Rethinking board recruitment for startups

We have interviewed Mathias Bargholt, People Development Manager at PSV, on the Role of Boards in Startup Success
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Why does the makeup of a board in startups matter?
At PSV, we’re obsessed with making sure founders get real value where it matters most. Whether it’s founder coaching, leadership development, attracting top-tier talent to build the optimal team – including the Board of Directors (BoD), interim People & Culture solutions, or our people deep-dive due diligence, we don’t do things halfway – boards are no exception. 

Building a (venture-backed) startup is kind of a David against Goliath scenario – as an emerging tech company taking on the challenge of knocking over big established competitors, founders must do a tremendous amount of work with just a small team and few resources. That’s why most VCs are hyper-focused on the founders and their competencies before they invest. 

At PSV we do an extensive people due diligence on the founder team, including thorough personality testing, of course to identify whether we believe the founders have what it takes, but also to understand the team composition and analyse where they have gaps in their competencies. 

It’s okay to have gaps. No founder team tick all the necessary competencies, but with the analysis we can identify which type of competencies the startup needs to hire and which type of competencies the board members need to have to support the founders. If you just blindly appoint a BoD you risk that they will overlap with the founders instead of complimenting them.

A bad board can easily turn into a founder nightmare with time-consuming, nitty-gritty preparation and endless reporting in meetings with no action. A great board? It’s a great advantage – market insights, a law of attraction for your next round, valuable connections, extra hands on deck, making sure you are all right, battle-tested advice. That helps you get to the next stage. Furthermore, aiming to build a company with global ambitions will require a BoD at some stage, so setting one early on means that you have some time to practice and learn how to work with a BoD.

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Why is pulling board members from your personal network risky?
Finding the right board members takes time – searching, interviewing, dating, negotiating. So, naturally, BoDs, investors and founders reach out to people they already know, because that means they are people they trust. But that’s where bias potentially creeps in.

It’s the same mechanism we see when we help founders hire the right people: We gravitate toward people like ourselves. And that can be a problem, because we can easily prioritise that over getting the right competencies into our BoD – meaning the competencies that will fill gaps in the founder and leadership team. If we compromise on getting the right competencies in favour of having people in the BoD who reflect our own values and traits, then it can possibly compromise the success of the business.

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How does PSV push for change and diversity at the board level?
PSV Foundry aims to challenge the status quo and take part in driving change in the ecosystem through investments, grants, and partnerships. We’re constantly looking for ways to close gaps in the ecosystem. The way boards are put together and how BoDs work is one of them. We believe in rethinking ways of working in startup BoDs, exactly because board members are so often found through personal networks instead of through informed, analytical decisions.

With Boardway, we see a new way of setting the right BoD. The world is deep into the AI wave, yet board selection is still running on gut feel and old-school networks. That doesn’t sit right with us. We will have a long way to go, but instead of waiting for the system to fix itself, we would like to do something about it. That’s why we’ve partnered with Boardway – to bring data and AI into the equation and take bias out of the process. Less guesswork, more impact.

We hope every founder we back can say what this one did: “PSV helped us form a professional and complementary Board of Directors that has been an invaluable support in the early stages towards our Series A investment.”