Let’s begin by analysing this case: A startup with all the proper components: sturdy traction, a clear cap desk, and a purchaser with strategic match. Due to AI, the narrative made the pitch even stronger. The board was aligned. Or so it appeared.
Then got here the diligence name. A direct query got here up: “How does this fall beneath the EU AI Act?”… The founder seemed over on the board. One individual mumbled one thing about checking into it. And that was it. Nobody adopted up, nobody took possession, and no plan was made. There have been no notes, no motion objects, simply final month’s board minutes, which learn extra like a uncooked transcript than a document of precise choices.
Three days later, the customer quietly stepped away. No drama, no fuss. Only a calm exit, the sort that occurs when nobody on the desk seems to be in cost. Quiet disengagement follows when there isn’t a clear signal that anybody is steering.
The danger that doesn’t present up within the deck
In 2024, Europe’s startup ecosystem is being rewritten by AI. Aleph Alpha raised €500 million. Mistral hit unicorn standing in beneath a yr. Synthesia reshaped the way forward for content material creation. And now, with the EU AI Act in impact, regulation is not a imprecise concern. It’s a reside parameter in each critical dialog about capital, product, and threat.
In that context, founders are working sooner. That’s not the issue. The issue is that boards are usually not maintaining, and when patrons discover the hole, they stroll.
Silence isn’t confidence: It’s absence
In my work, I’ve seen boards that lack an understanding of AI. That’s not deadly. What’s deadly is a board that doesn’t ask about it. They don’t query assumptions. They don’t flag dangers. They don’t make clear who owns what. Within the absence of problem, patrons assume the worst, not due to what is alleged, however due to what will not be.
One purchaser put it sharply: “If nobody’s argued about this internally, they in all probability don’t know the place it breaks.”
In offers above €30 to €50 million, governance turns into a part of the sign. Consumers learn greater than financials. They learn posture. When the board seems to be a passive viewers moderately than a decision-making physique, the deal begins to look fragile, irrespective of how sturdy the product could also be.
This isn’t about regulation: It’s about belief
You do not want an AI scientist on the board. You want somebody who can join product, capital, and compliance, and who’s assured sufficient to say, “Clarify this once more.” Most AI methods don’t fail due to overreach. They fail from an absence of examination.
In a single latest case, the founder talked eloquently a couple of new AI layer. The CFO nodded. The board nodded. Nobody requested the way it was educated, how it could be ruled, or what would occur if it failed. The customer observed and determined to not discover out the onerous means.
I’m not suggesting drama. I’m suggesting a sign. A superb board leaves a paper path of stress: dissent, pushback, threat possession. To not block progress, however to indicate that somebody is minding the shop.
In case you’re studying this earlier than an exit, you’re already late
- Founders: in case your board went silent the second AI entered the product roadmap, that isn’t alignment. That’s publicity. Invite friction now.
- Buyers: if the deck is filled with AI claims however the board minutes are stuffed with clean area, that may be a legal responsibility, not a moat.
- NEDs: Your job is to not interpret the mannequin. It’s to verify the group will not be decoding actuality too optimistically.
- Consumers: if all the things sounds too clear, ask who has been allowed to say “no“, and once they final did.
To sum up: Startups don’t fail due to AI. They fail when nobody asks what may go fallacious. The strongest boards I’ve labored with don’t simply approve the plan; they interrogate it. To not sluggish it down, however to verify it survives contact with the true world.
In case your AI story is prepared for the market, guarantee your governance is simply too. As a result of in exits, the true threat isn’t what’s on the slide. It’s what nobody says out loud.
