Supercharging Your Unicorn Board

The boards of pri­vate­ly-held tech com­pa­nies are increas­ing­ly impor­tant agents of change– the right direc­tors at the right time can help the founders cre­ate mon­u­men­tal val­ue. But I see signs that this untapped poten­tial is becom­ing bet­ter rec­og­nized and developed.

For exam­ple, Wash­ing­ton based deca­corn Tani­um recent­ly added sev­er­al out­stand­ing inde­pen­dent direc­tors to their board, includ­ing Mark Fields, the for­mer CEO of Ford; Matt Thomp­son, for­mer­ly the EVP of World­wide Field Ops at Adobe; and David Row­land, the exec­u­tive chair­man at Accen­ture. Oth­er great exam­ples can be found at Instacart, Stripe, Rip­ple and SpaceX.

It used to be that pre-pub­lic tech start-ups rarely put inde­pen­dent direc­tors on their boards. The key ven­ture investors made sure they had board rep­re­sen­ta­tion, and they joined the founders in pro­vid­ing board over­sight and direc­tion. The few excep­tions we came across were gen­er­al­ly com­pa­nies in the last stages of prepar­ing for the IPO.

But the ven­ture cap­i­tal mar­ket has changed in the last few years: we’ve seen a mas­sive influx of cap­i­tal, a slow­down in IPO time­lines, the rise of the SPAC, and the entry into the mar­ket of the non-tra­di­tion­al ven­ture investor tak­ing the lead on some of the most impor­tant ven­ture financ­ings. In addi­tion to the tra­di­tion­al Sequoias and the NEAs, we now see giant firms like Soft­bank and Fideli­ty and Tiger Glob­al as the lead investors on many big deals.

In this new land­scape, investors are giv­ing the green light to their founders to add mar­ket vision­ar­ies to their boards, some­times in lieu of an active board seat for them­selves. Founders are tak­ing advan­tage of the trend to attract sit­ting pub­lic com­pa­ny CEOs and oth­er senior exec­u­tives from much larg­er com­pa­nies to their boards. Investors are also pleased, know­ing that their port­fo­lios are ben­e­fit­ting from the insights and the con­nec­tions that indus­try lead­ers contribute.

Here at Lon­er­gan Part­ners, we’re excit­ed to work with clients to recruit statured exec­u­tives to serve on their pri­vate boards. Many high-pro­file busi­ness lead­ers with pub­lic com­pa­ny expe­ri­ence are anx­ious to become involved in the pri­vate com­pa­ny sec­tor. Inter­views with these board mem­ber can­di­dates indi­cate that they enjoy the urgency and impact of board work and the men­tor­ing rela­tion­ships they build with com­pa­ny founders. They also appre­ci­ate the finan­cial upside, as they are able to earn an equi­ty posi­tion in these high growth companies. 

So if you are a ven­ture investor, maybe it’s time to ask the ques­tion: ​“Could adding an inde­pen­dent direc­tor now help me grow my invest­ment?” If the answer is yes, we’d like to help!