Startup Boards, 2nd Edition

Chapter 7VCs and Boards

Not all VC board members understand their unique role. We've been involved with boards where VCs believe that their job is to provide “adult supervision” to entrepreneurs. We find this language to be pejorative and insulting to entrepreneurs. Some VCs feel the need to manage the CEO and the entrepreneurs. Others can't help but get involved in minutia, try to solve emerging problems, and stir up conflict. This type of VC board member gets in the way, confuses the management team, and, in the worst case, damages the startup.

If you're looking for capital from VCs for your startup, it'll come with strings attached, including at least one VC board member. Be prepared to deal with various mindsets and personalities, as VCs aren't a singular archetype. As Brad wrote on his blog:

Think about D&D [Dungeons and Dragons], or Magic the Gathering, or any other game like that. The VCs are individual characters in D&D. Each character has a different set of skills, weapons, money, and experience points and over time develops more. A firm is a combination of different characters—at Foundry, you might have a mage and a barbarian—and the combination is what you have to pay attention to.¹

The challenge of raising the first round of capital is well documented. This challenge continues to be true for the second, third, and next rounds of capital for many companies. Despite the long odds, many companies need capital. Raising ‌financing, especially the first round, is a ...