Q: We are in the process of raising early financing. Should the board be built after money is raised to meet the needs of the company and investors or should the board be used as a method to recruit angel investors?
A: (Brad) I view the creation of a board and the raising of an angel round as two separate activities that mutually reinforce each other.
Given that you have already started raising your angel round, you have the opportunity to use a board seat or two to help recruit your angel investors. However, you shouldn’t just give a board seat to whomever wants one – your board members should serve the interest of all shareholders, not just theirs or the angels that participate in the round with them.
You should always carefully and thoughtfully pick your board members. You want the best possible folks you can attract on the board. You should value experience and perceived contribution as a board member over the absolute dollar amount being invested, although often larger angel investors (and almost all VC investors) ask for a board seat as part of their investment.
All of your early board members should have a financial stake in the company – hopefully, they will all participate in the angel round. However, this shouldn’t be a requirement for a board member (and vice versa – just because someone invests in your angel round, they shouldn’t be entitled to a board seat.)