It seems very much the rage at the moment for companies to hire Non Executive Directors (NED). I am a big fan of these “outsiders looking inside“. They provide wisdom, guidance, help to raise the bar and introduce more robust systems and processes, help leaders make decisions and support change. In many instances an NED can help to open up new doors to finance and potential customers – help in the transition of growing up. If you are pursuing VC funding or PE finance then having a NED is often part of the deal.
One observation would be that many young companies appoint NEDs too early on in their cycle. They view them as the saving grace and the magic wand with all the answers. The reality is young fast growing companies should initially seek out a mentor or experienced person and trial the relationship before Companies House papers are signed. There are many individuals out there searching for NED trophies, it almost becomes their barometer for success – food for the ego!
My message to young growing companies who are seeking their new best friend, the NED, is be sure they can add value, be clear on where they can take you and most of all don’t GIVE AWAY equity, people either buy or earn a stake in your company.