Jean-Philippe Martin and Frédéric Boucher (Partners, VISCONTI Partners) participated in a webinar conducted under the aegis of the FINANCE INNOVATION Lab, in partnership with MGT (fundraiser) and CFS Avocats (law firm), and with the intervention of Michael Diguet (CEO Algoan).

Find the summary of their intervention during this webinar on the theme: the key factors of good governance.

What are the key factors for setting up good governance, a guarantee of performance for the company; especially in a context of fundraising?

The 2 imperatives and 4 challenges for effective governance:

To implement effective governance, the founding director (s) must:

• Have 2 imperatives in mind:

— The necessary foresight: to have a governance chosen and not subjected to.

— A proactive attitude: to evolve from being a founder to a manager with third parties to coordinate, including new investors.

• Responding to 4 decisive challenges:

— Define the future roles of the (co) founders: what are the aspirations of each? Do they want and will they remain operational? It is necessary to prepare for the evolutions and the perimeters of each

— Integrate the dissociation between capital and management: adapt, where appropriate, shareholder positions and operational manager positions

— To assert itself as the central hub of governance both in terms of political and strategic aspects and in terms of operational aspects

— Establishing an impacting strategic committee

The governance hourglass

Before raising funds, the company very often follows a pattern where the (co) founders are at the center of all operations/decisions (a real “Swiss Army knife”).

The fundraising preparation phase should be used to launch a process of clarifying everyone's roles. A first governance organization was then emerging.

After fundraising, effective governance is put in place. To represent this, we can talk about an hourglass diagram.

— The manager is central; he ensures fluidity between the various parties: on the one hand the shareholders (new or old) and on the other, the teams;

— The manager therefore has two hats: his role as operational manager (execution of the strategy — supported by the members of his management committee) and his role as shareholder (validation of the strategy and long-term ambitions with the new shareholders within a board of directors, board, or even strategic committee).

This global and fluid mechanism will ensure the proper functioning of governance. This is in compliance with the shareholders' agreement, respect for the long-term decisions that commit the company and its investors and respect for the execution of the strategy.

Fundraising (upstream, during and after) will catalyze this ecosystem and its organization.

Focus on the establishment of an impacting strategic committee

In practice, on the team side, the manager (s) often set up a management committee or an operational committee prior to fundraising, which brings together the key men who are responsible for the smooth running of the company.

The establishment of a strategic committee (board) is also a crucial and impacting step in corporate governance

How and why should a strategic committee be set up?

The strategic committee is complementary to the board of directors (often focused on formal legal aspects such as the approval of accounts and the organization of the General Assembly) and must “impact” the organization through 4 major dimensions:

• Challenge the manager about the company's performance and leadership. “Whoever does not report does not realize! ”. In this respect, the strategic committee acts as a demanding and benevolent counterforce.
• Integrate diversity and additional experiences by appointing members (including independent members) with different backgrounds and who can enrich debates and decisions. The strategic committee is then a guarantee of collective intelligence
• Managing major crises. The strategic committee makes it possible to break the loneliness of the manager and to fully support him during complicated and crisis periods; with solidarity and firmness
• Promote the visibility of the company. The members of the strategic committee must be the “first” ambassadors of the company by allowing the manager to access additional networks synonymous with new business.

Conclusion:

In summary, fundraising is an important step in the growth of the company and therefore in its structuring, in particular in terms of its governance. The founding director must not suffer it but choose it and must in fact:

• Anticipating the change in posture: from the role of omnipresent (co) founder to that of operational manager of a company that must be structured to grow
• Dissociating the “2 hats”; that of holding capital, and that of management
• Asserting ourselves as the “hub” of the Hourglass of impacting governance
• If necessary, constitute a management committee (team management) and a strategic committee (bringing together shareholder representatives but also independent members)

A real change is taking place for the leader and the assertion of his leadership. We then talk about the position of Chief Engagement Officer; and trust, autonomy, transversality become the guiding words that lead to collective performance.

This phase of evolution in the role of the (co) founder-manager is complex and can take time. It can be accompanied and guided by peer coaching.