A few days ago, WSJ’s startup & VC blog referred to an NVCA study where entrepreneurs complained about the lack of operational experience in some VC board members.
I’ve been an entrepreneur as well as a VC. The biggest travesty that VC firms can visit on a portfolio company is putting an inexperienced representative onto its board. Too many VCs have no real operating experience (sorry, having been a I-banker or recruiter does not count as experience).
I think this is an overly simplistic way of looking at things. Here is a quick test. Which one would you choose as your VC board member for your pre-product Series A startup:
- A really experienced former CEO who can’t get used to being a board member and thinks he can run the company better than you
- An really experienced former head of sales who has scaled companies from $10M on several times but who has never been in a pre-product startup
- A former lawyer or banker or accountant who’s had more than a decade of experience as a VC and a fantastic early stage investment record.
Not sure about you but, assuming the personalities work out well, I’d go with the VC w/o operating experience any day of the week. In fact, my first startup, Allaire, went exactly this way.
- Comparing between board members is very, very hard. Especially if you don’t have competing offers to compare. Do not underestimate the impact that your investor board member will have on your life. First and foremost, talk to good people with good track records. Do not get tempted by the cash. I know this is very hard to say in the abstract but it is true. Go talk to CEOs of companies who’ve had a serious falling out with their investor board members. Listen closely to what they tell you.
- There is no simple rule of thumb for comparing between investor board members. The key is to understand what you are comparing. You are not looking for a CEO or an exec. You are looking for one board member who’s part of a larger board. Boards are about strategy, governance, fundraising, exits and supporting the CEO. They should not be a crutch for your team, unless this is by design, e.g., with an executive board member.