BioE2E Presentation You and Your Boards

1
BioE2E PresentationYou and Your Boards

• Gregory T. Went, Ph.D

2
Background

• CMU, Berkeley PhD. 1989
• Chem. Eng/CS, Phys. Chem.
• Founder, CuraGen, 1991
• Technology Dev.
• Instruments
• Informatics
• Methods
• Operations
• Bus. Dev.
• Finance/IPO, PR, Marketing

• SAB, BOD Member, Interim CEO
• NeuroMolecular (CEO)
• Tethys Bio (CEO)
• Parallele Bio
• DNA Sciences
• Nugen Technologies
• Abgenix
• Investor, Advisor
• Versant Ventures
• CMEA
• Pequot
• Origin

3
Types of Boards

• SAB
• Leading scientists technologists, scientists
  clinicians
• Access to employee talent
• Access to customers
• Validation

• BOD
• Leading business people
• Entrepreneurs
• Financial investors

4
How to attract top talent to your board?

• Study your industry know the leaders
• Work with counsel to identify connections to
  target member
• Warm and cold calls get informal meeting
• Express your vision clearly
• Dont be disappointed if the hit rate is low

5
Who should and who should not be on your board

• Should
• Successful CEOs who have built companies,
  especially in your space
• Individuals who care about mentoring
• Should not
• Window dressing
• Clear potential conflicts with future customers

6
What to expect from your board members

• Outside
• Act on behalf of all shareholders fiduciary
  responsibility
• Budget and accounting- Audit Comm.
• Compensation plans Compensation Comm.
• CEOs boss
• Stock issuance, plans
• Authorization for deals, major financial
  decisions
• Mentoring be available 1-2 times per year
  outside of BOD meetings to help guide you
• Contacts quickly follow-up on key customers,
  investors as required
• Investment time or
• Inside
• Act on behalf of all shareholders
• Check their portfolio problems, cell phones,
  Blackberries at the door
• Contribute when then can, abstain when they cant

7
How to compensate outside board members

• Early Stage
• Stock 0.25-1 vesting over 4 years, works out
  to 2K shares/meeting
• Cash 2K/meeting, out of pockets
• Investment right to participate in early rounds
• Later Stage
• Stock reduced
• Cash 4-5K/meeting
• Retainer 20-25K/year

8
How board members can help you get funding

• Introductions
• Validation
• Deal Structuring
• Piggy-Backing

9
How to get the most out of your board members

• Keep them informed between meetings
• Email relevant articles
• Input for agendas
• Well thought out BOD books
• Make sure they understand your vision, mission,
  strategy
• No surprises
• Respect their time
• Be succinct, polished in your communication
• Respond quickly
• Be proactive
• Figure out what they can do for youbefore they do

10
Getting the right board composition

• Guiding principals
• Compose for balance
• Similar motivations

• Practical
• Insiders (1)
• Business Leaders (2)
• Financial (2)
• Typical
• Insiders (2)
• Business Leaders (1-2)
• Financial (34)
• Awful
• Insiders (1)
• Business Leaders (1)
• Financial (5)

11
Contracts with board members

• Standard BOD consulting agreement
• RSPA Restricted Stock Purchase Agreement

12
Removing difficult board members

• .next financing round, have the new investors
  request that they take the difficult ones seat.
• Aggressive definition of cause in by-laws for
  removal/voting off BOD members