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The Rise of Functional SaaS Boards: Partnering for Success

calendarJanuary 21, 2025
by Brett Williams
insight
The Rise of Functional SaaS Boards: Partnering for Success

In the fast-paced world of SaaS, the traditional board seat is undergoing a significant transformation. No longer just about governance and oversight, boards are now key strategic partners, actively adding value to the companies they serve. This shift is especially evident in private equity (PE)-backed SaaS businesses, where functional boards—comprising members with deep operational and industry expertise—are increasingly becoming the norm.

At The Lancer Group, we’ve seen firsthand how PE firms and their operating partners are rethinking board composition. The focus has shifted from generalist profiles to individuals who bring highly specialized functional knowledge to the table, helping executive leadership teams achieve value initiatives around scaling, product innovation, and market competition.

Here’s why this trend is accelerating and how it’s reshaping the SaaS leadership landscape.

What Sets Functional Boards Apart?

Functional boards go beyond the traditional governance role, actively engaging with the company’s operations to drive specific outcomes.

Here’s how they make a difference:

  • Go-To-Market Expertise: Board members with experience in GTM strategies and revenue generation provide invaluable guidance for SaaS companies looking to scale quickly and strategically.
  • Tech Leadership: Expertise in areas like AI, cloud computing, and cybersecurity equips SaaS companies with the knowledge to stay ahead in a rapidly evolving tech landscape.
  • Strategic Partnerships: Functional board members leverage their networks to secure strategic partnerships, opening doors to new growth opportunities and market penetration.

These boards are no longer just a governance layer; they are an extension of the executive team. This shift is driven by the increasing complexity of running a SaaS business today, where growth must be balanced with profitability and operational discipline.

Trends Driving the Adoption of Functional Boards

Several macro trends are fueling the rise of functional boards:

  • The Pivot to Efficiency: After years of aggressive growth, many SaaS companies are now under pressure to improve operational efficiency. PE firms recognize that functional expertise on the board can help identify and execute cost-saving measures without sacrificing innovation.
  • Diverse Expertise Beyond Governance: The demand for diversity extends to functional skill sets. Boards now seek members with varied operational and strategic backgrounds, from GTM strategy to product-led growth, to support leadership teams more effectively.
  • Hands-On Involvement: Functional boards are deeply engaged, diving into data, collaborating with leadership, and helping address bottlenecks in real time. This level of involvement reflects the growing need for a partnership-driven approach to leadership.

Functional Boards in Action: Case Studies from PE-Backed SaaS Companies

1. Transforming a $400M SaaS Leader in Enterprise Intelligence

A SaaS platform specializing in market intelligence and analytics underwent a PE-driven take-private transformation. We placed three board advisors with expertise in AI, enterprise sales, and international expansion. These advisors are now driving product innovation and unlocking growth opportunities in new markets, ensuring the company remains competitive in a high-demand vertical.

2. Scaling a $280M SaaS Company in Field Service and Logistics

At a critical growth stage, this SaaS company serving the logistics sector faced challenges in scaling operations and customer retention. The functional board actively worked with the PE sponsor to identifyleadership gaps and define the requirements for a new CEO. Through this collaborative process, the board ensured alignment on strategy and operational needs, leading to the placement of a leader with a proven record in profitable growth.

3. Capitalizing on a $2B TAM for Infrastructure SaaS

A high-growth SaaS company targeting the infrastructure management space needed to capitalize on its $2 billion total addressable market. The functional board identified gaps in the company’s sales strategy and helped shape the requirements for a Chief Revenue Officer. Board members provided feedback and support during the onboarding process. This approach ensured the new CRO was set up for success and could deliver immediate results.

Looking Ahead: The Future of Functional Boards

As the SaaS industry continues to mature, functional boards are poised to play an even larger role in shaping its trajectory. PE firms that embrace this model are positioning their portfolio companies for long-term success in an increasingly competitive market.

For executive recruitment firms like ours, this shift underscores the importance of understanding not just the candidates but also the specific needs of each company and its leadership team. It’s not just about filling seats, it’s about building partnerships that drive real, tangible results.

Are You Ready for the Functional Board Advantage?

The days of passive board seats are over. Functional boards are the future, and they’re already making a difference today. If you’re a PE firm looking to transform your board strategy or a SaaS leader seeking operational expertise, let’s talk about how The Lancer Gorup can help build the right team to navigate the challenges and opportunities ahead.

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