The role of non‐executive directors in high tech smes

Abstract

Until recently the role of non executive directors (NEDs) in small and medium firms (SMEs) was fairly easy to understand. Such directors were usually imposed by venture capital firms as part of the “price” of getting financial backing. Very often, if or when the business became profitable, no such imposition was made. The role of the NED was simply to see that the money provided by the venture capitalist was spent in the manner prescribed in the business plan or to ensure timely and correct financial information was available to both operating management and the investor. Neither of these roles would feature high on the agenda of a big firm’s non‐executive directors. But with the advent of early initial public offerings (IPOs), perhaps just into the second or third year of an SME’s existence, the role of the NED is set to change. A range of new responsibilities are coming into play. This article reviews the range of responsibilities a NED of a high tech SME must expect to take on.