Non-Executive Directors at Early-Stage Startups

Most non-executive directors appointed by early-stage startups are not investors in the startup, and only a small fraction are venture capital (VC) directors. Non-investor and angel directors are more likely to be appointed when they possess experiences that founders lack; and leverage their professional connections to attract new investors, directors, top executives, and potential acquirers for startups. Among early-stage startups that appoint non-executive directors, those with investor-directors experience better later-stage funding outcomes and a higher likelihood of exit, but also file fewer patents and are more likely to exit via acquisitions rather than IPOs compared to similar startups with non-investor-directors.