As your company grows, your BoD evolves
Venture Investor, VenRock Partner, Waterfall Evangelist
Angel investors typically stay on the BoD until Series A or B unless a signature deal.
Most early stage venture investors will stay on the BoD through liquidity.
Discover why people are using your product and how they benefit from use of it.
Lesson: BoD Management with Brian Ascher
Step #2 Stage: As your company grows, your BoD evolves
Angel investors typically stay on the board until there's perhaps a significant investor taking over the seat or they may take it one more round to the b. And sometimes they'll stay on all the way if this is going to be a true signature deal, and they want to maintain their very tight association with that company then they may take it quite far.
But typically they have lots of demand on their time and spend a lot of time deal sourcing. And so they're more than happy, once they have trusted others on the board, they're happy to relinquish their board sentence. Stay involved episodically directly with the team.
So most early stage venturing investors will stay on all the way through liquidity. Sometimes the late stage investors don't require a board seat, so they'd be observers in the room.
The question of how long you stay after an IPO for example. Typically it takes a little while for the VC to get full liquidity. There's at least a six-month lock up after the IPO And then because of trading volumes and because you don't want to drop a bunch of stock on to the market and leave the company with downward pressure on the price it could take two years or more. And so you might find venturing investors staying on throughout that period.
Often times if you've gotten a company all the way from early stage to an IPO, there is such a bond of trust and loyalty in both directions it's hard to get off the board. But ultimately the VC needs to so they can free up the slot for something else so they're going to be thinking about it.
We at Vinrock have sort of a loose rule that if you have a signature deal that is just a franchise maker for the firm, for you, for an area you want to continue making investments. You can keep one board as long as you like and we have partners who been on boards for 20 years because their iconic public companies. And it's just such an important vantage point from which the survey that particular sector and there's so many deals that come in. And when entrepreneurs see you're on the board of such and such a company, they're really impressed and want to know what unique market insights you have from that vantage point, so that's okay.
I think, Series A, you've probably taken in more capital, potentially significantly more capital. You now have institutional investors on the board. Maybe there's just one adding to the board but I think at that time it's nice to have an odd number board. Typically five would work well, maybe have one independent. You might have two from the founding team, one or two investors, and then either one or two outside directors.
And then meeting every six weeks, six to eight is a good cadence, and there's a little bit more of an expectation around reporting and some routine topics. Finances and, if you’re in market with sales, that would be an important one.
Going from A to B, I think you might just have another investor on the board. You might at that point, if you don't already have an independent, you definitely want one by then. And you're probably broaching topics of go to market, so you're going to be talking about sales results and pipe lines. You'll probably be seeing the sales leader in the room. You'll be revving the product enough that you're going to want to have–maybe not every board meeting–but routine drill downs on product road map, customer feedback, all that sort of stuff. By then you have enough of an executive team that you're going to start broach the issues of who's in the room and who's not?
I think you start to feel that you're seeing similar use cases across your customers. You're getting really strong feedback. If it's a consumer model or, frankly, a B2B model, you're seeing high engagement amongst your end users. You're starting to see similar types of customers using it for similar reasons, and you're getting pull. You're getting requests for the same thing over and over again. You're starting to say, "Ah, we're onto something. This is working, and it's repeatable."
Early stage, you know, before that you may get a bunch of churn. You may get an assemblage of rats and dogs, customers that don't look anything alike, they're oddball. You know, one's off in distant lands and they're using it for this thing you never anticipated, and others are what you expected and using it in the way you expected. It takes a little time for that to all sort out and feel repeatable, consistent and explainable. We've now uncovered why people are using it and what they think they get out of using it.