You Just Raised Your Seed Round (Here's Who Actually Runs Your Company Now)

You Just Raised Your Seed Round. Here's Who Actually Runs Your Company Now.

The wire cleared. You have outside investors, a board that includes someone other than the founders, and a company that no longer runs on the founders' say-so alone.

Before you schedule your first board meeting, you need to understand who decides what. The short version: the board governs major decisions, your officers run day-to-day operations, and your lead investor holds a defined set of vetoes over significant actions.

Three layers, each with its own rules. Here's how each one works.

Your New Board (And How It Acts)

At the seed stage, boards are usually small: often three seats, with one going to the lead investor and the rest staying with the founders or their designees. This keeps founders in the majority while giving the investor a voice.

Under Delaware law, the board manages the business and affairs of the corporation. In practice, that means the board approves the matters that shape the company: option plans and grants, new stock issuances, officer appointments and compensation, calling stockholder meetings, and adopting share transfer restrictions.

The board can act in two ways:

At a meeting. Before the board can vote, a minimum number of directors must be present: a quorum. That usually means a majority of the board's total seats, counting every seat that exists, not just the ones currently filled. Once a quorum is established, most decisions pass with a simple majority of the directors present.

By written consent. This skips the meeting entirely. The catch: every director must sign. On a three-person board, all three must consent. One unavailable or unwilling director means no written consent and a meeting becomes the only path.

What Your Officers Do

Officers run the company but only within the authority the board gives them. That authority comes from the bylaws and from specific board resolutions.

A title alone does not define the full scope of an officer's authority, but it matters: third parties can reasonably rely on it. A CEO is generally presumed to have authority over ordinary-course business - signing vendor contracts, managing employees, directing product work. Anything outside the ordinary course should trace back to a clear grant of authority from the board.

The practical line: officers handle operations; the board handles material expenditures, equity, and strategic direction. When in doubt, get a board vote first. A board consent that wasn't strictly necessary costs fifteen minutes. A missing one can invalidate the action.

The Investor Rights Sitting on Top

This is the layer of governance founders most frequently overlook.

Even when your board has the authority to approve an action, your financing documents may give your investors a separate veto over it. These are called protective provisions, and they typically require your preferred stockholders to approve the action by a separate class vote, in addition to whatever your board decides.

Actions that commonly trigger an investor veto:

• Changing the size of the board
• Amending your charter or bylaws in a way that adversely affects preferred stockholders
• Raising certain new rounds of financing
• Approving a sale, merger, or liquidation of the company

Before pursuing any significant action, run it through two questions: Has the board approved it? Does this require preferred stockholder consent?

Certain decisions like growing the option pool or raising your Series A may also require a general stockholder vote from all stockholders, preferred and common. Miss one of these steps and the approval may not be valid. That's the type of issue that surfaces at the worst possible moment: in the middle of your next financing or an acquisition, when investor counsel traces the approval chain and finds a gap.

What This Looks Like Over the Next 18 Months

Most seed-stage approvals are quick: a signed consent or a short call. Here's what will require your board's attention:

Routine matters: signing off on the annual budget, appointing officers, granting options to new hires, approving key contracts, and setting compensation.

Capital and strategy: approving your fundraising plan, taking on bridge financing (SAFEs or convertible notes), approving your Series A terms, or evaluating a pivot.

Administrative matters: approving the annual 409A valuation, approving any founder-related transactions, establishing a compensation committee, calling stockholder meetings, and adopting share transfer rules.

Less common, but possible: approving an acquisition, shutting down a product line, or responding to a legal threat.

Frequently Asked Questions (FAQs)

Who controls a startup after a seed round, the founders or the investors?
At the seed stage, founders typically retain board majority — usually two of three seats, with one going to the lead investor. Founders control day-to-day operations and most board votes. However, investors hold protective provisions: contractual veto rights over significant actions like new financings, charter amendments, and a sale of the company. Founders run the company, but within a defined set of boundaries.

What is a quorum and how does a startup board vote?
A quorum is the minimum number of directors required for the board to act at a meeting — usually a majority of total board seats, including vacant ones. Once a quorum is present, most decisions pass by simple majority of the directors at the meeting. Boards can also act by unanimous written consent, which requires every director's signature but skips the meeting entirely.

What are protective provisions in a seed financing?
Protective provisions are contractual veto rights held by preferred stockholders. They require a separate class vote of the preferred before the company can take certain actions — typically changing the board size, amending the charter in ways that affect the preferred, raising new financing rounds, or selling the company. Board approval alone is not sufficient for these actions.

What decisions require board approval at a seed-stage startup?
Board approval is required for option grants, new stock issuances, officer appointments and compensation, annual 409A valuations, fundraising plans, bridge financing, founder-related transactions, and any sale or acquisition. Day-to-day operational decisions — vendor contracts, hiring, product direction — sit with officers and don't require board action.



What happens if a startup takes an action without proper approval?
An action taken without required board, preferred stockholder, or general stockholder approval may not be valid. These gaps typically surface during due diligence for a Series A or acquisition, when investor counsel traces the approval chain. Fixing them requires corrective consents and ratification — a process that costs time and leverage at exactly the moment founders have the least of both.

The Bottom Line

At the seed stage, your board weighs in on the significant matters: material expenditures, equity, and strategic direction. The day-to-day stays with you and your team.

The habit worth building now is simple: before any major decision, ask who needs to approve it. Board approval, preferred stockholder consent, a general stockholder vote, or some combination of all three. Getting that sequence right keeps your approvals clean and your cap table ready when Series A diligence begins.

If you're navigating your first round of board decisions and want to make sure the approvals hold up, book a consultation at venturepointlegal.com.

Venture Point Legal advises founders and venture-backed startups on corporate governance, equity documentation, and transaction readiness across the San Francisco Bay Area. Book a consultation at venturepointlegal.com.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. For guidance specific to your situation, consult a qualified attorney.