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Landmark Survey Highlights New Challenges in the Boardroom as Early Stage Startups are Raising Massive Rounds
14.10.2021
Over 300 startups and investors took part in the Startup Snapshot report, highlighting rising board expectations that CEOs are struggling to manage
Tel Aviv, Israel – October 2021 – Startup Snapshot, a data-sharing platform for the startup ecosystem, today announced the results of a new report of over 300 startups and investors, focused on managing the board of directors.
With the influx of capital in the market, early-stage founders are raising massive rounds faster than ever before. The larger checks are accompanied by the rising expectations of increasingly sophisticated investors, forcing startups to manage the new complexities of a growing boardroom. As a result, the board, which can be a strong asset for a new startup, oftentimes becomes a source of friction for the CEO, creating more unnecessary stress and arguments than tangible value.
This report gives a sneak peek into the exclusive and private world of today’s early-stage startup boardrooms, highlighting the new expectations and resulting challenges startup CEOs are facing. In an attempt to show both sides of the boardroom table, data was collected from startup founders, as well as their investors and board members.
The report was created by Y.Benjamin Strategic Marketing in partnership with Intel Ignite, Samsung Next, Leumitech, and Yigal Arnon & Co.
Main research insights include:
· Challenges in the boardroom are more common than we think. 28% of companies reported their board has vetoed a decision. 36% of startups reported that they have a “difficult” board member, with this number jumping to 43% for startups that raised over $10M.
· Startup CEOs are not open enough, with 61% of startups reporting that they are not fully transparent with their board members. Trying to show that they have everything under control, the majority of founders delay sharing bad news and sugar coat major challenges and failures.
· Searching for transparency, board members want more frequent communication and updates than their portfolio companies actually provide. Investors report that they want monthly one-on-one meetings and monthly progress updates from their portfolio companies, but only 30-40% of startups are actually doing this, the majority communicating much less frequently.
· The board is a powerful asset for new ventures, yet CEOs don’t see the value. Directors overestimated the value they provide by 20% compared to what startups believe they are actually getting.
· CEOs are hesitant to ask their board for help, seeing it as a sign of weakness. 81% of investors stated that they want their portfolio companies to give them specific tasks to help with, but only 30% of CEOs were very comfortable doing this. As a result, startups are not leveraging the immense value-add that their investors can provide.
“We see that it’s tough for CEOs to get to a place of open and transparent communication with their board. They are struggling to switch from fundraising mode, where they are trying to impress investors, to this place of viewing them as board members that are going to see the challenges and faults, says Yael Benjamin, Founder of Startup Snapshot.
"2021 is the year of ‘Uni-Covids’ as young companies are raising massive amounts of funding. Startups should double down on the role of mentors and board members, working to leverage their wealth of expertise, rather than just report the bare minimum required," states Tzahi Weisfeld, VP and GM Intel Ignite.
“In today’s market dynamics, young ventures are growing rapidly, facing much more sophisticated board members at an earlier stage in their life cycle. The CEOs are forced to rapidly mature, satisfying their board’s needs for more frequent updates and reporting, while simultaneously struggling to sustain their entrepreneurial spirit and quick pace of growth,” states Timor Arbel- Sadras, CEO of Leumitech.
“This stat regarding vetoes is alarming and alludes to the inexperience of founders raising a lot of money before their managerial skills have evolved properly. Investors should also take notice of this stat, understanding that an exercise of a veto is a corporate “weapon of mass destruction” and shouldn’t be used so frequently, even if it burns, states Nimrod Vromen, partner at Yigal Arnon & Co and CEO at Consiglieri.
“Founders should not treat the boardroom as the main update channel, but rather as the place where strategic discussion happens. By updating directors on an ongoing basis outside the boardroom, CEOs give board members sufficient time to prepare before the meeting and enable a more meaningful and focused board meeting,” states Eyal Miller, VP and MD Samsung Next Ventures.
About Startup Snapshot
Startup Snapshot is an initiative designed to increase transparency for the startup ecosystem. Building the ecosystem’s first data-sharing platform, Startup Snapshot is on a mission to leverage the vast knowledge that exists in Israel, the Startup Nation, to provide founders with actionable insights, benchmarks and data points that can help their businesses thrive.
