Board Observer
An investor who attends board meetings but cannot vote on decisions.
Definition
A board observer has the right to attend board meetings and receive all board materials, but does not have a vote. Smaller investors or follow-on investors who cannot justify a full board seat often negotiate for observer status. Observers can still influence decisions through participation in discussions, even without a formal vote.
Why it matters
Board observers have visibility into company strategy and financials. While they cannot vote, their presence means more people have access to sensitive company information, which can affect confidentiality and decision-making dynamics.
Example
A Series A investor takes a board seat, while a smaller angel investor who invested $500K negotiates for board observer rights. The angel attends quarterly board meetings and receives financial reports but cannot vote on compensation or acquisition decisions.