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The value of a non-exec director for Life-science SME’s and when to appoint one…..
Whilst the remit and expectations of a Non-Executive Director have significantly broadened over the last 25 years, owing primarily to the 1992 Cadbury Report and latterly the Higgs report of 2003, not to mention the conclusions and learnings from the financial crisis in the late 2000s, this particular piece is dedicated to the benefits a great non-executive can provide to privately owned SME’s or early stage VC backed businesses.
The first thing to remember is that a non-executive must first and foremost add value, and careful time must be taken to ensure that the “brief” for your Non-Executive is clear and well thought out.
Companies in the early stages of existence may require a strong Non-Executive to assist with fund-raising activities, or to provide wise counsel in business direction. It is not uncommon for a Founder/CEO to have made the quantum leap from the lab-bench to the boardroom (to quote one of our clients) and the stretch of expertise and responsibility is vast, an effective Non-Executive can bridge that gap and provide mentoring where appropriate.
Speaking from personal experience, I have enjoyed the benefit of Non-Executive Director support at RMG in form of our previous Managing Director and Founder, Andrew Evans. It is hugely valuable to count on the input of someone who has no direct day to day executive responsibilities and whom can take a step back, offering advice and guidance in an unclouded manner.
I would advise companies to have a relatively open mind when considering the background and experience required for your Non-Executive Director. Rather than focussing solely on the “market sector” or even industry experience you Non-Exec has had, pay more attention to the journeys they have been on with other companies, how do you see that aligning with your objectives and aspirations, and most importantly, get the cultural fit correct – Many early stage company CEO’s seek guidance and mentoring, ensure that the person coming on board shares that approach and is willing to offer such support.
In terms of advising “when to hire”, I would say as soon as you can afford to! It reflects well on your company externally and it can open up doors for you sooner than you think, whether your goal is a trade sale exit, an acquisition and expansion, or access to new markets.
Avoid people you know! – At present, around 40% of Non-Exec appointments are made through a formal process. Whilst the easy option may seem to appoint an individual in your network, the downside is that you limit your exposure. Take a view of the whole market and engage a provider who can offer that full market access
Thinking of your own portfolio – Perhaps you’re reading this and have enjoyed successful exits of businesses in the life science space and would like to offer this expertise to the market in the form of a portfolio of non-executive appointments. There is a high demand for individuals of this skill-set and experience so feel free to reach out to me or a member of my team for a confidential discussion.