Tel Aviv, Israel – October 2021 – Startup Snapshot, a data-sharing platform for the startup ecosystem, today announced the results of a new report of over 300 startups and investors, focused on managing the board of directors.
With the influx of capital in the market, early-stage founders are raising massive rounds faster than ever before. The larger checks are accompanied by the rising expectations of increasingly sophisticated investors, forcing startups to manage the new complexities of a growing boardroom. As a result, the board, which can be a strong asset for a new startup, oftentimes becomes a source of friction for the CEO, creating more unnecessary stress and arguments than tangible value.
This report gives a sneak peek into the exclusive and private world of today’s early-stage startup boardrooms, highlighting the new expectations and resulting challenges startup CEOs are facing. In an attempt to show both sides of the boardroom table, data was collected from startup founders, as well as their investors and board members.
The report was created by Y.Benjamin Strategic Marketing in partnership with Intel Ignite, Samsung Next, Leumitech, and Yigal Arnon & Co.
Main research insights include:
· Challenges in the boardroom are more common than we think. 28% of companies reported their board has vetoed a decision. 36% of startups reported that they have a “difficult” board member, with this number jumping to 43% for startups that raised over $10M.
· Startup CEOs are not open enough, with 61% of startups reporting that they are not fully transparent with their board members. Trying to show that they have everything under control, the majority of founders delay sharing bad news and sugar coat major challenges and failures.
· Searching for transparency, board members want more frequent communication and updates than their portfolio companies actually provide. Investors report that they want monthly one-on-one meetings and monthly progress updates from their portfolio companies, but only 30-40% of startups are actually doing this, the majority communicating much less frequently.
· The board is a powerful asset for new ventures, yet CEOs don’t see the value. Directors overestimated the value they provide by 20% compared to what startups believe they are actually getting.
· CEOs are hesitant to ask their board for help, seeing it as a sign of weakness. 81% of investors stated that they want their portfolio companies to give them specific tasks to help with, but only 30% of CEOs were very comfortable doing this. As a result, startups are not leveraging the immense value-add that their investors can provide.
“We see that it’s tough for CEOs to get to a place of open and transparent communication with their board. They are struggling to switch from fundraising mode, where they are trying to impress investors, to this place of viewing them as board members that are going to see the challenges and faults, says Yael Benjamin, Founder of Startup Snapshot.
"2021 is the year of ‘Uni-Covids’ as young companies are raising massive amounts of funding. Startups should double down on the role of mentors and board members, working to leverage their wealth of expertise, rather than just report the bare minimum required," states Tzahi Weisfeld, VP and GM Intel Ignite.
“In today’s market dynamics, young ventures are growing rapidly, facing much more sophisticated board members at an earlier stage in their life cycle. The CEOs are forced to rapidly mature, satisfying their board’s needs for more frequent updates and reporting, while simultaneously struggling to sustain their entrepreneurial spirit and quick pace of growth,” states Timor Arbel- Sadras, CEO of Leumitech.
“This stat regarding vetoes is alarming and alludes to the inexperience of founders raising a lot of money before their managerial skills have evolved properly. Investors should also take notice of this stat, understanding that an exercise of a veto is a corporate “weapon of mass destruction” and shouldn’t be used so frequently, even if it burns, states Nimrod Vromen, partner at Yigal Arnon & Co and CEO at Consiglieri.
“Founders should not treat the boardroom as the main update channel, but rather as the place where strategic discussion happens. By updating directors on an ongoing basis outside the boardroom, CEOs give board members sufficient time to prepare before the meeting and enable a more meaningful and focused board meeting,” states Eyal Miller, VP and MD Samsung Next Ventures.
About Startup Snapshot
Startup Snapshot is an initiative designed to increase transparency for the startup ecosystem. Building the ecosystem’s first data-sharing platform, Startup Snapshot is on a mission to leverage the vast knowledge that exists in Israel, the Startup Nation, to provide founders with actionable insights, benchmarks and data points that can help their businesses thrive.
