Posted by Alroy on 2008-04-20
Tags: Operations Board
There are a lot of postings here about getting the initial term sheet and getting the VC on board. However, just like marriages, many of these courting periods can be quite different from the month to month evolving operations and business that we face a year or two down the road. Remember that often these VCs will sit on your board, and direct your business in different ways and depending on your dilution can dictate how operational decisions should be made. Thus, it is important to get an early feel from your VC dialogue, especially how they would respond if the actual business is less than the wonderful picture we sometimes paint in our pitches.
Even with the best of intentions, it is possible and even probable that the world does not quite turn out the way that we have carefully planned. Having VCs with real operational experience could actually prove to be useful in this setting. However, having attorneys or other less experienced associates on the board can be disastrous as they can and will send the management team on useless exercises to appease their ignorance and waste valuable time and resources that could be focused on the real business issues.
It is also important to set realistic expectations on how a business will evolve as this can determine the tone of the ongoing dialogue. I was involved with a CEO who promised rosy but unlikely-to-happen scenarios and thus the board was often in an antagonistic and negative stance with the whole management team.
While we all need to be as careful and realistic as possible with the expectations that we set, we also need to be careful about the kind of people we let on our boards as this can become a regular drag and distraction that we do not need when we are building a business.PRIVATE: Members Only