Board members are good, actually.
A case for three archetypal board members — the sherpa, quant, and impresario.
Some founders believe that VCs waiving a board seat (as a lead investor) is a “win.” While not every VC should be on every Board… here are a few thoughts on why you may want to keep a lead investor closer to the boardroom.
Assuming you can choose who you take money from, wouldn’t you prefer to take it from someone whose experience and advice you value? Have you done enough diligence on your VC to trust their judgment and character? Don’t you want to tie their reputational success to yours?
There are just a couple of levers in your control to ensure that most VCs will stay focused on your startup: 1) Immediate traction. 2) A sense that their reputation is tied up with the success of this company. Guess how you can make #2 happen?
You’re not getting one over on anyone by not adding a board member. You’re giving investors a way to write your company off and save face while doing so. You should want a lead VC tied to the mast right alongside you if they offer it up.
In a founder-friendly environment, a coup against a founder is a move only taken in the most dire circumstances. VCs aren’t going to do it. Choosing not to invest in your next round, leaving your startup high and dry? That’s just Tuesday, but tougher as a Board Member.
Hopefully, I’ve convinced you that you should want a board member, now the question is what kind?
Let me make the case for three archetypes — the sherpa, quant, and impresario.
🗻 Sherpa
Most founders have never run a company. Few have run a team of more than 20 people. Some don’t even know how to read a P&L. The keystone of your board should be a VC who will help you scale the startup learning curve.
Ideally, you’ll add this person at seed and they can school you in the art of becoming a CEO, scaling an org, and critically, managing the rest of the board. This post explains what you should be hoping to get:
🤑 Quant
Presenting financials to your BOD can be overwhelming. It feels like homework you hoped you left behind in college. Still, cash eventually goes from being a fuel to a strategic tool, and adding advanced financial talent is a wise investment of human capital.
Board support for a complex business can often help you bridge the gap between the early stages and your more mature phase where you can recruit a star CFO. Having someone who has ‘been there done that’ can help save you time, stress and prevent rookie mistakes.
🎙 ️Impresario
Founders overweight the value of a VC with a massive social footprint — they can tweet about your startup or interview you on their podcast so often. VCs can help achieve brand awareness and make helpful connections to their network for hires, customers etc.
Don’t stress if you can’t find these exact types. David Frankel lays out another half dozen kinds of investors here:
TL;DR: avoid toxic personalities and inexperienced strivers, but beyond clearly bad apples most board members will help in some way and will be incentivized to rally around you at a time of need in a way an investor at arm’s length will not.
From a VC POV, being on a board is like putting your name up on the front door. It’s a lot harder to walk away and call it quits and you’ll be willing to invest more sweat equity and time when it reflects on your brand name.
