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.