Silicon Valley Business School
Appoint New Board of Directors (Warm Restart)
A Step in a Management Maneuver in the Mezzanine Stage of Startup Development

Appointing a new board of directors is a step in the process of restarting the business. The Warm Restart is designed to boost momentum by shedding excess baggage. Remember: any changes to the board structure require investor approval. Significant investors normally ask for one seat on the board, sometimes two. After several rounds of funding, the board can accumulate a number of investor representatives, each with his/her own perspective and agenda. Inertia can set in, existing board members can become reluctant to change and it's often impossible to implement a warm restart without making radical changes to the board. Early-round investors and their board representatives are often considered excess baggage. New investors will often make their investment contingent on a restructuring of the board—“we'll invest on condition that we put our own people on the board, and that some, or all, of the existing board members resign”.

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