OLNS#12 – Advisory Boards in German Start-ups

German version 

Advisory boards are a standard corporate governance feature of VC-backed German start-ups. The advisory board (sometimes called a "shareholders' committee" and very rarely "administrative committee") has a couple of start-up specific tasks that develop over time when the company matures.

While supervisory boards in established companies are primarily concerned with controlling, compliance and corporate governance, the advisory board in the early stages of a start-up is much more focused on the development of the company, helping with technology and product development, customer and employee acquisition and support with fundraising. In addition, a good advisory board can also help the founders grow into their roles as company leaders and develop along the start-up's growth path or work towards making room for more suitable external managers in the future.

In practice, such advisory boards come in various forms. The advisory board can be a purely advisory (expert) body, but it can also be modelled closer to a supervisory body that has control over certain measures taken by the management board (i.e., usually the founders). Finally, the advisory board can also be granted its own decision-making powers so that it acts as a decision-making body for certain topics, notably the appointment and removal of managing directors.

Numerous constellations are also conceivable for the composition of the advisory board. Often, the advisory board will initially only consist of founder and investor representatives; independent members with special expertise are often added at a later stage.

OLNS #12 summarizes our learnings from working with countless start-ups and scale-ups and offers:

• The role of the advisory board in the corporate governance system of a start-up
• Duties and liability risks
• Practical guidance regarding the appropriate size and composition of the advisory board
• Best practices for a functioning advisory board

Throughout the Guide, experienced investors and founders share their lessons learned when it comes to board competencies and how best to deliver value.

In addition, this guide presents the first results of the OLNS Board Study 2024/2025, an empirical study on the size and composition of advisory boards in the various financing stages of more than 2,900 German start-ups:

• Findings regarding the size of advisory boards.
• Findings regarding the composition of advisory boards.
• Findings regarding strong advisory boards.
• Deep dive on German unicorns.

In preparing OLNS#12, our cross-functional Orrick team again drew on experience representing more than 4,500 venture-backed companies and 100+ unicorns as well as the most active funds, corporate venture investors and public tech companies worldwide. Founded in the Bay Area, Orrick is one of the world’s leading technology law firms and advises on more venture transactions in Europe than any other law firm for more than eight years (PitchBook, Q2/2024).