a few hours every month tracking their KPIs and analysing these in a deck — both for themselves and also for their key stakeholders.
¹ Note: the board coaching could be operational, but if you spend a big chunk of your board meetings dealing with operational things that perhaps should be dealt with internally, that suggests that you may be lacking key skills in your team. So rather than spending time with your directors trying to resolve an operational issue, try to get them to help you figure out a) if you do need additional skills in the team, and b) actually finding someone to fill the role.