Venture Backed Companies Need Real Help in 2023

Mark Lonergan, January 24th, 2023

There is a lot of recent research about the num­ber of board seats held by indi­vid­ual Ven­ture Firm Gen­er­al Part­ners. It is true that the aver­age GP has more than dou­bled the num­ber of com­pa­nies on whose boards they sit. Per­haps this prac­tice is sus­tain­able dur­ing pro­longed mar­ket upswings, but the dilu­tion of the GPs time and atten­tion can be dis­as­trous when the mar­ket is in trou­ble as it is now. In Sil­i­con Val­ley, we often see indi­vid­ual Gen­er­al Part­ners with a dozen or more board assign­ments in sup­port of their port­fo­lios. One local firm aver­ages 17 boards per Gen­er­al Partner. 

Even when they are pay­ing full atten­tion, these GPs may strug­gle to add val­ue as their com­pa­nies nav­i­gate a dif­fi­cult and con­fus­ing mar­ket. Many Gen­er­al Part­ners in Sil­i­con Val­ley had lit­tle or no expe­ri­ence run­ning oper­at­ing com­pa­nies before they became investors. Some can pro­vide lit­tle tough-mind­ed insight on busi­ness issues around Finance, Oper­a­tions, Sales & Mar­ket­ing or Gen­er­al Management. 

On the flip-side, Boards with expe­ri­enced oper­at­ing exec­u­tives in their midst can make a real difference.

Lon­er­gan Part­ners helps many pub­lic and pri­vate com­pa­nies con­duct board direc­tor search­es as a main­stream part of our busi­ness. We have dis­cov­ered hun­dreds of expe­ri­enced CEOs in our region alone with the time and ener­gy to help ven­ture-backed com­pa­nies. These CEOs (cur­rent and for­mer) are statured, expe­ri­enced and suc­cess­ful Gen­er­al Man­agers anx­ious to engage with young com­pa­nies, with no expec­ta­tion of cash compensation. 

Their only con­di­tion for accept­ing a board seat? Know­ing they will be join­ing a board with investors and a CEO will­ing to work with them, to insure that their efforts pay off.

In this very chal­leng­ing busi­ness envi­ron­ment, I hope more ven­ture backed com­pa­nies start to look out­side their investor ranks for board lev­el help.