A short guide on how to hedge against the three startup risks VCs ask about.
“Many excellent firms have their follow-on funding pulled simply because the market needs time to mature until they can cross the chasm, and the VC needs to close the fund. All of that technology, carefuly nurtured team, and a great culture ends up wasted, or acqui-hired for a pittance, whilst the staff ‘phone it in’ until they can vest and escape”
“Realize first and foremost that they are people; treat them as such. If I’m making an early stage investment, I’m making an investment in the founders and I only benefit when they succeed. With exits averaging 5-7 years, that’s one hell of a journey that I’ll be a part of and I go into it considering them friends”
“What has worked really well for me is to prioritize what is best for the company and not for any individual or institution (including ourselves) who holds a board seat”.
“In my experience adding value as a board member has always been key; this means contributing to value creation with a very pragmatic, hands-on approach. Giving strategic counselling to companies’ boards, looking for potential clients and partnerships and contributing to the development of strategic business agreements.”
“We only work with seasoned entrepreneurs who went through the rocky ride themselves and will always adding value during board meetings. These board meetings are always as transparent as possible and is only focusing around strategy”.
“At the end of a day we are startup in effect, so the main focus is the team, and part returns are proof of our ability. The specific “unique” angles and specialisms that we follow at any one time need to adjust to environmental conditions (regulatory, economic, competitive, cyclical..) and the fund’s ability to pivot depends entirely on our ability as a team”.
“The best board members “work for the CEO as long as they support the CEO.” If they don’t support her, they should do something (which could mean changing the CEO, or working hard with her to get back to a place of support). For me – that’s the fundamental “trick” to being an effective board member”
Case study of coaching Mark, the GP of a British VC firm, and his portfolio founders as well, to achieve higher operational efficiency and returns.