Founder vs Investor: The Boardroom Trap
One of the biggest mistakes I see founders make during the investment process is failing to think through what their board will look like as the business scales. And all too often, they find themselves stuck with a board that’s made up solely of themselves and their investors, a structure that can create real problems for the business if left unchecked.
This isn’t usually something founders actively choose. It tends to creep in almost un-noticed, particularly when you're laser-focused on closing the deal and don’t yet appreciate the long-term implications of board structure. You agree to a term sheet, the legal paperwork flies around, and suddenly you realise the investors have secured the right to appoint one or more directors, but you haven’t done the same. In some cases, there are even voting rights tied to board control that you didn’t fully appreciate at the time. And before you know it, your board is no longer your own.
No Neutral Voice in the Room
A board made up of founders and investors, without an independent chair or NEDs, lacks a crucial ingredient: objectivity.
Everyone around the table has skin in the game, which might sound like a good thing, but in practice, it means there’s no one whose sole job is to look out for what’s best for the business overall. Investors are there to look after their money (understandably). Founders are there to fight for the vision and drive the business forward. But who’s there to broker the tough conversations, mediate differing viewpoints, and bring a long-term strategic lens? Without that third voice, things can easily become combative, political, or just plain stuck.
No One to Chair
Without an independent chair, board meetings can feel more like a marketing exercise than a place for robust strategic discussion. Founders feel the need to “perform”, presenting a polished version of the story to keep investors on side. Investors can slip into judge-and-jury mode, interrogating rather than collaborating. And no one is holding the space, keeping discussions on track, bringing in diverse perspectives, or making sure difficult issues aren’t brushed under the carpet. This kind of board setup isn’t just ineffective - it’s unhealthy.
Lack of Psychological Safety
The absence of a neutral, trusted presence on the board can also make it incredibly hard for founders to show vulnerability. Growing a business is tough. You need a space where you can be open about what’s really going on, get support on the challenges you’re facing, and be held accountable in a constructive, compassionate way. When the boardroom becomes a performance zone rather than a safe space for growth, founders suffer. And so does the business.
So How Do We Fix This?
If you're a founder heading into an investment round, start with your Articles of Association. Make sure you retain control over the total number of directors on the board and who gets to appoint them. Don’t give away that power blindly in the rush to get your deal done.
Think about board composition as a strategic asset. Who do you need around the table to help you grow? What skills, experience and perspectives are missing? Who can play the role of trusted chair; someone who can hold both you and your investors to account while keeping everyone aligned around the mission?
If you’ve already got a founder-and-investor-only board, it’s not too late. Make the case for bringing in independent expertise. You’ll often find that the right chair or NED can be a game-changer for everyone involved, helping smooth out tensions, improve communication, and ultimately make better decisions that serve both the mission and the money.
Final Thought
As a founder, you will undoubtably outgrow your startup board - and that’s a good thing. But make sure you’re the one driving that evolution, not just being carried along by the deal terms. A well-balanced, well-chaired board can be one of your most powerful levers for scale. Don’t leave it to chance.
