A colleague of mine has a promising event marketing software company. So far he’s raised a Series A and has a few new board members this year. There is one new board member in particular that he feels does not fully comprehend the space and tries to wield more control over the company than he feels is appropriate. He says he’s being very careful to not get on the board member’s bad side (and be removed as CEO), but he also says he’s kind of reaching a breaking point. Because this board member invested more money than the others, the rest of the board acquiesces to him, and my friend believes that if he follows this board member’s requests, he will put the company in jeopardy.
Your colleague is unforunately in a sticky (and relatively commonplace) predicament. He might have room to manuever from a legal standpoint, but that would largely depend on what the underlying organizational documents provide regarding removing a member of the board of directors. The best angle, if there is any angle at all, is to play the political card and quietly try to gin up discord and disharmony with the other board members regarding this director. That, of course, comes with its own set of issues but would be an option if the underlying organizational documents do not allow for the removal of the director under the present circumstances. I would be happy to discuss with your collegue in the event he wants to run a few ideas by an attorney (which I am).
Having been on boards of narrowly funded startups, on the execution side as COO, and as a technology advisor to angel investors, there is only one answer: Choose your funders wisely! If it is bad now it will only get worse. As an entrepreneur looking for funding, you need to vet your investors much more carefully than they vet you. It is their money. No matter how they made it, they can dictate from their experience, no matter how divergent from the startup they are funding.
Rule of life: Who ever puts the money, makes the rules.
This is the game one accepts to play when accepting investment. Juggling with politics is a big part when doing a CEO job. No way around it.
Now you see why many founders are ousted? Weather that's fair or not.
Good luck to your friend!