was someone else I was appalled by Connie Loizos’ recent article Coming Out of COVID, Investors Lost Board Favor. Stories and citations in the article, such as investors reducing interest and participation in board meetings, not attending or sending junior his associates to the cover, are both eye-opening and alarming.
The reasons given are logical, including investor overspending, Zoom fatigue, and novice directors. “Personally, I admit VCs don’t add much value to boards,” Connie’s memo notes, with many investors talking about how much value they add to boards. It’s pretty interesting to read as a CEO I’ve heard of (although the good ones are conduct Adds a lot of value!).
For the most part, everything about the content of this article pissed me off.
An under-engaged or dysfunctional board is not only bad for CEOs and LPs. they are bad for everyone. If there really is a world where the board is nothing more than a distraction for the CEO and investors think it’s a tax they can’t afford, then it’s time to hit the reset button on boards and boards.
This reset should do four things:
Investors need to do their job better or quit
An under-engaged or dysfunctional board is not only bad for CEOs and LPs. they are bad for everyone.
The argument that investors don’t have time now because they traded too much in the pandemic is especially ludicrous. The pandemic has also reduced the amount of time VCs need to spend on individual board meetings. We used to have four in-person board meetings each year with directors who traveled for meetings, had dinner, spent time with the team, and attended committee meetings.
Today, the Board is fortunate enough to hold a face-to-face meeting once a year (more on that below). And since everything else takes less time and travels less, a particular VC has had to double the amount of time he spends on board meetings.
Serving as a director after an investment is central to the investor’s role. Since their primary function is to “find deals, execute deals, and manage portfolios,” they have obligations to the founders they support and the LPs they represent.
If you don’t have time to do a third job, you should let both the founder and the LP know before you step down. If a venture capitalist cares about investing and can’t focus on adding value, they need to work with the company to find alternatives.
