The recent announcement of a high-level addition to the board of directors at YCharts—a leading investment research platform and fast growing financial technology (FinTech) company—underscores how important it is for growing companies to strategically fill their board seats. Carefully choosing board members demonstrates a firm’s commitment and strategic planning towards its rapid growth goals and can provide an accelerated expansion of its presence and effectiveness in their markets. It can also be an early indicator that may reveal how well constructed and powerful their growth engine and product reach may become.
To help advisors and financial service leaders in their due diligence and partnering decisions in working with FinTech companies, the Institute for Innovation Development asked senior leadership at YCharts and a few other Institute FinTech members to comment about the importance and strategic nature of board members. What do they see as the true nature and characteristics of a strong board member? What kind of dynamic or opportunity set can board members bring to innovative entrepreneurial start-ups?
The insights below from these FinTech industry leaders may help advisors better ascertain the potential behind a company’s staying power and factor into their technology partner decisions:
Sean Brown, President and CEO of YCharts: “A Board of Directors needs to be more than a ‘board of investors’ or ‘board of people who will agree with the CEO.’ It’s important that each and every board member play a well-defined role in enabling the growth of the company whose board they sit on. The YCharts Board is comprised of a diverse group of individuals who bring unique experience, skills, and perspectives to our board meetings. They help us lift our heads and see strategic and operational opportunities that will allow us to better achieve our corporate objectives. They ask great questions. They challenge our thinking. They help us see pitfalls. They open up doors, or help management ‘connect the dots’ strategically. They are available to help outside of formal board meetings“
Adam Holt, CEO and Founder of Asset-Map: “It is critically important to include people who can hold leadership accountable and not just populate the board with people founders know from their network. We have heard of peers adding family members and shills who rubber stamp approval and seldom push back. However this doesn't serve the end game of most founders - nor does it instill confidence in investors that are looking for leadership and aligned interests.
At the end of the day a strong board member is going to provide insight, network access and experience that founders often lack. These traits and contributions can be game-changing or stagnating depending on the alignment. We look for a healthy dose of passion for the mission and yet enough experience to see past the rosy glasses to make honest and congruent decisions. The goal is to make sure that Boards have the company's success as their best interests even when it's unpopular or controversial.”
Corey Westphal, CEO and Founder of Mobile Assistant: “Similar to a boat captain who relies on the help of his crew, utilizing the knowledge and experience of board members is a powerful resource for business owners to help navigate industry waters. Practical experience from different perspectives from board members gives direction and guidance to major decision making. Listening to and analyzing these perspectives can be the competitive advantage that sets the organization on the right path to realize positive results.
A valuable board member is one that understands the entire firm story and has the ability to identify and facilitate intra-industry partnerships. Board members that understand and have experience with cultivating partnerships will help enhance integrated product or solution offerings. These board members come with unique perspectives from past experience which allows decision makers to focus forward on solutions that reflect strategic direction.”
Aaron Schumm, Founder and CEO of Vestwell: “It’s naïve for any CEO to say they know everything and everyone. If you’re not learning every day, you’re not pushing yourself hard enough. When I have a problem or want to bounce an idea around, my board members are my first phone call. Ultimately, we are all in this together, and having strong support at the board level helps you take the company to the next level.
When choosing board members, as well as investors, I have found it imperative to surround yourself and your team with varying viewpoints and areas of expertise. I looked for people that (a) deeply understand the industry and nuances, (b) thematically agree with the approach, (c) understand B2B2C FinTech delivery, and (d) had strong, reliable networks. I don’t want everyone to agree with me all the time. That’s not helpful. But, it’s important to have a basis for which to build viewpoints. Then, we can solution together, as we build the business, with motives and long term visions aligned.”