A Note on Boards in VC-Backed Ventures

Shikhar  Ghosh; Ramana  Nanda; Suraj  Srinivasan; Terrence  Shu

Technical Note | HBS Case Collection | April 2019

A Note on Boards in VC-Backed Ventures

by Shikhar Ghosh, Ramana Nanda, Suraj Srinivasan and Terrence Shu

Abstract

What is the value of a Board, and why does a company need one? The note documents the formal role of a Board of Directors as going beyond simply acting as legal representation of corporate ownership. Moreover, this role changes as the company moves through different stages of growth. The note discusses the structure and composition of a Board (Board Committees, Board Chair and Board Observers), along with best practices for managing the Board process (including what happens before and after each meeting, as well as the meeting itself). Entrepreneurs need to set foundations for Board composition, structure, compensation, and terms, early on in the company’s journey. Many of the qualitative insights in the note are collated from the collective experience of the authors.

Keywords: founders; Business Startup; board; board of directors; Business Startups; Governing and Advisory Boards; Venture Capital; Entrepreneurship;

Language: English

Format: Print

14 pages

Educators Purchase

Citation:

Ghosh, Shikhar, Ramana Nanda, Suraj Srinivasan, and Terrence Shu. "A Note on Boards in VC-Backed Ventures." Harvard Business School Technical Note 819-128, April 2019.

This case follows Prakash Melwani (HBS MBA '86), CIO of Blackstone's Private Equity Group, and his teams’ investment in the footwear company Crocs. Instead of a traditional secondary offering, Crocs opted for a unique deal structure by taking Blackstone's cash in a private investment in public equity (PIPE) deal. During the Blackstone investment, Melwani and his team drastically reworked Crocs’ strategy. The case offers insight into the operational initiatives undertaken to revitalize the Crocs brand.

Case | HBS Case Collection | September 2020

Disrupting Justice at RightNow: Persevere, Pivot or Perish

Shikhar Ghosh and Amir Reza Rezvani

The case examines the focus of an early stage company, and how an unexpected external incidence can threaten or void the business model. It encompasses issues such as defining and pivoting a business model, organizational requirements for a pivot, investor relations, disruptive business models, as well as business conduct in continental Europe. In 2017, Dr. Torben Antretter, a former competitive tennis player and academic researcher, founded RightNow with his two co-founders. RightNow was set out to provide consumers with “Justice-as-a-Service” by purchasing their legal claims that they would not pursue otherwise. Just one year after its inception, the company had closed a €25 million financing to increase its market share and leverage further growth opportunities. Upon closing of this financing round, matters took a sudden and unexpected turn when the National Supreme Court announced a ruling that airlines were no longer required to refund flight tickets. This decision wiped out RightNow’s profit margins. Antretter and his co-founders had to decide what they should do with the business. How should the founders approach investors? Should they quit and walk away from their entrepreneurial dream or try to reinvent the business with a different focus? What would be the strategy going forward?

Keywords: legal aspects of business; Startup; teams; Pivot; financing; Entrepreneurship; Law; Venture Capital; Business Startups; Financing and Loans; Business Model; Organizational Change and Adaptation; Legal Services Industry; Germany;

Citation:

Ghosh, Shikhar, and Amir Reza Rezvani. "Disrupting Justice at RightNow: Persevere, Pivot or Perish." Harvard Business School Case 821-027, September 2020. View Details

Cite View Details Educators

The case examines issues such as cascading problems within the organization, changing founder roles, founder success criteria, as well as company exit consideration. In 2017, Dr. Torben Antretter, a former competitive tennis player and academic researcher, founded RightNow with his two co-founders. RightNow was set out to provide consumers with “Justice-as-a-Service” by purchasing their legal claims that they would not pursue otherwise. Three years after inception and after overcoming numerous consecutive hurdles, the company was entering its next stage of its lifecycle. The selection of an investor type would be instrumental to the next few years of the company and the lives of the founders. With success, considerations around company exit and defining success criteria became inevitable. Different investors types had different investment criteria with regards to target returns, growth ambitions, decision rights, and ownership stakes. Antretter and his co-founders had to decide, jointly as well as individually, what they want to do. Discussions among the founding team showed that they needed to develop an ‘exit strategy’ in the same way that they had developed a growth strategy. When should they consider an exit and take some chips off the table? Was it more important to become rich or to remain kings of their kingdom?

Faculty & Research

A Note on Boards in VC-Backed Ventures

Abstract

Citation:

About the Authors

More from these Authors