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”.
Jump to Related Sections of the Zero-to-IPO Book:
SVBS Learning Materials Related to this Milestone ~ From SVBS Online Courses:
Maneuvers Involving this Milestone: