After raising capital, a startup stalled — not due to market conditions, but because all decisions remained concentrated with the founder. The board identified a governance issue, not a leadership flaw, and acted to redistribute decision-making. Interview with Luciana Restivo, ILA Startup & Scaleup Committee Member.
There is a fine line between a board diagnosing a “governance issue” versus a “leadership flaw.” How did you navigate that distinction with the founder, and why does it matter so much for how the intervention unfolds?
To navigate this, the board had to reframe the founder’s behavior from a personal failing to an organizational lifecycle phase. A “leadership flaw” implies the individual is fundamentally incapable or toxic. A “governance issue” recognizes that the highly centralized, hub-and-spoke decision-making model that saved the company in its seed stage is the exact same mechanism breaking it post-funding.
We navigated this distinction by looking objectively at the company’s decision architecture. We presented the founder with an analysis of where corporate liability and strategic risk were bottlenecking, rather than critiquing their management style. This distinction matters immensely because framing it as a leadership flaw triggers defensiveness and an “us vs. them” board dynamic. Framing it as a governance evolution validates the founder’s past success while clearly mandating that a maturing corporate entity requires a distributed fiduciary structure. It shifts the conversation from “you are doing this wrong” to “the corporate structure has outgrown its current scaffolding.”
What specific governance mechanisms did you introduce to formalise delegation — and how did you ensure they were adopted in practice rather than on paper only?
We moved away from informal trust and suggested the creation of a formal Delegation of Authority (DoA) matrix. This document explicitly codified who had the right to approve budgets, make hires, and sign commercial contracts at various financial thresholds without CEO intervention.
However, a DoA is useless if the culture ignores it. To ensure practical adoption, we changed the structure of board oversight. First, we required that board materials be presented by the respective domain executives (CFO, CTO, Head of Sales), not solely synthesized by the founder. Second, the board established a formal Executive Committee (ExCo) charter, mandating that specific strategic decisions be minuted and approved by the ExCo as a body, rather than unilaterally by the CEO. By making the executives directly accountable to the board for their specific domains, the founder was “forced” to step back.
Senior talent leaving is often a lagging indicator. What are the earlier signals that a founder’s concentration of decision-making has shifted from strength to constraint?
From a boardroom perspective, the early signals of a centralized bottleneck appear in the flow of information and the velocity of capital deployment.
The first signal is that the business is taking fewer risks. When a founder insists on making every decision, they lack the necessary distance to analyse opportunities, resulting in the company only executing “safe” bets. A second signal is board pack homogenization. If every slide, financial projection, and strategic update sounds like it was written in the exact same voice—the founder’s—it indicates a lack of diversity and leadership below them. Another sign is the frequent requests made outside of regular board meetings. If the board is constantly being asked to approve operational expenses, or mid-level equity grants between formal meetings, it is a clear structural indicator that internal authorisation frameworks do not exist or are paralyzed.
How do you adjust founder incentives to reward team development without creating perverse effects or undermining the founder’s motivation to stay engaged?
Historically, boards tie founder incentives strictly to financial milestones or product launches. What we put in place was to link a portion of the founder’s equity directly to building a capable, independent executive team, not just figureheads to check a box. The financial incentives sent a clear message: you will be highly rewarded for building a strong leadership structure, but you remain fully accountable for the company’s overall performance. This framework effectively forces the founder to stop micromanaging and step into the role of organizational architect.
Looking back, was there a moment where the board acted too late? And what would earlier intervention have required in terms of trust and relationship with the founder?
Candidly, yes, there was a delay, but it was largely a byproduct of our own board evolution. We had recently changed nearly 50% of our board members, bringing in a fresh breath of air—most notably through a new independent director. This newly composed board looked at the company’s structural bottlenecks from a radically different, institutional point of view, challenging the founder in ways they simply were not used to.
The founder’s highly centralized behavior wasn’t developed in a vacuum; it was arguably the fault of the previous board composition. The old board had established a modus vivendi that accepted—and even relied upon—the founder doing everything. While that dynamic was quite normal and effective in the trenches of the startup’s earlier stage, the previous board failed to signal when that phase had ended. Earlier intervention would have required the previous board to transition from operational cheerleaders to governance partners sooner, establishing the baseline trust that a healthy, structural challenge from the board is a feature of a maturing company, not a threat to the founder’s authority.
Editor’s note: As part of the collaboration between Silicon Luxembourg and ILA, members of the ILA Startup and Scaleup Committee are sharing their stories on governance. These reflect their personal views only and do not necessarily represent the official position of ILA.
