Category: Board of Directors
Question: Under what conditions would it make sense for a pre-seed stage CEO to give a board seat to his co-founder CTO/VP Engineering? What might be the positives/negatives? Especially if the CTO/VPE has more experience with dealing with VCs than the CEO?
If you think your co-founder would make a good fellow director, then put him on the board. With a company as young as yours, do what’s best to run your business and don’t worry too much about what potential investors may think later. When you decide to take some venture investment, you can sit down and decide what makes sense for the board at that time.
While helpful that your co-founder has some relevant VC experience, it’s not necessary for him to be on the board in order to interface with investors. Most of my board meetings have company executives who regularly meet with us who are not on the board.
Pascal Levensohn has been the ringleader of a group of 22 Venture Capitalists who have just released a white paper titled “A Simple Guide to the Basic Responsibilities of VC-Backed Company Directors” The white paper can be downloaded here.
Since its release last week there has been some commentary on this project which Pascal has responded to on his blog. It is interesting, useful, and thought provoking information for anyone that serves on the board of a VC-backed company.
Question: How important is speaking to product management to a VC? While most do not sit on the management team, do you like to interact with them regularly?
Our Take: Absolutely. VCs like to interact with all major functional heads of the company whether they are operations, finance, engineering, marketing, sales, product development and management, etc. It’s important for an investor to see the company from the eyes of many different touch points, not just those of the CEO and CFO. This in no way is meant to undermine the authority of the CEO, or to intimate that the CEO isn’t trusted, rather in a well-performing, functional management company, it is good to evaluate diversity of opinions.
I find that the board meetings that are most useful always contain some in depth discussion from one or more functional areas of the company. These aren’t always the same for every meeting. If the company is about to release a new version of the product, I fully expect and want to speak to the engineering team. If the company is getting ready for fundraising, we’ll spend more time with the finance folks. Along these lines it’s really helpful to talk to product management folks about their vision of the future, how customers are accepting their products and how the integration between them, sales, businesses develop and engineering works.